One of the asset classes hit the hardest by the Covid pandemic – hotel real estate - is recovering. From a historic downturn to hotel operators in the DACH region being “very optimistic”, the hospitality sector has been on a roller-coaster ride.
Josef Filser took over the position of Head of Hospitality Germany at Cushman & Wakefield during this turbulent period. Since the beginning of this year, he has been responsible for all transactions and lettings as well as strategic consulting mandates for the hospitality sector of the internationally active real estate consultancy firm in Germany. Now he takes stock - and has a closer look at the current state of the market at mid-year 2023.
Hospitality is back – Optimism in the DACH region
28/08/2023
An interview on the future of a resurgent asset class: Three questions for Josef Filser, Head of Hospitality Germany.
Has the hotel market recovered from the slumps of the Covid pandemic as well as expected?
Josef Filser: The hotel market has actually recovered faster than expected. There was of course a lot of pent-up demand, but German holidaymakers do not seem to be saving on travel despite the high level of inflation. This also applies to the strong domestic tourism that characterises many regions such as the Baltic Coast and the Bavarian Alps and lakes. Occupancy rates there are also often above pre-crisis levels. Business tourism, on the other hand, which continues to play a significant role in many major cities, is still lagging behind pre-pandemic levels. Due to the weak economic outlook and the increasing importance of more sustainability in business travel, I doubt whether demand here will recover 100%.
Reporting of ESG key figures, pandemic clauses etc. - contracts are becoming increasingly complex. Will this reduce the attractiveness of hotels as investment assets?
Josef Filser: The new clauses do indeed make the contracts more complex, but also more transparent and better assessable in terms of risk profile. The contracts also reflect the increasing complexity of investor requirements. This applies in particular to the reporting of ESG KPIs, but also, for example, to the regular reporting of operational key figures. These new clauses are thus seen as an advantage compared to old contracts, where many current issues around sustainability and transparency are not considered.
Berlin, Hamburg, Munich and Vienna remain the locations most favoured by hotel operators in the DACH region. However, the strong domestic markets of Leipzig and Dresden have seen the largest increases in operator interest since last year. Why is this - and what can other regions learn from it?
Josef Filser: Dresden and Leipzig benefit from booming domestic tourism combined with solid business travel. Both are also only marginally dependent on international travel and, as a result, have seen a rapid recovery in demand and operating results post-Covid. Operator interest has increased accordingly. The successful combination of being both an attractive leisure destination and a solid business destination is something not all cities are currently achieving.
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