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Sentiment Report - Hotel Market Germany 2017

Positive outlook: Hoteliers in top 8 hotel locations expect room prices to rise further in 2017

The hotel industry in Germany expects prices to rise further in 2017. This is one of the main findings of the "Hotel Market Sentiment Report Germany" by Engel & Völkers Hotel Consulting (EVHC) and HQ plus. The report analyses the expectations of hotel managers in the top 8 hotel locations. Accordingly, an average increase of 6 percent to €120 is envisaged this year for hotel room prices (gross cost rate) at the top 8 hotel locations of Berlin, Hamburg, Munich, Frankfurt, Dusseldorf, Cologne, Stuttgart and Dresden. The strongest growth is forecast for Stuttgart at 18%, followed by Berlin with 13%. "The positive sentiment among hoteliers for 2017 confirms that Germany is established as one of the most attractive hotel markets in Europe," said Andreas Ewald, Managing Director of Engel & Völkers Hotel Consulting GmbH (EVHC), commenting on the trend forecasts.

The "Hotel Market Sentiment Report for Germany" combines many years' experience in international hotel consulting with innovative data-analysis methods. "In the hotel business, key performance indicators are an important management instrument. However, until now, the bulk of the data has related to the past. With HQ plus, for the first time, we are now looking into the future from a market perspective by analysing the rate management of nearly all accommodation providers in the top 8 hotel locations," said Andreas Ewald. To achieve this, an algorithm programmed specifically for the analyses was developed in conjunction with HQ plus. Roland Hehn, Managing Director of HQ plus, emphasised: "The evaluation of our data and the resultant findings help to deliver greater investment security when evaluating hotel properties, particularly with regard to locations and market opportunities and risks."

Low announced price range underlines the attractiveness of the German hotel market

The strength of the German hotel market is apparent from a detailed assessment of the locations examined for 2017. Apart from the backmarker, Dresden, forecast gross cost rates are in a bracket of €117 to €140across all categories. As usual, Munich heads the price rankings. It is followed by Cologne, Stuttgart and Frankfurt. "The analyses cover more than 90 percent of the market volume of a location. They show that in the main, attractive room prices are generated in Germany's most popular tourist destinations. From the perspective of operators and investors, this is another factor when assessing the attractiveness of the hotel market – including with regard to risk diversification," explained EVHC Managing Director Ewald.

The luxury segment separates the wheat from the chaff

A closer look at the individual segments reveals that the biggest gap between gross cost rates is anticipated in the luxury segment. Whereas a guest is likely to pay €354 on average for a 5-star hotel in Munich in 2017, prices in Dresden are estimated to be around 60 percent lower at €136. According to the analysis, the average gross cost rate for the luxury segment is €223 across all locations. The expected average gross cost rate in the mid to upscale segment is around €124 across all locations for 2017. Excluding Munich (€142) and Dresden (€83), the price range is only likely to be €125 to €132. The forecast stable price level in Germany's largest segment by far underlines the decentralised attractiveness of the hotel market.

Not all budget prices are the same

In 2017, a budget room in Germany's top 8 hotel locations is likely to cost around €65 on average. However, the price range extends from €58 (for Dresden) to €92 (for Munich). There are also some significant differences among the other locations. Whereas a budget room in the trade-fair city of Dusseldorf is only likely to cost €61 on average, a room price of €70 is forecast for the budget capital, Berlin.

The lower the categorisation, the worse the rating

A clear link can be seen when analysing guest ratings (on a scale of 1 to 10) for each segment. At 8.8, the luxury segment attains the best scores across all locations. It is followed by the mid to upscale segment at8.1 and the budget segment at 7.4. Among the top 8 hotel locations, Dresden, with the lowest price level, has by far the best guest rating of 8.5 (the average is 7.9). "Overall, all examined locations have improved their rating compared with the previous year. This emphasises the growing professionalism of the German hotel landscape," said Ewald.


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