German hotel market at record level

The market value of investment-relevant hotels in Germany rose by 8.3 percent between 2015 and 2016 to 51 billion euros, Union Investment and bulwiengesa report.

The decisive factor was the continued brisk construction activity of new hotels (including garni hotels), which on balance led to bed growth in Germany of 0.7 percent. At the same time, German hotels had better occupancy rates last year and were able to charge higher room rates on average, which was reflected in higher property values. As Dierk Freitag, divisional director and partner at bulwiengesa, says, the accommodation sector in Germany recorded growth for the seventh year in a row in 2016, from both domestic and international tourists.

According to the survey, a room stock of 376,600 hotel rooms spread across small, medium and large German cities is fundamentally suitable for investment. The average value determined in 2016 was around 135,600 euros per room (CHF 149,400). In the previous year, the figure was 130,500 euros (CHF 143,800).

Market values rise above all in B-cities

According to the calculations, the market value of hotels in German B-cities in particular rose. These are increasingly operated by hotel chains and thus fit into the investment universe of numerous investors.

Last year, hotels and hotel project developments worth 5.2 billion euros (CHF 5.7 billion) were traded in Germany, or about 10.2 percent of the calculated market volume (previous year 9.3%) - a new record. "The transaction volume is growing even faster than the market. This shows that the hotel asset class is becoming increasingly popular with investors," says Martin Schaller, Head of Asset Management Hospitality at Union Investment Real Estate GmbH.

The survey by Union Investment and bulwiengesa is based on data from companies and hotel associations as well as public statistics.