Germany scrambling to catch up in lucrative budget hotel sector
Germany has already seen more hotel investment transactions in the first nine months at €1.96bn than in the entire 2013, according to figures from JLL. 2014 is already shaping up to be a record year for tourism in Germany, with more than 331m overnight stays in the period, up 3%, while the number of tourists from abroad is up 5%. All of this is changing the landscape for the fastest-growing sector of the hotel industry, the budget segment.
A new survey published by hotel B2B research and database group Tophotelprojects documents the extent to which Germany is catching up with global trends. Currently 330 new hotels are coming on stream in Germany, of which 47 are economy/budget hotels.
Six new Motel One and ten projects from IHG hotel brand Holiday Inn Express are in the pipeline. The German Motel One concept with its mixture of “Lean Luxury” and reasonable prices has been attracting international investors with returns approaching those of four- and five-star hotels. The standard rooms (thick mattress, good TV screen, and a elegant marble bathroom) are available at guaranteed prices - one of the secrets of success of the German hotel chain, Motel One claims.
InterContinental Hotels Group (IHG) has already singled out the German hotel market as an priority expansion market for its budget brand Holiday Inn Express, with more investors and stable franchise partners being signed up. Similarly, French hotel export hit Accor is currently developing 20 projects under its Ibis brand, while in the same category competitor B&B is preparing the launch of ten new properties.
Other hotel groups in Germany are also betting on the low budget sector. The Wyndham Hotel Group is developing three properties of its Super 8 brand in Munich and Freiburg/Breisgau in the popular Black Forest. Marriott and Ikea are building three new hotels under its recntly launched smart-hotels brand Moxy in Munich, Frankfurt/Main and in Berlin. And the Louvre Hotels Group, which now belongs to the Chinese hotel group Jin Jiang, plans to open its first low-budget hotel as the new Tulip Inn Alp Style in Dachau near Munich in January 2015.
New project developers entering the market include Prizeotel (its third hotel is being built in Hannover), Travel 24 (readying a project in Leipzig), McDreams (projects in Cologne and Düsseldorf) and Premier Inn (the British group Whitbread with its well-known UK brand kicking off in Frankfurt/Main). Other independent budget hotel concepts such as Say Cheese (second project in Berlin) or Invite (fourth hotel project in Freiburg/Breisgau) are on the lookout for investor partners ready to offer discount hotel rooms in so-called B-locations.