The investable hotel market in Germany grew in 2017 by approximately 6 percent to €52.6 billion ($61.3 billion) compared with 2016, according to the latest market value analysis carried out by Union Investment and bulwiengesa. The size of the German hotel market has doubled in the past 10 years as well.
The key factor in this rise is the continued growth of the branded hotel segment in Germany, as well as a general increase in supply. This is reflected in an upturn of 16.6 percent in the number of hotel beds over the past 10 years. The performance of the German hotel chain segment, which is being driven by rising occupancy and higher room rates, also boosted value. RevPAR (revenue per available room) in the German hotel chain segment increased significantly over the period in question, climbing from €49.9 ($58.2) to €66.7 ($77.7). Budget and mid-range hotels saw above-average value growth.
“Overnight stays in Germany, which have risen for eight years in a row, are the main factor behind this development,” said Dierk Freitag, departmental head and partner at bulwiengesa. “Despite competition from Airbnb, the institutional hotel market continues to grow steadily. Alongside the traditional hotel market, newer hotel concepts are also part of this growth story. This includes apartment hotels, which are becoming increasingly investable and therefore also feature in our market value model.”
Union Investment and bulwiengesa identified an investable universe of around 375,200 hotel rooms, which are split across small, medium and large towns and cities in Germany. The average value per room was approximately €140,100 ($163,288) in 2017. In the prior year, the corresponding figure was €135,600 ($158,043).
In 2018, Union Investment and bulwiengesa expect around 5 percent growth in the institutional hotel market, which more or less corresponds to the prior-year level.
“Many existing properties are getting rather long in the tooth, which is driving the development of new hotels across all segments and putting huge pressure on privately run hotels. Real estate for temporary living, such as apartment hotels, is likely to profit disproportionately from the continuing strong growth in 2018,” said Martin Schaller, head of asset management hospitality at Union Investment Real Estate GmbH.
The Union Investment and bulwiengesa market value model is based on data from companies, official statistics and hotel associations. It enables a comparative analysis of the institutional hotel market for the years 2007 to 2017.
