Germany's third-largest hotel market set to grow

Le Meridien Munich, Germany. Photo credit: Marriott ( Le Meridien Munich, Germany)

Munich’s hotel inventory is expected to grow by 39 new properties and 7,397 rooms by 2020—a 15.4-percent increase to the market’s existing supply—according to STR’s AM:PM database.

The city’s hotel-room inventory has increased 11.3 percent since the end of 2015. Currently, the Munich market has 463 hotels and 47,880 rooms, making it the third-largest hotel market in Germany. Berlin and Frankfurt rank first and second with 73,211 rooms and 48,507 rooms, respectively. 

Christian Strieder, STR’s country manager for Germany, Austria and Switzerland, said Munich’s performance has shifted in recent years amid significant supply growth. 

Occupancy declined in both 2016 (-3.4 percent) and 2017 (-0.4 percent), and was down 0.6 percent through the first 10 months of 2018. However, while average daily rate (ADR) fell 4 percent in 2017, the metric was up 4 percent for the October 2018 year-to-date time period. Demand (room nights sold) was up 4.2 percent as well. 

“Event and conference business tends to play a key role in Munich’s hotel business,” said Strieder in a statement. “We often see a fluctuation in hotel demand from events, while regular corporate demand usually remains steady. Markets that rely heavily on event business can experience sharp seasonal fluctuations in year-over-year performance levels. Large conferences will shift locations and those that remain in the same city are usually not held annually. As Munich’s hotel inventory expands, and the market continues to accommodate large events, it may take time for performance to stabilize during non-peak periods.”