Market Report Stuttgart | Hotel 2014/2015

Stuttgart Market Report

Accelerating success.

Overall information Stuttgart, capital city of the state of Baden-Württemberg, currently has a population of about 604,000. A green metropolis, about one-third of Stuttgart’s area is occupied by parks and other outdoor areas, forests and the Stuttgart city winery. Based on its diverse economic structure and strong business sector, the Stuttgart metropolitan area is among the cities in Germany with the strongest exports.

Transportation infrastructure Stuttgart’s transportation infrastructure features connections to the A8 and A81 autobahns and numerous federal highways for a comprehensive range of travel options by car. The city center is close to major attractions and Königstraße, Germany’s longest shopping street, as well as a wide range of S-Bahn metro rail, tram and bus lines. Germany’s sixth largest airport, located in the south of the city, processed over 9.7 million passengers bound for over 100 flight destinations in 2014. The city’s main rail station is also slated to undergo major construction to change it from a terminus to a through station located deeper underground. Work on the project, which is aimed at accommodating the rising passenger volume in the city, is scheduled to continue until 2021.

STUTTGART

Center of economic and business activity

Employees subject to social insurance requirements

379,800

Disposable income per capita

25,125 €

Stuttgart is the seat of the state parliament and state government and is one of the cities with the strongest economies and the most important regional centers of economic and business activity in Germany. Major firms such as Bosch, Mercedes, Porsche, Lenovo and Siemens have opened locations in Stuttgart. The research landscape focuses on the fields of mobility and cars, mechanical engineering, laser technology, development of new materials, environmental and energy technology, IT and communication technologies, and software development.

In Numbers

Inhabitants Unemployment rate

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Market Report | 2014/2015 | Hotel | Colliers International

5.7 %

Source: Federal Statistical Office, Statistical Offices, Federal Employment Agency

Demand

Center of travel and tourism The number of overnight stays in Stuttgart has increased by 68% since the year 2000. Business travelers continue to account for an estimated approximately 66% of the total, with the trade fair and conference options offered in Stuttgart among the main drivers of demand. Major attractions for tourists to visit Stuttgart for pleasure include automakers Daimler and Porsche, the Cannstatter Volksfest festival, and soccer team VfB Stuttgart. In 2015, Stuttgart will also host the German Protestant Kirchentag event for the fourth time. The tourist attractions with the highest numbers of visitors are the zoo and botanical gardens, the SI-Centrum complex (venue for musicals, movie theater, Schwabenquellen spa and water park), the mineral baths, Mercedes-Benz Arena and the associated museum, the Porsche Museum, and the Staatstheater.

604,000

Source: Federal Statistical Office

Trade fair grounds

Hotel market structure by classification

Last year, there were about 72 events, 21,400 exhibitors and over 1.33 million attendees at the Stuttgart trade fair grounds, which are located right near the airport. The venue offers 105,200 m² of exhibition space in all, with seven halls, one multipurpose trade fair and event hall (26,800 m²), and the ICS Stuttgart (International Congress Center). The trade fairs held here include CMT, the world’s largest public trade fair for the tourism and leisure time industries, and R+T, the leading world trade fair for roller shutters, doors/gates and sun protection systems.

Hotel market Tourism in Stuttgart continued to see positive development in 2014. There were 175 accommodation providers (up 1.2% from the previous year) with 18,968 overnight accommodations on offer (+1.6%) for guests in 2014. More than half of the figure (59%) falls within the three-star segment. There are seven hotel openings scheduled for 2015, with almost 1,000 rooms in all. The Hampton by Hilton, Star Inn Hotel Airport-Messe, Motel One Bad-Cannstatt and ALOFT Stuttgart properties are in the completion stage. The A&O Stuttgart City and Dorint Airport-Hotel are scheduled for completion in the summer of 2015. Openings scheduled for 2016 include a Steigenberger Hotel with 175 rooms in the “Cloud no. 7” property, due to operate under the new Jaz in the City brand, the Holiday Inn Express City Hauptbahnhof (155 rooms) and the Nordic-pure Hotel in the Gewa Tower (132 rooms). More than 1,900 rooms in all are expected to be added over the next few years. On the demand side, Stuttgart has posted new records for both the number of guests and the number of overnight stays. In 2014, a total of 1,805,374 guests stayed at Stuttgart accommodation providers with ten or more beds (including camping), representing an increase of 5.7% from the previous year. Guests booked 3,466,328 overnight stays (+8.3%) at an average stay length of 1.9 days. International visitors accounted for 29% of overnight stays (+9.1%). The United States is the largest market (155,571 overnight stays, +12.8%), followed by Switzerland (112,084 overnight stays, +11.6%), Italy (57,673 overnight stays, +14.7%), and Austria (55,013 overnight stays, +12.1%). At 50,223 overnight stays, the Chinese market generated a higher-than-average growth rate of 42.7% and placed seventh among the top source markets for Stuttgart. The month of May saw the largest increase over the course of the year, at 305,533 overnight stays (up 23.0%), but this was due to the influence of calendar events (the Pentecost vacation period fell entirely in June). Compared to previous years, July and August 2014 posted especially strong growth rates. July even outperformed September for the first time ever, coming in at 322,680 overnight stays (up 12.1%). As in previous years, October was the strongest month in 2014, with above-average bed occupancy of 61.1% (357,721 overnight stays, up 6.9%).

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Market Report | 2014/2015 | Hotel | Colliers International

Source: HRS

Development of accommodation supply

Source: Colliers International, State Statistical Office BadenWürttemberg

Development of accommodation demand (in thousands)

Source: Colliers International, State Statistical Office BadenWürttemberg

Hotel performance

Rating and outlook

Compared to the previous year, average capacity utilization of the available beds at accommodation providers saw a significant increase in 2014, going from 47.5% to 51.2%. The reasons for this were moderate growth in the number of available beds (+2.0%) and rising demand in terms of both guests (+5.7%) and overnight stays (+8.3%). Room occupancy in 2014 stood at 73.7%. This represents a year-on-year increase of 4.5% in the occupancy rate. The average room rate (ARR) increased by 4.9%, to € 90.00. RevPAR also increased, rising 9.6% to stand at € 66.00.

The Stuttgart hotel market features a stable supply and steady demand. The reasons for this lie in the strong economy of the city within the Stuttgart metro area, the numerous trade fairs and conferences held in Stuttgart, and the area’s favorable geographic location in the southern German economic area, which is excellent in terms of transportation. The expansion of local infrastructure, the German Protestant Kirchentag event to be held in June 2015, and improved marketing of tourist attractions for greater appeal in the leisure segment will continue to have a lasting positive impact on the hotel market. Colliers International considers there to be potential for hotel projects in the economy segment, especially in central locations with good transportation connections.

Parameters of the hotel market in German major cities OPERATIONAL FIGURES 2014 Occupancy

change to previous year

ARR

change to previous year

RevPar

change to previous year

Berlin

76.6 %

2.0 %

89.00 €

2.0 %

68.00 €

4.0 %

Dusseldorf

66.9 %

5.7 %

99.00 €

5.7 %

66.00 €

11.7 %

Frankfurt a. M.

68.4 %

3.4 %

95.00 €

- 2.6 %

65.00 €

0.6 %

Hamburg

79.4 %

1.8 %

91.00 €

3.9 %

73.00 €

5.8 %

Cologne

70.3 %

1.6 %

88.00 €

- 1.0 %

62.00 €

0.5 %

Munich

78.3 %

1.9 %

110.00 €

0.0 %

87.00 €

1.9 %

Stuttgart

73.7 %

4.5 %

90.00 €

4.9 %

66.00 €

9.6 %

Germany

70.1 %

2.3 %

87.00 €

1.6 %

61.00 €

3.9 %

City

Source: IHA Deutschland 2015 / STR Global

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Market Report | 2014/2015 | Hotel | Colliers International

Author:

502 Office in 67 Countries on 6 Continents United States: 140 Canada: 31 Latin America: 24 Asia Pacific: 199 EMEA: 108

Janin Rynski Research Analyst | Hotel +49 30 5858178-10 [email protected]

Colliers International Hotel GmbH Budapester Straße 50 10787 Berlin | Germany TEL +49 30 5858178-10 FAX +49 30 5858178-99

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16,300 professionals and staff

About Colliers International Hotel GmbH As part of Colliers International, Colliers International Hotel GmbH provides a full range of hotel real estate services; it sees itself as the lifeblood of brand-name hotels and is at the disposal of clients throughout Germany. Colliers International Hotel GmbH advises hotel corporations, investors, hotel operators as well as project developers on their choice of location, business concept and brand strategy. Together with associates, they provide financing and equity-partners. Moreover, Colliers International Hotel GmbH seeks out the right hotel properties to suit the investor’s needs. Colliers International is a global leader in commercial real estate services, with over 16,300 professionals operating out of more than 502 offices in 67 countries.

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Picture credits: Photo 178420127 (Thinkstock Photos), Schlossplatz Stuttgart Copyright © 2015 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.