BUDGET HOTEL BOOM: SUSTAINABLE STRUCTURAL CHANGE IN GERMANY’S HOTEL MARKET. SUCCESSFUL CONCEPTS MOTEL ONE AND HOLIDAY INN EXPRESS DISPLACE OWNER-MANAGED PRIVATE HOTELS – 330 NEW HOTELS IN GERMANY IN THE PIPELINE.Germany has to catch up with Budget Hotels: successful concepts such as Motel One and Holiday Inn Express reinforce the profound structural change of the hotel market. Real estate experts from Patrizia Immobilien and CBRE make this clear. According to surveys by TOPHOTELPROJECTS, the worldwide leading provider for global b2b hotel data, six new Motel One and ten projects by the IHG hotel brand Holiday Inn Express are currently in the pipeline in Germany.
Overall, 330 new hotels will arise in Germany, a new record. Of these, 47 hotel projects are classified as economy/budget hotels.
2014 is a record year in tourism: The number of overnight stays is estimated at over 400 million. Already in the first nine months of this year more than 331 million overnight stays were counted (+3%). The increasing number of visitors from abroad (+5%) and an increased demand for smart but cheap hotel rooms gives an enormous boost to well-known hotel brands with reliable products.
Like no other concept does Motel One stand for a successful mixture of “Lean Luxury” and reasonable prices. The standard rooms (thick mattress, good TV screen, and a beautiful marble bathroom) are available at guaranteed prices – one of the secrets of success of the German hotel chain, which inspires more and more international real estate investors with projects abroad. The interest of the investors in profitable budget hotels has increased because the rate of return is approaching that of a four-and five-star hotel. So there already is an extra fund for budget hotels.
The InterContinental Hotels Group (IHG) has already determined the German hotel market as an expansion area for its budget brand Holiday Inn Express. More and more hotel projects are being implemented with experienced and stable franchise partners.
French hotel export hit Accor is currently developing 20 projects of its Ibis brand. Competitor B&B is preparing the launch of ten new properties.
Other hotel groups in Germany also bet on low budget: The Wyndham Hotel Group is developing three properties of its Super 8 brand in Munich and Freiburg/Breisgau. Marriott and Ikea are building three new hotels by its recently launched smart-hotels-brand Moxy in Munich, Frankfurt/Main and in Berlin. And the Louvre Hotels Group, which now belongs to the Chinese hotel group Jin Jiang, plans to open its first low-budget hotel by the new Tulip Inn Alp Style in Dachau near Munich in January 2015.
More promising budget hotel concepts are Prizeotel (its third hotel will arise in Hannover), Travel 24 (the first project will be built in Leipzig), McDreams (projects in Cologne and Düsseldorf) and Premier Inn (the British group Whitbread invests in Frankfurt/Main). Other independent budget hotel concepts such as Say Cheese (second project is arising in Berlin) or Invite (fourth hotel project in Freiburg/Breisgau) are looking for investors who are ready to establish discount hotel rooms in B locations.
“Germany is still lagging behind, in international comparison, in the development of new concepts, especially in the budget hotel sector. So there is still lots of potential for investors” said Jan-Hendrik Jessen, Head of Fund Management Operated Properties for Patrizia Real Estate. “With specific properties, successful investors need profound technical expertise to not only seriously judge the situation but also the operator’s concepts. Investors should therefore rely on professional fund providers who have this expertise, “so his analysis.
