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Germany’s hotel investment market is showing clear signs of recovery, but investors and operators alike remain constrained by the slow normalisation of financing, a stubborn pricing gap, and operational drag. If any optimism was on show earlier this month at the IHIF EMEA 2025 in Berlin, it came with caveats.
This year’s conference drew over 2,500 attendees, including 650 investors managing assets worth more than $581 billion—a record turnout. One in four were first-time participants. “The appetite is back,” said Dimitris Manikis, President EMEA at Wyndham Hotels & Resorts. According to CBRE, European hotel investment volumes rose by a third in 2024. Many expect this trend to continue. “We are seeing strong bids from potential buyers who want to acquire the best properties,” said CBRE’s Kenneth Hatton.
The operating side is responding in kind. Nearly every major chain has identified Germany as a strategic priority, with expansion targets that far exceed pre-COVID ambitions. Premier Inn, part of the UK’s Whitbread group, plans to grow its German portfolio from 61 to 120 hotels by 2030, securing 20,000 rooms across more than 30 cities. “We are planning to open 33 new hotels within the next five years,” said Erik Friemuth, CEO of Premier Inn Germany. The company aims for a 50:50 mix of leased and owned properties, which Friemuth describes as a “real competitive advantage” in a volatile financing environment. “We can act faster and more independently on project decisions,” he said, citing Whitbread’s financial strength as a key enabler. The company has invested £1.1 billion in Germany to date.
B&B Hotels, by contrast, is pursuing aggressive growth via a zero-asset strategy. The group added 42 new hotels in Germany last year, taking its portfolio to 225 properties and over 23,000 rooms. Revenue from the German market reached €446 million in 2024, up 16% year-on-year. “The zero-asset strategy offers decisive advantages that support our expansion and long-term success,” said Tobias Gollnest, Chief Development Officer for Central & Northern Europe. By avoiding ownership, the company works simultaneously with numerous developers and reinvests equity into regular refurbishments. “This allows us to modernise our houses every ten years or so and significantly extend their life cycle,” Gollnest noted. New locations in Wismar and Emmerich are already planned for this year, with a goal of reaching 400 hotels in Germany and Austria by 2030.
Scandic Hotels is also stepping up its commitment to the German market, though on more selective terms. “Our goal is to sign about 3,000 new rooms in Germany’s largest cities by 2030,” said Group CEO Jens Mathiesen. This translates to roughly 15 new hotels, with three signings per year through the end of the decade. The group currently operates eight hotels in Germany and opened the Scandic Nürnberg Central last year. Projects in Stuttgart and Berlin are in the pipeline, set to open in Q4 2025 and Q3 2026, respectively. “We are taking a balanced and strategic approach to ensure our expansion contributes to overall margin and delivers a good return on invested capital,” said Mathiesen.
Deal activity still well down on 2019 peak
Deal activity is recovering, but the market remains far from its 2019 peak. Hotel transactions in Germany totalled €1.32 billion in 2024, up 10% year-on-year but still less than a quarter of the pre-pandemic high of €5.4 billion, according to Christie & Co. While opportunistic capital—private equity, family offices and owner-operators—has returned in force, institutional investors remain cautious. Capital is available, but the bid-ask spread persists. Average key prices fell to €147,000, down from €207,000 in the boom years.
Still, cross-border activity is picking up. Accor sold 30 Ibis Budget hotels to B&B. IHG acquired Ruby Hotels for €110.5 million. SV Hotel took over six Marriott-branded properties from Vastint. Premier Inn’s turnaround in the German market, now posting occupancies above 70% and average rates of €85.50 per night, is supporting its growth push. Its adoption of online distribution via Booking.com has helped drive higher room utilisation.
Margins remain under pressure. Operators are battling wage inflation, energy and food cost increases, and post-pandemic lease complications. Indexed rents and rising minimum wages have compressed profitability, especially in the three- and four-star segments. “Room revenues have not grown nearly as much as costs,” said Claudia Sunderkamp of Hotour Hotel Consulting. “Some operators are now in their fifth difficult year,” added MRP Hotels partner Martin Schaffer. Deferred rents and underperforming F&B operations continue to weigh heavily, and financing remains a hurdle. “The banking and investment capacity of many is questionable,” said Schaffer.
More flexible risk-sharing business models in strong demand
Lease models are evolving. Fixed leases have lost favour, replaced by variable models linked to revenue or profit. IHIF discussions centred on more flexible risk-sharing structures, including shorter terms and exit clauses. “Now is the time again to take a close look: who is the right partner? Who has creditworthiness?” said Thorsten Faasch, Hilton’s development head for the DACH region.
Yet certain segments are clearly outperforming. Budget-premium brands, serviced apartments, and top-end luxury are leading occupancy and rate recovery. “These hotels are still the first to be fully booked,” said Treugast’s Moritz Dietl. Lifestyle concepts with leaner operations are attracting capital, particularly in secondary cities with rising domestic demand. “It’s not just about Munich or Berlin,” said Gollnest. “The clientele is very broad.”
Lindner Hotels AG, one of the few chains to restructure through self-administration, is on track to exit proceedings by summer. “We are in close and constructive contact with all parties involved,” said general representative Frank Kebekus. The process has stabilised operations at the group’s 12 remaining locations, with a formal insolvency plan to be submitted in Q2.
Looking into 2025, the outlook remains split. Tourism demand is resilient, and operators are pressing ahead with ambitious growth targets. But lease volatility, cost inflation, and financing friction continue to restrict investor confidence. As one IHIF panellist put it: “The capital is there, the intent is clear. But until pricing aligns and deal structures evolve, the market will stay active—just not liquid.”