[German Hotel Market 2015] Overnights reached record level Germany’s overnights statistics reached a new record for the sixth time in succession, peaking at 436.4 m – a rise of approx. 3 % year-on-year. Although demand continues to be driven by domestic visitors at over 356.7 m overnights, overnights by international visitors rose 5 % compared to 2014. Particularly high growth rates in 2015 were returned by the source markets of Spain, China, Switzerland, the UK and the USA.

The six primary destinations of Berlin, Munich, Hamburg, Frankfurt, Dusseldorf and Cologne saw a total of around 76 m overnights, an overall increase of 5.1 % year-on-year.

The set of primarily branded hotels in the three- to five-star category sampled by BDO LLP UK increased their revenue per available room (RevPAR) by approx. 3.5 % in 2015 to 69.27 EUR. The increase was attributed to a year-on-year rise in average net room rate of approx. 3.6 %. Room occupancy fell slightly by 0.1 % to 71 %.

Photos bottom-up: Meliá Hotel Dusseldorf, Mandarin Oriental Munich, Rocco Forte Hotel de Rome Berlin, Radisson Blu Hotel Cologne

In 2015, the hotel investment market showed a transaction volume of approx. 4.5 bn EUR, also achieving a record year (up 44 % year-on-year). Four-star hotels were particularly popular with investors.

Positive RevPAR trend in 2015 RevPAR continued to show positive development throughout the year, achieving growth rates of over 5 % in the first, second and fourth quarters. While RevPAR growth for the third quarter was only 2.1 %, the period showed the highest RevPAR, at 72.20 EUR. Total RevPAR Germ any 1) Change EUR

1st Quarter

2nd Quarter

3rd Quarter

4th Quarter

Total

75

% 6.0

70 4.0

65 60

2.0

55 50

0.0

2014

58.79

66.66

70.45

67.03

66.91

2015

61.93

69.98

71.95

70.54

69.27

5.3

5.0

2.1

5.2

3.5

Change %

Note

1) Sample of primary branded three- to five-star hotels Source

BDO LLP UK Monthly German Trends

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[German Hotel Market 2015] Highest growth in lower and top price categories RevPAR of the hotels sampled developed positively, showing growth rates between 2.1 % and 4 % throughout all price categories. Hotels with net room rates of over 120 EUR were at the top in 2015 with RevPAR growth of 4 %, closely followed by the lowest price category (room rates under 55 EUR), which succeeded in growing their RevPAR by 3.9 % to 34.54 EUR. Hotels in the price category from 80 to 120 EUR showed the lowest growth, at 2.1%. RevPAR 1) EUR

ARR

ARR

ARR

ARR

Change

over € 120

€80 to € 120

€ 55 to € 80

under € 55

%

120

8.0

90

6.0

60

4.0

30

2.0

0

0.0

2014

111.00

74.28

54.86

33.23

2015

115.43

75.81

56.88

34.54

4.0

2.1

3.7

3.9

Change %

Note

1) Sample of primary branded three- to five-star hotels Source

BDO LLP UK Monthly German Trends

With respect to location categories, growth in RevPAR was returned by hotels in all three segments analysed (city hotels, airport hotels and country hotels) in 2015. Growth rates of 3.2 % for city hotels and 4.6 % for country hotels were shown to be possible despite virtually stable room occupancy rates (-0.2 % and +0.5 % respectively) due to rises in average net room rates (+3.4 % and +4.1 % respectively). The airport hotels in the analysis showed the highest rise in room occupancy (+1.9 %), yet also the lowest growth in price (+2.8 %). In terms of RevPAR this is equivalent to an increase of 4.7 %. RevPAR1) Change EUR

City Hotels

Airport Hotels

Country Hotels

80

8.0

60

6.0

40

4.0

20

2.0

0

0.0

2014

73.54

56.21

50.46

2015

75.87

58.85

52.79

3.2

4.7

4.6

Change %

%

Note

1) Sample of primary branded three- to five-star hotels Source

BDO LLP UK Monthly German Trends

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[German Hotel Market 2015] Key performance indicators The following chart shows the development of key performance indicators for the sample of primarily branded hotels in the three- to five-star categories in 2015.

Hotel category / location

room occupancy (%) 2015

Total Germany

2014

chg. %

net room rate (EUR) 2015

2014

RevPAR (EUR)

chg. %

2015

2014

chg. %

71.0

71.1

-0.1

97.56

94.18

+3.6

69.27

66.91

+3.5

City hotels

73.1

73.2

-0.2

103.79

100.41

+3.4

75.87

73.54

+3.2

Airport hotels Country hotels

70.9

69.6

83.01

80.78

56.21

67.1

78.32

75.21

+2.8 +4.1

58.85

67.4

+1.9 +0.5

52.79

50.46

+4.7 +4.6

Net room rate (ARR) over €1201)

73.6

72.9

+0.9

156.84

152.22

+3.0

115.43

111.00

+4.0

€80 to €1201)

71.4

71.2

+0.3

106.18

104.29

+1.8

75.81

74.28

+2.1

€55 to €801)

71.3

71.7

-0.5

79.77

76.56

+4.2

56.88

54.86

+3.7

61.2

61.9

-1.2

56.44

53.67

+5.2

34.54

33.23

+3.9

Berlin

77.5

76.0

+1.9

91.45

86.09

+6.2

70.87

65.45

+8.3

Dusseldorf

67.6

68.2

-0.9

120.40

125.78

-4.3

81.39

85.81

-5.1

Frankfurt

68.6

68.6

+0.1

110.36

106.27

+3.8

75.71

72.86

+3.9

Hamburg

77.7

79.6

-2.4

111.53

111.39

+0.1

86.66

88.63

-2.2

Cologne

76.6

74.9

+2.3

120.69

111.95

+7.8

92.45

83.84 +10.3

77.6

77.6

+0.1

110.57

107.94

+2.4

85.80

83.71

+2.5

Baden-Baden

74.8

73.9

+1.2

88.62

87.91

+0.8

66.29

64.97

+2.0

Dortmund

70.6

71.5

-1.3

70.34

68.12

+3.3

49.66

48.73

+1.9

Dresden

74.3

77.4

-4.0

74.60

73.21

+1.9

55.43

56.65

-2.2

Hannover

70.2

66.3

+5.8

115.90

115.04

+0.7

81.36

76.31

+6.6

Heidelberg

78.3

76.2

+2.7

120.28

113.90

+5.6

94.18

86.81

+8.5

Leipzig

62.5

65.2

-4.2

83.38

81.29

+2.6

52.11

53.02

-1.7

Mannheim

70.4

71.1

-1.0

72.14

67.71

+6.5

50.79

48.14

+5.5

Nuremberg

70.1

71.6

-2.1

91.55

91.17

+0.4

64.18

65.30

-1.7

Potsdam Stuttgart

63.6 66.0

64.0 65.6

-0.5 +0.7

64.64 106.43

63.98 100.21

+1.0 +6.2

41.11 70.24

40.92 65.70

+0.5 +6.9

Wiesbaden

59.3

68.0

-12.8

70.14

69.06

+1.6

41.59

46.95

-11.4

under €551) Primary locations

Munich Secondary locations

Note

1) Based on the average net room rate (ARR) Source

BDO LLP UK Monthly German Trends

Source markets In 2015, overnights by international visitors rose to approx. 79.7 m, accounting for an 18.3 % share of total overnights. As in the previous year, the main international source markets continued to be the Netherlands, Switzerland, the USA, the UK, Italy and Austria; in 2015 these countries showed growth rates of between 1.8 % (Netherlands) and 8.5 % (Switzerland). The highest growth was shown by visitors from countries including Spain (+28.6 %) and China (+25 %), while figures for Russian overnights fell from 2.4 m to 1.7 m (-29 %).

Most important source markets

Source

Federal Statistical Office

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[German Hotel Market 2015] KPIs of top 6 cities

A changeable year In 2015 an increase in RevPAR was registered at four out of the six primary destinations, and a decline in the remaining two. RevPAR rose in Berlin, Frankfurt, Cologne and Munich, with Cologne showing the highest growth rate year-on-year at 10.3 %; Dusseldorf and Hamburg achieved lower RevPAR than the previous year.

Note

1) Sample of primary branded three- to five-star hotels Source

BDO LLP UK Monthly German Trends

Berlin

Cologne

2015 proved to be a further record year for Germany’s capital city, with around 30.3 m overnights and growth of 5.4 %. The impact of the 2014 celebrations of the fall of the Berlin Wall had given the city fresh impetus and particularly boosted demand among international visitors. As a major event in football, the final of the European Champions League also generated positive effects in June.

The city of Cologne registered around 6 m overnights in 2015, a further record year and a rise of 5.3 % over 2014. The proportion of international visitors rose by 6.6 % to 2.1 m. The congress and conference market, Koelnmesse exhibition centre and the Lanxess-Arena all reported a highly successful year.

The hotels in the sample increased their RevPAR by 8.3 % year-on-year to 70.87 EUR. However, despite increases in average net room rates of 6.2 % to 91.45 EUR and in room occupancy of 1.9 % to 77.5 %, Berlin remains in last place among the primary destinations in terms of pricing and RevPAR.

This positive development was likewise reflected in the RevPAR of the hotels in the sample, which showed a year-on-year rise of 10.3 %. In 2015 the average room occupancy rate was 76.6 % (+2.3 %) and the net room rate 120.69 EUR (+7.8 %).

Frankfurt

Munich

At around 8.5 m overnights, Frankfurt showed an increase of 6.3 % year-on-year. The city proved to outperform Munich and Berlin as a destination for tourists from Asia. The annual calendar of approx. 72,000 congresses and conferences held there, accounting for around 20 % of overnight volume, is also a significant factor.

Munich’s tourism industry has delivered nothing but growth for the past thirteen years. In 2015 the number of overnights rose by 4.6 % year-on-year to 14.1 m. The German-speaking market (Germany, Austria, Switzerland) accounted for around 7.9 m visitors, or 56 % of overnights. In 2015 the majority of international visitors came from the USA (+13.4 %), while the Arab Gulf states – the third largest source market – also showed strong growth.

Overall, the hotels in the sample achieved RevPAR of 75.71 EUR (+3.9 %) at a room occupancy rate of 68.6 % (+0.1 %) and average net room rate of 110.36 EUR (+3.8 %).

RevPAR rose in 2015 by 2.5 % to 85.80 EUR, accounted for by a 2.4 % increase in room rates to 110.57 EUR and an only minor rise in occupancy (+0.1 %) to 77.6 %.

Hamburg

Dusseldorf

Hamburg registered around 12.6 m overnights in 2015 (+5.3 % compared to 2014), with 1.3 m overnights in August alone in what proved to be the highestperforming month since records began. The highestvolume international markets are Denmark, Switzerland, Austria, the UK and the USA.

Given that 2015 was an off year for many regular biennial exhibitions, Dusseldorf showed a decline in overnights of around 2 % to 4.4 m. International visitors accounted for around 41 % of the total. The four largest international source markets are the UK, the Netherlands, the USA and the Arab Gulf states.

The hotels in the sample showed a fall in RevPAR for 2015 of 2.2 %, caused by a decline of 2.4 % in room occupancy to 77.7 % while the average net room rate rose by only 0.1 % to 111.53 EUR. The fall in RevPAR is primarily due to an increase in supply on the hotel market.

The dip in the trade show schedule also impacted on RevPAR for the hotels in the sample, which fell year-onyear by 5.1 % to 81.39 EUR. Room occupancy for 2015 was 67.6 % (-0.9 %) and the net room rate was 120.40 EUR (-4.3 %).

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[German Hotel Market 2015]

Germany‘s Hotel Market - strengths and weaknesses 2015 was once again a record year for overnights in Germany, showing growth in both numbers of domestic (+2 %) and international (+5 %) visitors. International overnights grew faster than the overall volume of overnight stays; China and the Arab Gulf states showed particularly high growth as source markets. Germany continues to offer a good price/performance ratio in international comparisons. The hotel market is highly fragmented, with relatively low penetration by chain hotel brands, allowing high potential for this sector. The hotel real estate market continues to benefit from investors’ confidence in the German market; however, yields are falling and core properties are practically unavailable. Numerous new hotels are in the planning stage at the primary destinations, implying that competition will increase in future.

Future prospects The hospitality industry got off to a positive start in 2016, showing a plus of around 5 % year-on-year for overnights in January and February. The hotels in BDO LLP UK’s sample also showed an increase in RevPAR of 3.2 % in the first two months of 2016. Both room occupancy and the average net room rate rose compared to the same period in the previous year (+1.2 % and +1.9 % respectively).

Prospects for the year of 2016 are cautiously optimistic. While the current hotel market appears positive, uncertainty is increasing due to the current security situation in Europe and throughout the world, the instability in the EU, the refugee issue and the slow growth in the main newly industrialized countries. For example, DZT anticipates “slowing growth for overnight figures of approximately one to three per cent.”

By contrast, growth in the supply of new hotels in Germany’s top six cities is increasing. The project pipeline is full, particularly in the budget to mid-class hotel sector, and many new hotels and brands will launch in 2016, so that some locations must expect stronger competition.

PKF hotelexperts GmbH Maximilianstrasse 27 80539 Munich For further information, please contact: Mrs. Caroline Schade tel.: +49 (0)89 290 32-201 e-mail: [email protected]

Worldwide hotel consulting — Partner für Ihren Erfolg.

Disclaimer: This report, the figures, trends and possible reasons for change stated therein are based on careful market research. While PKF hotelexperts endeavours to use the utmost care in assembling this information, we undertake no guarantee or liability for its completeness and up-to-dateness. As at April 2016.

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