InterContinental Hotels Group

IHG bullish on Germany

7 Oct, 2013 By: David Eisen

InterContinental Hotels Group is seeking to spread its flags across Germany, as the country continues to be deemed a safe investment for the hotel industry. IHG has concluded a multi-development franchise agreement with Bierwirth & Kluth Hotelmanagement GmbH to develop five hotels across Germany. The hotels signed under this agreement will include up to four of IHG’s brands

The first hotel under the agreement, Holiday Inn Hamburg – City Nord, has already been signed. This is IHG’s sixth multiple development agreement (MDA) with a partner in Germany. The hotel brands signed under this agreement will include Hotel Indigo, Crowne Plaza, Holiday Inn and Holiday Inn Express.

Robert Shepherd, CDO for Europe, said: "Germany is a priority market for IHG and we see significant headroom for growth there. MDA agreements are proving to be a success in Germany and we’re really excited to be working with Bierwirth & Kluth Hotel management GmbH for the first time on this latest deal. We remain committed to working with experienced and reputable investor and owner partners for the long-term in order to achieve high-quality, sustainable growth."

The 297-room Holiday Inn Hamburg – City Nord is scheduled to open in the third quarter of 2016. It is the first IHG hotel to serve Hamburg Airport.

Klaus D. Kluth, managing director of Bierwirth & Kluth Hotelmanagement GmbH said: "We are very pleased about the new multi development agreement with IHG. Within this strategic partnership we are planning further hotel projects together throughout Germany over the coming years with a particular focus on new builds. IHG are a very dynamic partner and we are proud to be expanding our total portfolio through their internationally recognised and leading hotel brands."

IHG, which currently has 61 hotels open in Germany with a further 16 in the pipeline, plans to double the number of its hotels in Germany by 2020.

Other hotel companies are looking to expand in Germany. In October, Wyndham Hotel Group signed a deal in association with Grand City Hotels to rebrand 17 hotels with more than 2,300 rooms across Germany and Austria. The expansion takes the total number of Wyndham Hotel Group properties open in Germany to 89.

While London and Paris might command the highest prices for hotel real estate, recent data from CBRE Group suggest that it's Germany where investors feel the most safe.

Bloomberg cites CBRE research that sales of German hotels rose 44 percent in the first quarter as foreign investors sought safe investments in what is reported as Europe's largest economy.

According to the report, about 605 million euros ($788 million) of hotels changed hands, up from 420 million euros a year earlier, CBRE said in a statement.

"Our annual survey of German banks indicates a healthy appetite for hotel investment if their lending criteria and parameters are met," said report co-author Arlett Oehmichen, associate director, HVS London. "Financiers are not giving money away and remain prudent, but for the right transaction a proper amount of debt is available at the right price."

Germany's economy continues to grow and is seen as attractive due to continued record-low interest rates. Prime hotels offer net initial yields of more than 5 percent, Schwaeppe said. A German 10-year government bond yields about 1.3 percent.

Topic : Germany, IHG
External Source : IHG, Hotel Management

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