Webinar hosted by HVS and Bird & Bird suggests, not
surprisingly, that conversions are driving the development pipeline.
GERMANY – The German hotel investment market is proving
robust compared to the rest of Europe, according to participants in a February
webinar hosted by HVS Europe and Bird & Bird. Transaction volume has
increased significantly (over +50% year-on-year) and the outlook for 2026 is
cautiously positive.
Hotels are not bought for the moment, but for the long term. For us, the micro-location of hotels is the decisive factor.
Andreas Löcher
Union Investment Real Estate
Panelists said Germany remains a European core market for
investors, even though Mediterranean markets are currently showing stronger
growth. However, investments are increasingly selective and driven by
micro-locations – quality, location, and operator creditworthiness are key
decision factors.
Data presented at the event revealed occupancy in Germany
stands at around 68% with slight growth but remains below the European average.
ADR and RevPAR declined in 2025 in all but a few cities – mainly due to the
absence of major events (EURO 2024, Olympic Games). Munich stands out
positively due to trade fairs and events. Germany remains a trade fair country:
group and exhibition business is a key performance driver.
The luxury segment continues to show relative strength,
while midscale and economy segments are under greater cost pressure. Leisure-driven
markets in Europe are developing more dynamically than traditional business
destinations. Berlin, Hamburg, Cologne and Munich are the only cities reaching
the European average occupancy level.
Especially in metropolitan areas, we are seeing yields that are clearly higher than those we see, for example, in Southern Europe – and this creates selective opportunities.
Patrik Hug
Invesco Real Estate
Operator insolvencies are leading to more thorough reviews
and negotiations of lease agreements (e.g. variable lease components, landlord
participation rights, and economic assessments of operators beyond the
individual property company) – more caution than crisis.
Hotel lease agreements remain the standard in Germany; hotel
management agreements are expected to remain exceptions (among other reasons
due to BaFin regulation and limited market acceptance in Germany overall).
On the development side, there is a clear trend away from
new construction in Germany towards conversions (office and retail to hotel),
particularly in prime locations and city centers.
Reasons include high construction costs, limited
availability of land, and restricted alternative use options for owners
(especially office and retail properties). The deal pipeline remains intact,
although transactions and developments are experiencing time delays.
High personnel costs remain one of the biggest burdens for
operators. Inflation and energy prices have recently stabilized; interest rates
remain at a relatively high but stable level.
We do not want to take on development risk. We see that old hotel concepts no longer work and need to be repositioned.
Matthias Niemeyer
Andina Hotels Europe
Financing is available, but subject to more intensive
scrutiny, with a focus on sustainable business cases and an assessment of the
operator’s overall performance beyond the individual operating entity.
Lastly, AI is increasingly gaining importance as an
efficiency and productivity driver, particularly for larger operators.
ESG requirements continue to tighten and are influencing
investment and development decisions.
Slower supply growth is having a stabilizing effect on
occupancy and room rates in the medium term.