Hotel Market Spotlight: Germany

The German hotel industry continues to grow 

The past decade has seen continuous growth both in terms of demand and supply in the German hotel industry. In 2018, overnight stays reached over 477 million, an increase of 4% from the previous year.^[1] Moreover, almost 88 million of those overnight stays had been booked by foreign visitors, a 5% increase compared to 2017.^[2] According to the German Hotel and Restaurant Association, DEHOGA, this trend only seems to continue in 2019, with nominal revenue having improved by 3% in the first quarter of 2019 compared to the respective time period last year.^[3]

Tourism and investment figures compared to other European markets

Germany boasts the largest domestic tourism sector compared to any other European countries, namely 82% of overall tourism compared to an average of 46 % in other countries.^[4] With 56.2 million trips in 2017, Germany is the third most popular destination for Europeans, behind Spain and France.^[5] Berlin comes after London and Paris as the city with the most overnight stays in Europe (31.2 M).^[6] Furthermore, Germany (54%) is the third most attractive market for hotel real estate investments behind Spain (55%) and Italy (42%) according to the International Hotel Investment Forum (IHIF) survey 2019.^[7]

Main destination markets 

Clearly, most overnight stays are being recorded in Germany’s ‘Big 5’ - Berlin, Munich, Hamburg, Frankfurt and Cologne. While Munich is the most expensive hotel market in Germany (with an average room rate of EUR 112), it has also seen the largest increase in overnight stays by over 9% (17.1 million in total in 2018).^[8] Therefore, the trend towards urban tourism continues in Germany. However, there has also been an increase in overnight stays in regions such as the Baltic Sea and Allgäu.

Investment in the German hotel market 

In 2018, 67% of investments were targeted towards the top 7 cities in Germany.^[9] The transaction volume is still going strong with around EUR 4 billion in 2018, matching the strong results of 2017.^[10] Out of this sum, single-asset deals pulled in EUR 3.4 billion, showing that several high-volume single transactions characterized the past year and are a result of limited supply. In 2018, Berlin took the top spot in terms of transaction volume (540 million), followed by Frankfurt and Munich. The development pipeline in Berlin is well filled and investors are rating Berlin very positively. Germany is the leading European country in terms of the construction pipeline with 283 hotels and 52,569 rooms.^[11] In fact, according to the TOPHOTELPROJECTS database, among the 10 cities in Europe that have the most active hotel project pipelines, four of them are in Germany (Munich, Hamburg, Berlin and Frankfurt), which makes Germany the most active overall country.^[12]

Thus, the German hotel real estate market continues to grow and the additional supply from completed project developments has so far been absorbed by rising demand. It is to be expected that investments in locations other than the top 7 cities will continue in the near future and due to good general economic conditions, 2019 should match 2018’s strong results.

Your Hotels & Leisure team in Germany 

Our German lawyers provide advice and solutions on a broad range of areas within the hospitality industry, supporting clients during all stages of the lifecycle of hotel properties. We have a deep understanding of the hotel market, and have expertise in the most current and relevant legal issues and industry trends.

Our lawyers are experts in real estate, technology, intellectual property, brand management, financing, employment, multi-channel licensing and franchising, advertising, marketing, data protection, trade secrets, and together offer a joined up, straightforward and knowledgeable service.

As a law firm with a special focus and a top tier reputation in technology and industries that are being affected by disruptive technologies, we are well aware of emerging technologies, upcoming business models and new regulations that have an impact on the business activities of our clients. The legal requirements regarding the collection and handling of customer data (particularly in light of the GDPR), advertising and distributing on social media and new digital platforms or the entry of new market players are just a few examples of areas of our expertise.

We provide advice on possible legal structures regarding the ownership and operation of hotels, covering all the typical aspects such as acquisition and disposal of the property, operating leases, management agreements, franchise agreements, construction, real estate finance, ownership structuring, insolvency and restructuring and dispute resolution.

A few examples of hotel-related matters we have worked on include:

• Handling all trademark matters (contentious and non-contentious) for a well-known German Hotel chain.
• Advising a project developer on the management and owners agreement for a five star Hotel in Düsseldorf, Germany.
• Assisting Bank Hapoalimon on the financing of several hotel portfolio acquisitions across Germany.
• Advising Mizrahi Bank on the financing of several hotels in Germany.
• Advising DS Bauconcept on the long-term lease agreement and construction agreement for the development of the Campus Futura (including JUFA Hotel) in Hamburg
• Advising a Finnish pension fund on the EUR 100m acquisition in a joint venture structure of a multi- use building complex, including a 4 star hotel in Berlin.
• Advising a German real estate company on the sale of a wellness and spa resort.
• Advising an exclusive distribution agent in relation to a luxury resort island, including advice on all forms of booking channels (tour operators, travel agencies, direct marketing), payment related questions, IT and data protection issues, liability and regular commercial topics, as well as corporate law advice.

Please do get in touch for any further information or queries. 

[1] https://www.destatis.de/DE/PresseService/Presse/Pressemitteilungen/2019/02/PD19_046_45412.html;
jsessionid=9147447B46D7A4C0AE6CA665292627EA.InternetLive2

[2] http://www.germany.travel/media/content/presse/ch_1/PM_DZT_CH_DZT_Bilanz_2018_mit_neuem_Rekordjahr.pdf

[3] https://de.statista.com/statistik/daten/studie/30359/umfrage/klassifizierte-hotels-nach-anzahl-der-hotelsterne/

[4] https://www.immac.de/wp-content/uploads/2019/01/DFV_Studie_Hotels_20190108_low.pdf

[5] https://www.germany.travel/media/pdf/ueber_uns_2/2018_11/DZT_ZahlenFlyer_April_2018_EN_RZ02_Web.pdf

[6] http://www.dehoga-bundesverband.de/fileadmin/Startseite/06_Presse/Publikationen/DEHOGA_WK_2018_web.pdf

[7] https://www.hospitalitynet.org/file/152008563.pdf

[8] https://www.colliers.de/wp-content/uploads/2019/05/Hotelmarktbericht_M%C3%BCnchen_2019_Colliers.pdf

[9] https://www.colliers.de/wp-content/uploads/2019/01/2019_Colliers_Research_Marktbericht_Hotel_Investment.pdf

[10] https://www.colliers.de/wp-content/uploads/2019/01/2019_Colliers_Research_Marktbericht_Hotel_Investment.pdf

[11] LE Global Construction Pipeline Trend Report, https://lodgingmagazine.com/global-hotel-construction-hit-a-record-high-at-the-end-of-2018/

[12] https://www.prnewswire.com/news-releases/tophotelprojects-the-top-10-hospitality-cities-in-europe-right-now-661274193.html