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Taking Stock of Hotel Investment & Development in German-Speaking Markets PROFOUND BELIEF IN SWITZERLAND Steigenberger Hotel Group, which changed its name to Deut- sche Hospitality last year, operates two hotels in Switzerland (Davos, Zurich) and three in Austria (Vienna, Krems, Linz). CEO Puneet Chhatwal is struck by the region’s consistency. “Basically, Germany, Austria and Switzerland comprise one of the most stable and reliable economic areas in the world,” he said. “As a home location and core market, this area offers a reliable frame- work to be able to expand from here to other regions.” In the neighboring countries, conditions have become more stable for real estate projects; therefore, it has been a very attractive environment for hotel projects since 2014. “Supply and demand are in a healthy ratio; the market is growing without over- heating,” said Chhatwal. “This will remain the same in 2017.” And while it is true that Switzerland’s hospitality industry went through a difficult period due to the revaluation of the Swiss franc, the country still offers stable conditions. Vienna House’s Simoner offers a similar positive opinion of Switzerland—though one that is more subdued. He’d know: From 1995 to 2014, he worked for Kempinski and managed the Kem- pinski Grand Hotel des Bains, in St. Moritz. “The Swiss market is assessable, will remain expensive and therefore offers no great rates of return at the moment,” he said. “But Switzerland is also one of the most innovative countries in the world and therefore attracts money, as well as human resources, and, in this way, creates investment opportunities repeatedly.” Though the bulk of Moevenpick Hotels & Resorts’ properties are in the Middle East, it has 13 hotels throughout Germany and Switzerland. “[The region] has an elementary significance for Moevenpick’s future,” said Olivier Chavy, the chain’s CEO since September 2016. The company has two hotels planned to open in 2019, in the region, in Basel and a second property in Stuttgart near the airport. Chavy believes that the region is a guarantor for long-term sta- bility, even if “the high real estate prices are very challenging at the moment, especially concerning negotiations about long-term lease agreements,” he said. “In addition, the increasing competition through medium-sized operators is straining the lease price. This becomes obvious in strategically important markets, such as Geneva, Munich and Vienna.” STRUCTURAL CHANGE FROM RESORT TO BUSI- NESS DESTINATION Despite goodwill on all sides, Switzerland is currently undergoing a massive structural change. “The country is losing its small-structured resort hotel industry,” said Michael Lidl, Managing Partner at Munich-based Treugast Solutions. “Now, all new projects are concentrated in the cities.” These statements do not include mega projects, such as Buergenstock Resort, an investment of the Sover- eign Wealth Fund of Qatar and set to open in 2017. “The Swiss hotel market cannot be analyzed on the basis of the total market figures but the distinction has to be made between national demand (increasing) and interna- tional demand (decreasing),” said Lidl. “Despite a stable occupancy rate in the Swiss market as a whole, RevPAR is decreasing. The main reason is the unfavorable devel- opment of the exchange rate in the last few years, which leads to lower realizable rates for the hotels due to the high proportion of foreign demand.” “The Swiss hotel market cannot be analyzed on the basis of the total market figures but ta distinction has to be made between national demand (increasing) and international demand (decreasing), as well as between the city hotel industry (increasing) and mountain regions (decreasing),” said Lidl. “Despite a stable occupancy rate in the Swiss market as a whole, the RevPAR is decreasing. 10 The main reason is the unfavorable development of the exchange rate in the last few years, which leads to lower realizable rates for the hotels due to the high proportion of foreign demand.” * % Chg is calculated in comparison with the same time period the previous year. Source: STR Andrea Joerger, Managing Director & Partner at RIMC Hotels & Resorts Switzerland, sees Switzerland as an island in Europe, where demand is concentrated in Zurich, Geneva, Lausanne and Basel, and “the air has become Switzerland Time period: Multiple Currency: Swiss Francs Market Date 2010 2011 2012 2013 2014 2015 2016 Occupancy This Year 64.4 64.3 63.0 65.1 65.3 65.0 65.2 ADR This Year 221.74 221.04 217.82 218.85 222.57 216.43 214.62 RevPar This Year 142.85 142.11 137.12 142.48 145.30 140.64 140.02 Switzerland HOSPITALITY INSIDE | IHIFPDF Image | Burgenstock Taking Stock of Hotel Investment
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