In recent years, Germany’s Top 6 cities were considered safe havens and saw sustained interest from global hotel investors. In 2019, 38 hotels with almost 7,000 rooms entered the market across the analysed markets, resulting in a total supply increase of 3.7%. Even though the pandemic caused less hotels to open, 2020 still saw 26 hotels with nearly 5,000 rooms enter the Top 6 cities; led by Hamburg and Frankfurt where 6 new hotels and over 1,200 rooms opened.
The lack of events, festivals, as well as trade fairs in 2020 caused a significant decline in the arrivals and overnight stays in Berlin
. In 2020, about 12.3 million overnight stays were registered, which is only 44% of the overnight stays of the previous year. This caused the occupancy rate to fall from 79% in 2019 to 29% in 2020. However, due to a relatively high percentage of domestic tourists and its highly heterogeneous demand, a fairly fast recovery is to be expected.
As in Berlin, the yearly occupancy rate in Cologne
went down to only 29% due to the pandemic in 2020. Multiplied with an ADR of EUR 94, Cologne showed a RevPAR of EUR 27. The recovery potential in the Rhine city is rather positive. Among the Top 6 cities in Germany, Cologne has historically shown the most sustainable development of the hotel market, as demand has increased significantly more than supply in the past. Although the hotel stock has only grown by 4% since 2016, the supply of beds has increased simultaneously by 11%, which is due to the opening of mainly larger hotels. The confirmed pipeline currently consists of approximately 16 projects.
The second city in North-Rhine-Westphalia, Dusseldorf
, has been comparatively severely affected by the impact of the Covid-19-pandemic on tourism. According to STR, the 1.8 million overnight stays in 2020 led to an occupancy of 25%. The average daily rate of this Top 6 city slid from EUR 118 in 2020 to EUR 108, resulting in a RevPAR of EUR 27. Taking the high number of rooms in the pipeline, combined with the dependency on corporate demand into consideration, a rather slow recovery for the hotel market is indicated.
suffered the most from the impact of the pandemic. The number of overnight stays decreased by 61% and arrivals by 65%. This led to an occupancy of only 23% and a RevPAR of EUR 21, which are the lowest numbers of all Top 6 markets. The return of international business demand, which has fallen by 70% in the last year, will be crucial for the hotel market recovery. On the other side, Hamburg
showed the highest performance KPIs of the presented markets. Due to a relatively high occupancy rate during the summer months, the total occupancy ranked 32%. Hamburg is expected to recover ahead of the other Top 6 cities due to its high percentage of domestic tourists. In addition, the relatively dense pipeline within the leisure segment indicates that the leisure demand is expected to recover quickly over the next year.
The Bavarian capital Munich
depends on some of the world's leading trade fairs as well as on strong business tourism and event business. The several travel restrictions caused a decrease of all performance KPIs. The overnight stays slid from 17.2 million in 2019 to 6.4 million in 2020, the RevPAR from EUR 94 to EUR 24. Without the business demand, occupancy and RevPAR are likely to recover more slowly than in other cities that have a stronger focus on leisure travellers than Munich. A more positive sign for the nearer future is the increase of 30% in domestic overnight stays in the past year.
All in all, the year 2020 was certainly a turbulent year for the hotel industry. Starting with the first cancelations in February, followed by a national lockdown in March, a brief respite in the summer months when trading picked up slightly as restrictions eased and people attempted to enjoy a staycation and another lockdown in November. “While 2019 saw some winners in terms of RevPAR growth, all of Germany’s Top 6 cities suffered significantly in 2020, recording record occupancy declines in excess of 50%”, comments Lukas Hochedlinger
, Managing Director Central & Northern Europe at Christie & Co.
Several planned openings were postponed to the following year due to the pandemic. Thus, 76 additional hotels with around 13,000 rooms are now in the pipeline for 2021. “As we do not expect demand to recover in line with those supply additions, KPIs especially in Dusseldorf, Hamburg, Munich and Frankfurt are likely to stay under pressure in the medium term”, analyses Benjamin Ploppa
, Director – Head of Hotels Germany at Christie & Co. Benjamin Ploppa adds: “Even though we expect the recovery to be asymmetrical and likely diverge across markets and assets, we assume that an advance in vaccinations and the lifting of the corresponding travel restrictions will result in a quick recovery of the domestic hotel market.”