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The lively Hotels & Hospitality stands at this year’s Expo REAL reflected what the numbers confirm: Germany’s hotel investment market has shifted into a higher gear. Transaction volume reached €1.5 billion in the first three quarters of 2025, up 50% year on year, with Q3 alone contributing €550 million, according to CBRE. What makes this recovery different is that operators are driving deals through long-term platform strategies and systematic brand rollouts rather than opportunistic bargain hunting. Foreign buyers still dominate, accounting for up to 86% of transactions, but they are building durable positions instead of flipping distressed assets.
The operational fundamentals justify the confidence. German hotels recorded 496 million overnight stays in 2024, exceeding pre-pandemic levels and ranking second in Europe. Investment-grade stock rose 3.7% to €64.3 billion, while property values climbed 4.8% to €152,000 per room, topping 2019 levels for the first time. Prime yields remain steady between 4.7% and 5.25%, with some deals breaking through 20 times earnings. “The return of institutional investors shows that confidence in the hotel asset class is continuing to strengthen,” said Stefan Giesemann, Managing Director of JLL Hotels & Hospitality Group.
Serviced apartments and conversions are defining the next wave
The focus of new investment has shifted decisively toward resilient, yield-driven segments. Serviced apartments lead the charge, achieving 81% occupancy at €91 average daily rates and making up nearly 30% of new guest rooms. Martin Schaller, Head of Asset Management Intercontinental at Union Investment, notes that the segment “has positioned itself as a confident winner due to its crisis resilience.” Digital-first operators such as Numa, Stayery and Limehome are expanding rapidly with asset-light models that appeal to both lenders and equity investors.
Lifestyle hotels and mixed-use assets are also gaining traction as investors seek differentiation and multiple revenue streams. Institutional players remain selective, leaving room for family offices and asset managers to step in. Platform building has become the preferred growth route: ActivumSG’s majority stake in Centralis, targeting €500 million in modern hospitality properties, exemplifies this. “With ActivumSG, we can scale Centralis faster and expand our position as a leading investor and developer in the increasingly institutionalised asset class of modern hospitality,” said CEO Dr Fabian Vieregge.
Management contracts are returning after years of lease-dominant structures, allowing investors to share upside from operational gains while retaining transparency. The broader shift is clear: hotels are now seen as active businesses requiring genuine partnerships, not passive rent streams.
Chains are executing genuine expansion programmes. B&B Hotels added 43 properties with 3,800 rooms over twelve months, reaching 227 hotels nationwide. Premier Inn committed £1.1 billion to its German expansion, securing 100 locations with roughly 20,000 rooms. “The German hotel market remains in flux. The budget and economy segment in particular continues to be dynamic,” said Ulrike Schüler, Head of Germany at PKF Hospitality Group.
Much of this growth comes through conversions. With development pipelines down 56% since 2020, refurbishment and repositioning have become the default model. Office-to-hotel projects are accelerating, aided by rising office vacancy and high land costs. Union Investment’s €10 million conversion of former Deutsche Pfandbriefbank offices into 93 B&B rooms shows the economics. ESG-compliant renovations have moved from optional enhancement to a prerequisite for both financing and operations.
The expertise premium
The new interest-rate environment, stabilised around 2.15%, has changed investment economics fundamentally. Access to capital now depends on demonstrated competence. “Expertise of borrowers is crucial. Hotel properties are a highly specialised asset class,” said Florian Kern, Vice President at Aareal Bank. Strong brands and transparent cashflows remain decisive advantages when seeking finance.
The professionalism requirement extends far beyond the balance sheet. Despite healthy transaction volumes, operators face margin pressure from rising costs, softer business demand and a weaker consumer climate. The mrp hotels report Booking the Future highlights the transformation drivers for the next decade: digitalisation and AI, advanced human-resources models that blend technology with genuine hospitality, and ESG responsibility as a baseline, not an option. “Successful operators combine operational excellence with adaptability,” said Catherine Szolar, Vice President of mrp hotels.
Martin Schaffer, Managing Partner at mrp hotels, summarised the new landscape: “Decisions are taking longer, markets are reacting in more differentiated ways, and traditional strategies are increasingly being replaced by new partnerships.”
REFIRE: Germany’s hotel market has entered a new phase defined by operational skill rather than opportunism. Serviced apartments, conversions and brand-led consolidation are reshaping the investable universe. For investors, the message is direct: hotels have evolved from passive real-estate holdings into operating businesses where returns hinge on execution. Domestic institutions remain underweight in a sector offering resilience, inflation protection and stable cashflows, while foreign capital builds enduring platforms. The expertise premium is now decisive — and generic ownership no longer works.