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Taking Stock of Hotel Investment & Development in German-Speaking Markets By Maria Puetz-Willems When it comes to German-speak- ing hotel markets, Rupert Simoner, CEO of the Austrian Vienna House hotel group, described it succinctly: “Germany is hot, Austria is lukewarm and Switzerland remains select,” he said. With respect to investment, he is right: This is exactly how the German-speak- ing hotel market fanned out in 2016. Development in the “hot” German market even runs anti-cyclical toward the trends in EMEA and worldwide. One notable trend last year: hotel operators are increasingly becoming part of the transactions. According to JLL, in 2016, global hotel investment volume amounted to approximately $USD 61.7 billion, or about €59 billion. In 2015, it global transactions clocked in at $USD 85 billion. Even with respect to EMEA, the hotel transaction volume went down: from $USD 29 billion in 2015 to $USD 20.88 billion in 2016. Compared to that, the positive development resulted in new records on the German and Austrian market was a sensation. Despite political prophecies of doom, Germany, in particular, is considered a “safe haven” for investment. But trust in Austria and Switzerland remains strong, even though both investors and operators look at these two smaller markets clearly more selec- tively. So far, Germany, Austria and Switzerland —often referred to as the DACH region—have offered international capital a common and reliable safe harbor. “Germany achieved record levels of hotel investment in 2016, in fact, the highest levels of investment achieved to date. From a European perspective, Germany is regarded as one of the top performing markets, a trend that we expect to see for years to come”, Markus Beike, who has been Managing Director Northern and Eastern Europe at CBRE since September of 2015 and was responsible for Germany at Christie & Co before that. “The positive development of KPIs (room rates, occupancy and RevPAR) since 2010—resulting in growing cash flow—is a reason why Germany is on the shopping list of an increas- ing number of national and global hotel investors. Another reason why Germany attracts investments from abroad is that Germany is regarded as “safe heaven” in a world of uncertainty,” said Beike. The one disadvantage: high demand puts pressure on yields. GERMANY 2016 transaction figures confirm all that: The German hotel property market experienced another record year—the seventh in a row. Trans- action volume clearly surpassed the previous year’s results, and there is no end in sight. However, depending on the sta- tistics, the German record amount slightly varies. CBRE real estate consultancy mentions €5.1, which corresponds to an increase in trans- action volume of 15 percent. Colliers International comes up with more or less the same results of €5.2 billion, which is also a 15-percent increase. JLL’s Hotels & Hospitality Group cal- 1 “Germany achieved record levels of hotel investment in 2016, in fact, the highest levels of investment achieved to date.” Markus Beike Managing Director Northern & Eastern Europe CBRE HOSPITALITY INSIDE | IHIFPDF Image | Burgenstock Taking Stock of Hotel Investment
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