Why the value of German hotels is on the rise

Berlin over Tiergarten Park

According to calculations from Union Investment and Bulwiengesa, the market value of investable hotels in Germany increased by 8.3 percent to €51 billion between 2015 and 2016. 

The growth could be credited to the “ever-healthy” rate of construction of new hotels, boosting the number of guestrooms by around 0.7 percent across the country. 

At the same time, the performance of German hotels also improved in 2016 in the form of higher occupancy and ADR.    

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The two companies identified a portfolio of around 376,600 hotel rooms spread across small, medium and large cities in Germany as an investable supply. In 2016, the average value was calculated to be around €135,600 per room (€130,500 in the previous year). 
Hotel transactions in Germany hit a record high last year, and the roughly €5.2 billion spent now corresponds to approximately 10.2 percent of the calculated total market, compared to 9.3 percent in the previous year. “The volume of transactions is growing even faster than the market,“ Martin Schaller, head of hospitality asset management at Union Investment Real Estate, told Property Magazine International. “This indicates that the hotel asset class is becoming increasingly popular amongst investors.“

According to the calculations, the market value of hotels operated increasingly by hotel chains grew in second-tier German towns and cities in particular. “In terms of growth dynamics and value development, some B-rated cities could be the A-rated cities of tomorrow,“ Dierk Freitag, divisional manager and Partner at Bulwiengesa, said. 

Want to learn more about Germany's hotel scene? The International Hotel Investment Forum will be held March 5-7, 2018 at the InterContinental Berlin. For more information and to register, visit www.ihif.com.