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The German hotel investment market in 2024 saw a year of stabilisation, marked by steady transaction volumes, increased deal activity, and a renewed focus on core and opportunistic assets. Insights from the leading broker groups highlight a market in recovery, buoyed by improved transaction processes and rising investor confidence despite persistent macroeconomic pressures.
The total transaction volume for hotel investments in Germany reached €1.5 billion in 2024, in line with the previous year, according to CBRE. BNP Paribas Real Estate reported a slightly lower figure of €1.4 billion, reflecting a 5% increase year-on-year. While these figures remain significantly below the 10-year average of €3.2 billion, the market saw a notable increase in deal activity, with 85 transactions registered—a 43% rise compared to 2023.
Helena Rickmers, Head of Hotel Investment at CBRE Germany, emphasised the normalisation of market processes: “We observed a significant increase in activity in the hotel investment market in 2024. Structured sales processes have returned, with appropriate competition among bidders and transactions closing within normal timeframes.” Notable deals included the sale of Hotel de Rome in Berlin to Gruppo Statuto for over €140 million and transactions involving Roomers Munich and Méridien Stuttgart, valued between €50 and €100 million each.
Value-added, opportunistic and conversions to the fore
Investor strategies displayed a polarised focus on both value-add/opportunistic assets and core properties. CBRE noted that 57% of the transaction volume in 2024 was allocated to value-add and opportunistic investments, a significant increase from 24% in 2023. Core assets also gained traction, accounting for 22% of the market, up eight percentage points year-on-year. By contrast, core-plus assets saw a decline, with their share dropping by 40 percentage points to 21%.
Michael R. Baumann, Head of Capital Markets Germany at Colliers, highlighted the growing appeal of conversions: “Office-to-hotel conversions are gaining traction, addressing regional office vacancies and meeting demand for budget design hotels and collection brands.”
Berlin emerged as a standout performer, contributing 27% (€380 million) to the national hotel investment volume. The city’s dominance was underpinned by the sale of high-profile assets like Hotel de Rome. Other top seven cities, including Munich and Frankfurt, collectively accounted for 56% of the total volume, reflecting a historical trend of strong performance in Germany’s primary markets. Meanwhile, B-cities such as Dresden saw increased activity, with six properties changing hands for a combined total of under €100 million. In Dresden, transactions included mid-sized hotels catering to leisure tourism, underscoring growing investor interest in secondary locations.
Smaller deals dominated the landscape, with an average transaction size of €16 million—the lowest on record. Transactions under €10 million totaled €200 million, surpassing the long-term average. In secondary cities like Leipzig and Nuremberg, boutique hotels and family-operated properties attracted a mix of private and institutional investors, adding further depth to the market.
Prime yields for hotel investments held steady at 5.25% throughout 2024, reflecting investor confidence in the sector’s fundamentals. This stability occurred alongside a backdrop of higher interest rates, with 10-year German government bonds yielding 2.43% at year-end, up 0.24 percentage points from the start of the year. Dr Jan Linsin, Head of Research at CBRE Germany, noted, “In the current interest rate environment, real estate investments are becoming increasingly attractive again, particularly for conservative plans.”
Record-breaking tourism figures
The hotel sector’s recovery was supported by record-breaking tourism figures. According to the Federal Statistical Office, overnight stays in Germany reached 465.3 million by November 2024, surpassing pre-pandemic levels. Domestic tourism grew by 4.9%, while international visitors recorded a 4.2% increase. Alexander Trobitz of BNP Paribas Real Estate attributed the momentum to a combination of strong private travel demand and the gradual return of business travel.
Market sentiment points to further recovery in 2025, with transaction volumes expected to surpass €1.8 billion, driven by improving financing conditions and strong operational performance in the hotel sector. Colliers’ Sebastian Hoffmann predicts greater investor competition for core properties, which could result in slight yield compression in the latter half of the year.
CBRE's Rickmers adds, “The processes for some larger deals are already at an advanced stage, suggesting that the year will feature a higher number of transactions and possibly a significant recovery in the market.” However, pricing in the value-add and opportunistic segments remains challenging, as investors weigh hotel use against conversion potential for alternative uses such as residential.
On balance, the German hotel investment market in 2024 demonstrated resilience and adaptability, overcoming difficulties in a competitive and changing environment. With stabilised transaction processes, strong tourism performance, and a diversified risk-return spectrum, the sector should be well-positioned for further growth in 2025. Institutional investors focusing on high-quality core assets, regional opportunities in B- and C-cities, and innovative repositioning strategies will be best placed to capitalise on the sector’s recovery.
