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The German hotel investment market is experiencing a resurgence, driven by notable portfolio sales and ambitious expansion plans from key brands like B&B Hotels and Premier Inn.
Among the most impactful transactions was Accorinvest’s sale of 30 Ibis Budget hotels to BC Partners Real Estate and Hova Hospitality, marking a strategic shift for Accorinvest as it focuses on core assets and debt reduction. The portfolio, leased to B&B Hotels, is pivotal for B&B’s “Road to 400” strategy, which targets around 400 hotels in Germany and Austria by 2030. According to Arno Schwalie, CEO for Central & Northern Europe at B&B Hotels, the transaction is “the largest in the company’s history” in Germany and is a transformative move toward doubling B&B’s footprint in the region.
The market saw nearly €1 billion in hotel investments from January to September 2024, reflecting a 114% increase compared to last year, even though it remained around 50% below the ten-year average. Cushman & Wakefield noted this increase with cautious optimism, pointing out that “international investors were dominant in the third quarter,” which boosted confidence in the sector. Christine Mayer from Cushman & Wakefield highlighted that the recovery was partly fueled by demand for operator-free properties, which are more attractive to international investors looking for flexibility and strategic repositioning options.
This transaction-heavy quarter also included Vivion’s acquisition of the Femina Palais in Berlin, including the historic Ellington Hotel, for €64.5 million. The property, acquired from Signa’s portfolio, is slated for a high-profile renovation to reposition it under a global brand. These high-value deals underscore that well-located, iconic assets continue to draw investor interest, particularly for projects with repositioning potential. In addition, Extendam’s sale of three Mercure hotels to Somnoo Hotels signals that investor interest extends beyond flagship cities, tapping into the demand for hospitality assets in secondary and tertiary cities.
ECB rate cuts helping to improve financing
The momentum has been supported by recent ECB rate cuts, which have improved financing conditions and added liquidity to the market. As Heidi Schmidtke, Managing Director of JLL Hotels & Hospitality Group, observed, “better financing conditions and additional liquidity are helping to propel investment activity,” especially as more assets become available. BNP Paribas Real Estate’s Alexander Trobitz echoed this sentiment, citing a “growing number of registered deals” and anticipating that fourth-quarter activity will remain strong.
Despite this positive trend, experts advise caution. Martin Schaffer of MRP Hotels points out that “core investors face challenges” due to adjusted multipliers, now around 14-17, down from 20-25 previously. Banks remain cautious, and risk tolerance has not yet returned to pre-pandemic levels, making financing for new builds more challenging. Consequently, many investors are focusing on existing properties where risk is lower, creating a supply-demand imbalance in the new-build sector. According to Trobitz, “the slowdown in new construction means that demand for existing assets is likely to remain strong.”
Premier Inn’s asset-heavy expansion approach contrasts with B&B’s asset-light model, with Premier Inn owning close to 60 hotels and aiming for 300 properties in Germany by 2030. This strategy highlights the evolving approaches in the market: while B&B’s lease-heavy model allows for rapid expansion without capital constraints, Premier Inn’s ownership strategy is designed for greater control and long-term value creation in prime locations.
Overall, Germany’s hotel investment market is undergoing a phase of consolidation and selective expansion. High-value deals, portfolio shifts, and strategic asset management are reshaping the sector, as both domestic and international investors seek to capitalize on the rebound in tourism and hospitality demand. The year is likely to close with transaction volumes approaching €1.5 billion, up from €1.3 billion in 2023, signalling growing investor confidence tempered by strategic caution.
