The hotel real estate market in Germany and Austria remains stable despite the complex macroeconomic environment. Correspondingly, robust cash flows as well as the quality of operators and sponsors, supplemented by professional asset management, are gaining considerable importance for investment and financing decisions. This assessment is based on the findings of the current mrp hotels quarterly.
During a webinar, Martin Schaffer, Managing Partner at mrp hotels, Matthias Reith, Senior Economist at Raiffeisen Research, Norman Schaaf, Chief Development Officer at CELLS, Peter Anthuber, Board Member and Chief Investment Officer at CAERUS Debt Investments, and Hannah Struck, Senior Asset Manager & Consultant at mrp hotels, discussed current developments. The impact on the development, financing, and operation of hotel properties was examined in detail.
According to Matthias Reith, geopolitical developments and their impact on energy prices continue to shape the economic framework. These factors significantly influence inflation trends and the monetary policy decisions of the European Central Bank. Reith highlights ongoing uncertainty as a crucial factor, while predicting a moderate economic recovery for the second half of the year. Despite rising energy prices and subdued consumer sentiment, tourism is attested to continue a comparatively robust development.
Operational development in the hotel sector was positive in the first half of the current financial year. In Germany, the number of overnight stays from January to May increased by 1.4 percent compared to the previous year, and by 2.4 percent in Austria. Both markets recorded strong growth in May. In Austria, Vienna and Carinthia, as well as a resurgent international demand, particularly from the USA, contributed to these positive impulses. Germany showed regional heterogeneity: while North Rhine-Westphalia and the trade fair locations of Düsseldorf and Cologne recorded significant gains, Berlin and Munich lagged behind the previous year's figures.
According to Martin Schaffer, the transaction and leasing market is becoming increasingly heterogeneous. Deals are possible, but require a convincing combination of location, qualified operator, solid sponsor quality, viable business plan, and secured financing. The consequences of the Revo insolvency continue to affect the market, leading to an increase in operator changes and renegotiations of existing lease agreements. Schaffer points out that contract controlling, the formation of FF&E reserves, and active asset management have often not been consistently implemented. Property owners are therefore urged to take a more stringent approach to their asset management duties.
Norman Schaaf notes a significant change in the framework conditions for project developments. New hotels are primarily created through the revitalisation of existing properties or their repositioning in the context of mixed-use districts. Particularly in inner-city locations, there is now an increased focus on examining whether existing office or retail properties are suitable for hotel use or mixed-use concepts. Hotels can usefully complement various uses and support the financing of district developments. The micro-location is a decisive criterion for the attractiveness of projects; prime locations continue to perform well, while less attractive sites are more challenging to implement.
Financing for hotel properties remains feasible, but is subject to a more differentiated review by banks and alternative financiers. In addition to location and operator quality, the financing structure and the plausibility of business plans are gaining importance. Peter Anthuber observes an increasing complementarity between classic bank financing and private debt solutions. Banks are primarily active in established existing properties with long-term operator contracts, while alternative financing methods are used for more complex project developments, revitalisations, or higher financing ratios. Capital is generally available, both from banks and debt funds. A convincing combination of location, operator, business plan, and financing structure is crucial. Attractive financing opportunities exist particularly for refurbishments and existing property transformations. Classic new hotel constructions without an operator contract or a robust pre-lease, however, remain a challenge.
