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Hotel Investment – The Quiet Before the Storm

Harald Thomeczek
Editor at Immobilien Zeitung

The German investment market for hotel properties raced from one record to the next over the last few years. Now some first signs of weakness are showing. But this is not so much because of dwindling interest, but mainly because of insufficient supply.

 

Last year about 5.2 billion euros was spent on hotels including project developments. In the first half of 2017 we saw a comparatively low figure of 1.8 billion euros. In the last six months it was mainly the trade with hotel packages that collapsed, while the number of individual transactions went up. Most estate agents see this as a weak result overall, but at the same time they speak of this being just a “breather”.

All agents agree that investment figures will go up again in the next few quarters. CBRE still expect the demand for project developments to rise, to compensate for the shortage of existing properties. JLL also do not see the market cooling down, but rather the opposite, because several new funds were installed recently to invest in hotels among other things.

Ideal Conditions for the German Hotel Market

The question arises whether the supply can keep pace. According to a survey conducted by Union Investment and bulwiengesa hotel properties worth 51 billion euros are basically available for investments by institutional investors in this country. Compared to 2015 this is an increase by 8.3 per cent. bulwiengesa says that it is the lively building activities which resulted in a net increase in the number of hotel beds (including guest houses) by 0.7 per cent that are responsible for this increase and for the fact that the 50 billion euro mark was exceeded for the first time . Apart from that, the better average utilization of hotels and higher average room prices were also felt. This is reflected by higher property values.

The institute speaks of ideal conditions for the German hotel market. In 2016 the German hotel industry showed an increase in the number of tourists for the seventh year in a row, which applies to both national and international tourists. Analysts calculate that it is particularly the market values of hotels in B cities that increased last year. This is mainly because more and more hotels are operated by chains in cities of this category. And this is encouraging an increasing number of investors to look at such locations.

 

The hotel segment is an integral part of EXPO REAL

At EXPO REAL two continuously growing joint stands of the international hotel business have established themselves: the “World of Hospitality” and “The hotel lounge, organised by PKF hotelexperts”. This year about 50 companies will be there.

For more information on this go to the website.

The “Hospitality Industry Dialogue” in the conference program also provides profound insights into the hotel property market.

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