REGIONAL REPORT
costs , which has made cost calculations and planning difficult . General contractors behave as in a monopolistic market , resulting in rising prices for the developers , according to CBRE ’ s Jung . Hoteliers are also cognizant of this concern .
“ Today , key challenges are real estate-related — mainly high cost of land and increasing construction costs ,” says Radisson Hotel Group ’ s chief development officer EMEA , Elie Younes . “ It is becoming expensive to either buy or build hotels in Germany . Some markets have a lot of new supply being constructed – this will likely cause a short-term dip in trading , but which will eventually be offset by increased demand .”
According to STR , after nine years of steady growth , RevPAR weakened slightly from January to October 2019 , with a year-on-year increase of only 0.7 %. Despite this , project developers continue to fill their portfolios .
“ Due to the high building and equipment quality of new buildings and the long lease terms of generally 20 years or more , forward deals are highly attractive for ( German institutional ) investors ,” Jung says . From January to September 2019 , project developments accounted for more than one-third of hotel transaction volume . “ A similarly high level is
Germany ’ s
PIPELINE
Q3 2019 ( projects / rooms )
BY PROJECT STAGE , YEAR-OVER-YEAR
Q3 2019 Q3 2018 % change
Projects Rooms Projects Rooms Projects Rooms Under construction 162 30,430 145 27,094 12 % 12 % Starts next 12 months 110 19,438 75 14,793 47 % 31 % Early planning 42 7,617 45 7,753 -7 % -2 % Total pipeline 314 57,485 265 49,640 18 % 16 %
BY CHAIN SCALE , WITH UNBRANDED TOTALS Projects
Luxury 3 519
Rooms
Upper upscale 13 3,248 Upscale 82 15,966 Upper midscale 95 16,967 Midscale 40 6,882 Economy 35 6,047 Unbranded 46 7,856 Total 314 57,485
BY TOP FRANCHISE COMPANIES Projects
Rooms Accor 32 5,019 Best Western 12 1,422 Deutsche Hospitality 14 2,812 Hilton 12 2,166 IHG 42 7,312 Marriott International 36 6,929 Novum Group Hotels 35 7,221 Total 183 32,881 expected for 2020 ,” she adds .
Hotel experts are mostly discounting the effect of a potential recession on the market . “ Currently , there are no obvious signs of a slowdown , or even a recession , in the hotel market , neither in demand nor supply ,” Drees & Sommer ’ s Rohwedder says . “ Hotel developers and operators are continuing their proactive and ambitious expansion strategies .”
There is no “ tangible indicator ” for a recession in the coming year , Younes agrees , although he admits there is such talk in the market . “ Neither us , nor anyone that we know in the industry , has factored this into their projections for 2020 ,” he says . “ Of course , if an economic recession was to take place ( and it might
Source : Lodging Econometrics
34 hotelsmag . com March 2020