Regional PRofile
Union investment ’ s
Löcher on German opportunity
According to a recent CBRE hotel investment report for Q2 2016 , German hotel investment saw an increase of 34 % year-over-year , with transaction volumes reaching € 2.02 billion ( US $ 2.2 billion ) in the first half of 2016 . As a result , the German hotel investment market has proven to offer consistency during a time of relative uncertainty in the rest of Europe . HOTELS spoke with Andreas Löcher , head of investment management hotels at Hamburg-based Union Investment Real Estate GmbH , about opportunities in Germany , the hottest German markets and future sentiment .
HOTELS : What is the general industry sentiment right now about the German hotel market ? Andreas Löcher : The German hotel market has been constantly maturing during the last years . It appears in all German submarkets , demand has consistently stayed ahead of high new supply . This is true for both primary and secondary markets .
H : How are the upcoming political elections impacting Germany ' s market ? AL : I would not regard the upcoming elections having a great impact on the German markets . Right-wing parties are too far away to obtain the majority and this would be the only reason for the markets to experience pressure . The future of EU as a whole , though , may have a bigger impact in the mid-term in case borders would be closed again .
H : What areas are the hottest markets right now ? AL : During the last several years , German cities have been experiencing a tremendous increase in RevPAR . Munich , Frankfurt and Hamburg ’ s RevPAR have been soaring due to a strong increase in demand by both business and leisure guests . The only market to experience a sideways trend was Dresden , due to unpopular demonstrations by the so-called right PEGIDA ( Patriotic Europeans Against the Islamisation of the West ), which , however , is currently decreasing .
H : What hotel concepts are gaining the most traction ? AL : The economy segment , which has been well-served in countries like the U . S . and the U . K ., has the greatest growth potential in Germany . Products like the Holiday Inn Express and Hampton by Hilton are particularly appealing to the cost-conscious German traveler .
Lifestyle hotels have been very much in demand in Germany . This is causing the rise of new emerging brands such as Ruby , 25Hours and CitizenM , as well as branded lifestyle hotels such as Indigo or Aloft . A third trend is “ aparthotels .” Adina has Germany clearly on its map for its expansion strategy .
H : Are there any overbuilding issues in these markets ? AL : Not yet , but an investor should have a careful view on the elevated development pipeline . One leading question to ask is : Does the hotel concept match with its micro location ? Hotel forecasts should not miss a clear cyclical downturn . This is even more important in today ' s time .
H : What is the sentiment going into 2017 ? AL : We would not regard a substantial change in the short term ; however , current political uncertainties may have a clear negative impact in the mid-term .
Union Investment purchased Innside by Meliá Aachen Hotel in Germany earlier this year .
32 hotelsmag . com December 2016