In the first three quarters of 2023, international real estate consultancy firm Cushman & Wakefield (C&W) recorded a total transaction volume of EUR 540 million in the hotel segment, of which EUR 150 million was generated in the 3rd quarter. The result represents a decline of almost 60 percent compared to the equivalent period last year. Only single-property transactions were recorded. The average transaction volume was approximately EUR 16 million.
Around two-thirds of transaction volume was contributed by German investors. This was followed by buyers from Great Britain with 20 percent and Israel with 13 percent.
Institutional investors accounted for the plurality of the transaction volume, at 38 percent. Hotel operators accounted for 28 percent of total CRE transaction volume. Other market participants such as private equity, family offices and developers contributed 34 percent of the transaction volume.
"Transaction activity remained at a low level. Above all, operator-free hotels with repositioning or value-add potential were traded. Financially strong hotel operators such as Premier Inn and Leonardo, as well as private equity investors, came into play here. Purchases or sales of core properties with long leases were the exception," comments Josef Filser, Head of Hospitality Germany & Austria at C&W.
Among the largest transactions in the 3rd quarter of 2023:
- the acquisition of the 150-room Holiday Inn Mannheim, part of the mixed-use office and hotel development "No.1", by the Hamburg-based investment and asset manager Fondsgrund. The seller was Adler subsidiary Consus. The total price was around EUR 75 million.
- the sale of the 190-room Pentahotel Berlin-Köpenick to operator Leonardo Hotels. The hotel is soon to be renovated and repositioned under lifestyle brand NYX.
- the sale of the Essential by Dorint Hotels in Cologne-Deutz and the nh Hotel in Magdeburg with a total of 260 rooms to the Alchemy Step Hotel Group. The hotels will be renovated in the coming months and integrated into the Marriott system via franchise agreements.
- the acquisition of the 84-room nestor hotel in Neckarsulm by Art-Invest. As part of a new long-term lease with The Chocolate on the Pillow Group, the hotel will undergo a major renovation and repositioning.
Josef Filser on the outlook for the hotel market: "The transaction volume has probably bottomed-out and prime yields have almost reached their peak. In view of the economic situation, further interest rate hikes appear increasingly unlikely, which should lead to greater stability and certainty in the transaction market. Added to this is the continued very good operating situation with strong demand and good performance figures in almost all major hotel markets. In addition, the challenges in the office sector are leading to an increased willingness among many market participants to invest in alternative assets such as hotels."