Shortage of existing properties increases demand for hotels in the development stage


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Press release including chart [PDF]


FRANKFURT, 13. April 2018 – In the first quarter of 2018, the transaction volume on the German hotel investment market* was largely attributable to 17 small and medium-sized individual transactions between €10 million and €20 million. Larger individual transactions in excess of €50 million as well as portfolio deals proved to be the exception, and deals above €100 million were completely absent. The transaction volume thus reached a total of €640 million, of which institutional investors accounted for 41% and German investors for 60%. This quarterly result corresponds to a decline of around 40% compared to the previous year. Furthermore, the first-quarter result was only 2% above the five-year average (€632 million). Looking back over the past 10 years, it is clear that the hotel market did not gather any real momentum until 2014 when hotels started to become a preferred asset class with annual transaction volumes of more than €3 billion. 
“The bare figures are of course disappointing, but do not reflect the overall investor sentiment and activity that is taking place in the background,” said Stefan Giesemann, Senior Vice President of the JLL Hotels & Hospitality Group. Giesemann added: “The product shortage was even more dramatic than in other asset classes. While the pressure to invest remains high, it has become even more difficult to find adequate and high-quality product. Many owners are (still) unwilling to dispose of existing properties, although market conditions and price levels are at an all-time high. But where would they then invest the proceeds?”
The result of the shortfall in available product for sale is that investors are increasingly focusing on properties in the development stage - a trend that has picked over the last two years. In addition, the competitive situation is exacerbated by the growing interest from more international investors. “Fewer products combined with a larger circle of potential investors increase the competitive environment,” said Giesemann.
In the first three months, 21 individual transactions were registered with a total volume of around €458 million (Q1 2017: 27 deals with €850 million), including three deals in the project stage for a total amount of €103 million. The average transaction size amounted to €22 million, which is €10 million below the annual average for 2017.


  • The sale of the Maritim Cologne to Art-Invest for approx. €120 million. Seller is the closed CFB fund 111 of Commerz Real. The hotel built in 1988 has over 454 rooms and is operated under a lease agreement with Maritim.
  • The sale of the planned Premier Inn Hotel on Simon-von-Utrecht-Straße in Hamburg to Whitbread. The sales price was in the double-digit million range. The seller was the project developer Strabag.
  • The sale of a Moxy project in Kelsterbach at Frankfurt Airport to Corum Asset Management for its public fund SCPI Corum Convictions. The hotel with 188 rooms was sold by a joint venture between Ten Brinke and Bonn-based BLI Projektentwicklungs GmbH in a forward deal structure.
  • The sale of the Penta Hotel with 127 rooms in Trier to the IFA company of Wolfgang Schäfer. The seller is Berlinovo in Germany. The lease agreement with Penta Hotels expired in January and the hotel will now be operated under the Best Western brand.
  • The purchase of five hotels by the owner / operator HR Group from various sellers for about €100 million. The hotels are the Dorint-Hotel Main-Taunus centre in Sulzbach, Hesse (282 rooms); the Dorint-Parkhotel Bad Neuenahr (238 rooms); the Arcadia-Hotels in Hanover (8a Karlsruher Straße) and Bottrop (6 Passstraße); and the Best Western Hotel Flensburg (44, Alte Zollstraße, Harrislee).



Similar to the first quarter of 2017, three portfolio transactions registered in the first three months of 2018. However, the capital investment of about €115 million in total was well below that of the previous year (Q1 2017: €265 million):

  • The sale of two recently opened B&B Hotels in Rosenheim and Neu-Ulm to the Core Budget Hotel fund of Art-Invest.
  • The acquisition of two hotels of the Achat Gruppe at Hanover Airport as well as in Hoyerswerda, North Saxony, by the Dormero hotel group. Dormero realised both projects together with the Frankfurt investor Headstream Capital.
  • The sale of the SI-SUITES Hotel and the DORMERO Hotel Stuttgart, as part of the “SI-Centrum” in Stuttgart, to various companies of Brookfield Asset Management. The “SI-Centrum” includes two musical theatres, a casino, eleven restaurants, seven bars, three cafés, 22 conference and meeting rooms and a Cinemaxx complex. The seller was Balandis Real Estate.


“In the first quarter, there was a lot of M&A activity with various corporate transactions taking place. However, such transactions are not included in the calculation of the hotel investment volume, but they confirm the increasing consolidation in the hotel market and strong investor interest for the German hotel sector,” said Stefan Giesemann. Giesemann added: “In particular, international hotel operators and private equity companies, sometimes acting together as partners, are taking this approach to drive their expansion plans in search of higher operational efficiency and profitability, new segments and markets as well as more market share.” These include the following transactions:

  • One of the biggest transactions globally in this field was the sale of 55% of the shares of AccorInvest to the sovereign wealth funds PIF (Saudi Arabia) and GIC (Singapore) as well as the institutional investors Credit Agricole Assurances, Colony NorthStar und Amundi. Of the 891 hotels owned by AccorInvest, a high double-digit figure are located in Germany. The hotels will continue to be operated by the Accor Group following the acquisition.
  • In Germany, all shares in the operating company GS Star GmbH, franchisee of Hilton and IHG among others, were acquired by Gorgeous Smiling Hotels Holding (GSHH). This increased their portfolio to 53 hotels in total. 
  • Whitbread snapped up the Holiday Inn Express operating company from the Foremost Hospitality Group that operates or will operate 19 hotels under the Holiday Inn brand. Whitbread plans to renovate the hotels and gradually convert them to its own Premier Inn brand.

Stefan Giesemann concluded: “Transactions that have already been in due diligence or negotiated, in some cases for a fair amount of time, but, contrary to expectations, have not yet been completed. However, we are certain that these deals will close over the next couple of months. Nonetheless, the number of large-volume portfolio transactions will remain at a modest level, as most of such portfolios have been sold to long-term holders in recent years. We therefore expect a hotel transaction volume for 2018 in the range of €3.5 billion to €4.0 billion. This is based in particular on a large number of single attractions with a deal volume in excess of €50 million.”

*The Hotels & Hospitality Group of JLL in Germany includes individual transactions with an investment volume of at least €5 million and portfolio transactions with properties only in Germany. Also included are German hotels that are sold as part of cross-border portfolio deals.