Frankfurt am Main, 29. April.2021
Together with analyst bulwiengesa AG (bulwiengesa) the Germany-wide active real estate developer benchmark. REAL Estate (benchmark.) has evaluated the development activity for hotel properties in the German real estate market. Götz U. Hufenbach, managing partner of benchmark., concludes: „The market for hotel developments in Germany has gone through a challenging period due to the pandemic. However, we see a steady demand for modern concepts like long-stay hotels and serviced apartments in specific areas of the market.” Martin Hantel, managing partner of benchmark., adds: „Due to the uncertainness in the hotel market, the asset class is developing regressively to what it was couple years ago: a market for specialists only. In order to archive long-term success, you need to know the different submarkets, hotel concepts and the operators.”
The nationwide study was performed for the fifth time after 2019 and is based on the analysis of development activity in the hotel segment for new construction sites with a minimum of 40 beds. The main results:
In 2020 over 20.000 hotel rooms were completed – till February 2021 only 680
The number of completed hotel rooms decreased from approximately 21.500 rooms in 2019 to 20.277 rooms in 2020. The number of completed rooms could keep on decreasing in 2021. Only 680 rooms were completed by February, compared to 34.000 rooms originally forecasted in 2021.
The development activity keeps on shifting to the B- and C-cities and touristic regions.
The trend that started in 2019 stays steady: most of the created hotel rooms in 2020 were not build in A-Cities. 66 percent of the market share went to B-, C- or D-cities and holiday locations. The authors predict that the hotel development in Germany’s touristic regions will become more significant and shift more into the focus of developers. This will potentially be a disadvantage to city, exhibition, and airport locations, that were strongly affected by the pandemic. Around ten percent of all hotels, which are expected to be completed by the end of 2022 are in a touristic region. Including all other cities into the equation, in 2022 every fourth planned hotel room will be located outside the big cities.
Midscale-hotel industry and long-stay concepts continue to succeed.
Midscale and upscale hotels accounted for around 83 percent of all new hotel rooms between 2019 and 2020. Rooms in the low budget sector took 15 percent of the market share, while hotel rooms in the luxury sector only took 2 percent of the market share concerning all newly completed hotel rooms between 2019 and 2020. Long-stay concepts, like the Hyatt House in Frankfurt created by benchmark., are popular with developers. 15,8 percent of all completed hotel rooms in 2020 were long-stay rooms.
Operators are focusing more on rebranding than rebuilding.
Takeovers and market shakeouts are the preferred instrument of financially sound operators to pursue their growth strategy. The B&B group for example just took over the Leto- hotel group and Whitebread took over a couple Hotels of Centro.
Bulwiengesa and benchmark. expect a decreasing development volume. Projects are planned in a cautious manner and some have already been cancelled. A main cause is the bank’s cautious sourcing. However, the authors do see potential in the part markets for worthwhile investments: „Sustainable projects can be realized in the areas of serviced apartments, long-stay concepts and holiday hotels“, says Andrea Back-Ihrig, managing partner of bulwiengesa AG. „We are also expecting an increasing crowding out. New developments are usually crowding out old hotels with investment backlog. Especially private hotel operators will not survive the economic damage due to the pandemic. This will form a gap, which can be closed by the expansion of developers together with hotel operators. “