HOTEL REAL ESTATE MARKET IN GERMANY.
The general increase in flexibility in the working world has also led to a change in holiday behaviour. In the past, summer and winter holidays were mainly used for holiday trips, but nowadays it is short holidays that are spread out over the year. This is not only good for the tourism industry, which can look forward to a better utilisation of capacity that goes beyond the seasons. It's just as good for the hotel property market. The special real estate hotel is becoming increasingly attractive for investors and investors.
OVERNIGHT STAYS AT THE 500 MILLION BORDER
According to the statistical figures, German cities have recorded a high increase in overnight stays over the last 10 years. In 2016 alone, 447.3 million overnight stays were reported by the various accommodation establishments. On average, the number of overnight stays in Germany rose by 2.73 % per year between 2006 and 2016.
This continuous increase is due to several factors. The Federal Republic of Germany has been a very safe and clean country to travel in since its inception. This makes them equally popular with holidaymakers and business travellers. In addition, the German cities offer their guests very attractive events. Congresses, trade fairs, exhibitions and numerous events of all kinds. The world's largest trade fair grounds are located in Hanover. Frankfurt, Cologne and Düsseldorf are also among the 7 largest providers of trade fair venues worldwide.
STAYING IN OWN COUNTRY
At around 24 % (as of 2015), the proportion of foreign hotel guests in Germany is in the lower mid-range compared to other European countries. France, England and Spain are the front-runners, with up to 75% of their guests coming from abroad, including a not inconsiderable proportion from Germany.
However, the proportion of foreign hotel guests in German overnight accommodation facilities varies widely by location. Interestingly, Hamburg, which is referred to as the gateway to the world, has fewer foreign hotel guests such as Berlin, Frankfurt or Munich. However, the proportion of foreign guests is on the whole increasing, albeit only slowly. The number of guests from China, the Middle Kingdom, in particular, is showing enormous growth rates. This trend will continue, thanks to easier visa requirements and a positive effect: Chinese travellers traditionally spend a lot of money on their travels. The tourists and business travellers from China ranked 8th with regard to their number of 1,393,254 overnight stays in 2015 among all foreign guests in German accommodation establishments. The rate of increase as of 2014 was 34.7 %. This was only outdone by the Chinese guests from Taiwan, who also made almost 40 % more.
LEISURE IS REFINED NEWLY DEFINED
Short breaks are becoming more and more trendy. The average duration of a hotel stay in Germany is only 2.6 days. In recent years, there has been a marked change in the general leisure and holiday behaviour. Of course, the large annual holiday is still very popular, but there are also more and more short breaks.
In particular, this will benefit providers of city trips and, of course, the hotels in question. Urban tourism is now regarded as the growth driver within German tourism. In almost all major cities in the Federal Republic of Germany, the number of overnight stays for tourists is increasing.
WHAT IS THE SITUATION CONDUCTING IN THE HOTEL MARKET?
The Federal Republic of Germany has 46,630 accommodation establishments with more than 540,000 employees (as of 2014). Approximately 60% of all hotels are in the 3-star category. After all, around 30% of the companies have 4 stars. A certain proportion of hotels deliberately refrains from staggering, not for fear of poor rating, but because this type of classification is regarded as obsolete and sometimes does not correspond to reality.
Room prices are still considered to be an index of market development. These can vary considerably within Europe. For example, Moscow's hoteliers had to accept a sharp drop in prices in 2015. In the same year, however, they rose sharply in major German cities. Compared to other European cities such as Amsterdam, Milan or Stockholm, however, German room rates are still very moderate.
VERY POPULAR: HOTEL REAL ESTATE
The booming tourism market is also having an impact on the speciality of hotel properties. Long-term low interest rates and the resulting pressure on investors to invest ensure a stronger entry into this business. Hotel properties in attractive locations such as Frankfurt, Munich, Hamburg and Berlin have gained significantly in value as investments.
Internationally, however, German hotel properties are still valued very low. Munich is worth about 290,000 euros for the hotel room, while Paris, the number one in the ranking, has more than 700,000 euros per room. In a rising market, Germany therefore still offers a lot of room for growth in a timely entry into investment. Especially since German hotel properties in particular pose low risks.
EXPECTING NEW RECORDS?
As early as 2015, a record EUR 4.47 billion in billings was achieved in the specialty segment of hotel properties. The year 2016 was also a positive one, although the increase compared with the previous year was not quite as big. A total volume of 5.16 billion euros. In the last five years, the transaction volume of German hotel properties has increased by almost 500 %. If that's not a good sign of an investment in hotel property, what then?
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