On the occasion of this year’s congress of the German Hotel Association (IHA) taking place in Hamburg on 12-13 June, hotel property specialist Christie & Co has released a report on the hotel market looking at Germany’s metropolis in the North.
Over the past five years, Hamburg’s hotel supply has increased by 6.4% and the supply of bed places almost by twice as much at 10.2%. As Christie & Co’s research reveals, this development shows the structural change the hotel market is currently undergoing on a national level, shifting away from smaller businesses to larger hotels. The average Hamburg hotel currently comprises 171 beds on average, a 3.6% rise compared to 2012.
While the supply on the overall accommodation market registered an even larger growth than the hotel market alone, hotels still provide the lion’s share of the overall market, making up 87%. Measured by the number of beds, hotels even represent more than 90% of total accommodation supply. According to German hotel and restaurant association DEHOGA, 149 of a total 316 hotels in Hamburg are classified by stars. With 76.5%, the sector is largely dominated by 3- and 4-star hotels, while the budget segment only accounts for 16.8% and the luxury segment 6.7%.
According to Christie & Co’s research, more than three quarters of Hamburg’s hotels are branded. The top ten hotel chains relative to the number of hotel rooms in Hamburg is led by Accor with 14%, followed by Motel One with 7% and Marriott/Starwood with 6%.
Since the turn of the millennium, overnight stays in the “Hanseatic City” have risen more strongly than in any other of Europe’s top 20 cities. In the past five years, Hamburg’s hotels saw an average increase of 3.4% p.a. in arrivals and 5.0% in overnight stays, suggesting an improvement on the average length of stay in Hamburg’s hotels. In fact, between 2012 and 2016, a gain from 1.9 to 2.0 days was observed. Also, the number of overnight stays by international guests has more than doubled from 1.5 to 3.3 million over the last decade with major source markets including Denmark, Switzerland, the UK, Austria, the US, the Netherlands, Spain, France, Italy and Sweden. That said, Germany remains the most important source market, making up 75% of all overnight stays.
As data by STR reveals, Hamburg’s hotel market recorded an upward trend in all KPIs from 2012 to 2016, despite the fact that annual supply growth rates outperformed demand growth over the last five years. Occupancy picked up by 5.1% and reached a record level in 2016 by climbing up to 80%. The Average Daily Rate (ADR) also reached an all-time high at €115 – up by 13.5%. Revenue Per Available Room (RevPAR) saw an even sharper increase as a result, picking up by 19.7% from €77 to €92, which makes Hamburg third on the list of cities with the highest RevPAR in Germany after Munich and Heidelberg. Compared to the same period of the previous year, the first quarter of 2017 also showed positive development.
Kay Constanze Strobl, Director and Head of Advisory & Valuation Germany at Christie & Co, comments: “Going forward, we expect growth rates to level out for 2017. On the one hand, uneven years traditionally show weaker trade fair demand in Hamburg and the interim shutdown of the Congress Center might also affect the city’s performance.
“On the other hand, the city’s full pipeline – until 2021 about 48 hotels with approximately 8,800 bedrooms are expected to enter the market – is set to apply pressure on Hamburg’s KPIs. The 4- and 3-star segments in particular, which are reportedly registering the largest supply growth, will be impacted.
“Yet, Hamburg continues to be one of Germany’s most attractive hotel markets, which provides significant upside potential in the budget and economy sector, as well as in the upper 5-star segment.”
Patrik Hug, Consultant Advisory & Valuation Services Germany at Christie & Co and co-author of the report, adds: “With about 50 chains and 70 brands, Hamburg’s hotel market provides a multifaceted brand landscape, appealing to every possible traveller segment.
“With the opening of the grand hotel The Fontenay, which is planned to take place this year, the currently somewhat underrepresented upscale segment is set to grow by 131 bedrooms.”