German hotel sector survey shows operators’ confidence in the future – despite pandemic

Despite the coronavirus pandemic, the German hotel sector is still expanding. This positive business climate was revealed in a survey carried out during the months of May and June by the international property consultancy firm Cushman & Wakefield.

Despite the coronavirus pandemic, the German hotel sector is still expanding. This positive business climate was revealed in a survey carried out in May and June by the international real estate consultancy Cushman & Wakefield (C&W). For Operator Beat, C&W asked more than 30 professional operators active in Germany about their appetite for the top 20 hotel markets – and invited them to share their insights.
Of those contacted for the survey, almost 95% expected the German hotel market to return to its 2019 record high by 2022 or 2023 at the latest; however, none of the respondents expected a full recovery next year. The focus on expansion remains unbroken, with 85% of operators saying that all or most of their expansions are proceeding as planned; the fact that 84% are expanding and bidding for new leases highlights the sustained level of activity in the sector.

Berlin, Hamburg and Munich considered the most attractive; Cologne on an uptrend
As expected, operators have identified Berlin, Hamburg and Munich as their priority expansion targets – a category in which Germany’s three largest cities have now been joined by Cologne. With its relatively small development pipeline and balanced demand, the largest city in the Rhineland famous for its cathedral is seen as a promising prospect in the sector.

Second-tier locations potentially more lucrative than main cities
Despite the focus on Germany’s main cities, the potential of second-tier locations such as Stuttgart, Nuremberg and Heidelberg by no means goes unnoticed, with survey respondents reporting more interest in them than in Frankfurt. and Dusseldorf. Both cities are made less attractive due to a strong development pipeline and a pronounced reliance on trade fairs and business travel. Other second-tier cities identified in the survey were the university cities of Bonn and Münster, both of which compensate for relatively low numbers of overnight stays with strong growth potential.
“Overall, we expect second-tier locations with strong domestic demand to recover faster than cities heavily reliant on trade fairs and bookings outside of Europe,” says Christian KirchoffAssociate Director, Head of Hospitality Advisory Germany & Austria at Cushman & Wakefield.

“What the results of this survey show”, confirms Stefan GiesemannPartner, Head of Hospitality Germany & Austria at Cushman & Wakefield “is the high level of confidence in the German hospitality industry as a whole and the strong potential of the European market. We expect Germany’s status as a that “safe haven” for investors becomes increasingly cemented and that as performative metrics recover, investment activity in the hospitality sector will begin to expand again.”

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global real estate services company that delivers exceptional value by putting ideas into action for occupiers and owners of real estate. Cushman & Wakefield is one of the largest real estate services companies with 48,000 employees in approximately 400 offices and 70 countries. In 2017, the company had revenue of $6.9 billion in core services of property, facilities and project management, leasing, capital markets, assessment and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.

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Peter M. Doran