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Germany’s hotel sector, long overshadowed by more liquid asset classes, is reasserting itself as a credible destination for institutional capital. Investment volumes climbed sharply in the first half of 2025, with foreign buyers accounting for the overwhelming majority of transactions. While activity remains concentrated in single-asset deals, the momentum is shifting. Strategic platform sales, operator-led expansion, and conversions from other uses are quietly reshaping the market.
According to Cushman & Wakefield, €395 million was transacted in the first quarter—up 55% year-on-year but still 35% below the 10-year average. JLL data suggest total H1 volumes reached €800–900 million, driven by major transactions such as Brookfield’s acquisition of the Generator Hostels portfolio and the €150 million sale of the Mandarin Oriental in Munich. Prime yields held steady between 5.25% and 5.50%, with value-add pricing evident in several repositioning plays.
The weight of capital is now clearly international. JLL reported that foreign investors accounted for 86% of hotel investment volume in the second quarter. “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. Munich and Berlin alone attracted nearly €440 million in the first half, led by landmark deals. According to BNP Paribas Real Estate, these two cities are once again “clear leaders among the most important hotel investment markets.”
The investor interest is not limited to equity. “This confirms the results of two surveys conducted by CBRE among investors and lenders, which had already shown that hotels are becoming more important for both equity and debt capital sources,” noted Helena Rickmers, Head of Hotel Investment at CBRE Germany.
Platform growth, brand conversions and operator push
Operators are increasingly driving transactions. IHG, through its tie-up with Novum Hospitality and its acquisition of Ruby Hotels, is executing a rapid expansion strategy. “We see immense long-term growth potential here, which is why we are committed to investing heavily in the market and expanding our portfolio,” said Karin Sheppard, IHG’s Senior Vice President and Managing Director for Europe. The group opened 14 hotels in Germany in Q1 alone and signed agreements for a further 16. Under the Novum partnership, more than 50 niu-branded hotels are being converted to Holiday Inns, with new brands Garner and Candlewood Suites also entering the German market.
Motel One, now majority-owned by French private equity firm PAI, is pursuing parallel growth. “Together with PAI, we believe that we can use our fantastic position and grow the business to the next level,” said co-CEO Stefan Lenze. “We remain fully committed to our German growth plan as there is still a lot of room for Motel One in our home market, which is becoming increasingly attractive for international travellers.”
Accor, too, is pushing forward. Together with tristar, its white-label partner in the DACH region, the group has launched a dual-branded ibis and ibis budget hotel near Berlin Brandenburg Airport, with several more in the pipeline. “Our ibis brand family is well established in the DACH region with almost 200 properties,” said Thiemo Willms, Vice President Development at Accor. “We are now seeing the success of our brand rejuvenation strategy.”
These operator-led rollouts are filling the vacuum left by stalled development pipelines. With ground-up construction largely off the table, investors and brands are turning to conversions and brownfield sites to grow their footprints at lower risk and higher speed.
Conversions and brownfield redevelopments are back
What’s conspicuously absent is new development. “New hotels are not being developed, or at least very few, with the rising construction costs since the pandemic,” said Christian Buer, Managing Partner at Horwath HTL. This has shifted focus to conversions and brownfield redevelopment. Properties once earmarked for alternative use are being repositioned as hotels. “The brownfield market is on the move, especially for hotels whose construction was completed before the pandemic,” Buer added.
JLL’s Heidi Schmidtke observed that even buildings previously acquired with the aim of converting them away from hospitality are now being returned to hotel use. “While completely new developments are rather the exception, there is a strong market trend towards conversions of existing hotels and properties that were originally used for other purposes,” she said.
The restructuring of AccorInvest into the newly independent Essendi underscores the shift toward active ownership and sustainability-led capex. “The long-term goal is to own the hotel properties,” said Mario von Hoesslin, COO for Central Europe at Essendi. “We are opportunistic. If something fits and we can develop it further, we are open to discussions.” Around 30% of Essendi’s German hotels are owned outright, and the group has committed €200–250 million annually for ESG upgrades, including circular economy renovation and energy-tracking sensors.
Investor sentiment is turning a corner
Tristar, a key Accor partner in the DACH region, now operates five hotels under Accor brands with eight more in the pipeline. Jochen Weishaupt, Managing Director of tristar Germany, described the pipeline as “in line with our approach to sustainable growth,” adding that it supports strategic expansion into “important gateway markets and sought-after leisure destinations.”
For IHG, Germany represents a platform play. “From a development perspective, Germany still has plenty of scope for increased brand penetration,” said Sheppard. “We’ve opened around 80 of these hotels spread right across Germany in cities like Hamburg, Berlin and Frankfurt.” The group is also leveraging the expanded loyalty programme and brand awareness to solidify midscale and extended-stay dominance.
Meanwhile, investor sentiment appears to be turning a corner. “It is only a matter of time before the noticeable increase in investor confidence is reflected in the registered transaction volume,” said Alexander Trobitz of BNP Paribas Real Estate. CBRE’s Rickmers was similarly bullish: “The outlook for the hotel investment market remains positive. The pipeline is well filled, investor sentiment is better than before, and hotel properties themselves offer stable and inflation-proof returns.”
Data from the Federal Statistical Office showed a record 496 million overnight stays in Germany in 2024—above pre-pandemic levels and the second-highest figure in Europe. Business travel remains subdued, but domestic and leisure tourism is filling the gap. As Colliers’ Michael Baumann noted: “Equity-rich players are continuing to take advantage of the market situation to secure attractive properties.”
With fewer distressed sales than expected, experienced operators expanding aggressively, and international capital seeking exposure through platforms, conversions or franchise partnerships, hotels are no longer an afterthought. “The market is gaining momentum,” said Giesemann of JLL. And while the headlines may now echo those of 2019, the structure underneath has shifted: fewer developments, more conversions, deeper operational plays, and capital partners who expect more than just bricks and branding.