Europe -  Frankfurt, Germany

Frankfurt is the largest financial centre in continental Europe and ranks among the world’s leading financial centres. It is home to the European Central Bank, Frankfurt Stock Exchange and several large commercial banks. In addition, the city has a long tradition of staging trade fairs, and the Messe Frankfurt is one of the largest trade fair venues in the world, hosting events such as the Frankfurt Motor Show (the world’s largest motor show), the Frankfurt Book Fair (the world’s largest book fair) and the Musikmesse (the world’s largest music fair). Although some key trade fairs are held biennially or triennially, demand remains relatively constant compared to other markets as smaller trade fairs generate significant demand during years with fewer key events. While most visitation to Frankfurt is driven by business and trade fair demand, leisure visitation has been increasing year-on-year.

Owing to its central location within Germany and Europe, Frankfurt is a major air, rail and highway transport hub. Frankfurt Airport is one of the busiest airports in the world in terms of passenger traffic and the city’s central railway station is one of the largest rail hubs in Europe. Following a slight decrease in 2016 in terms of passenger numbers at Frankfurt Airport, figures for 2017 indicate a new record year with an increase of 6% to reach a total of 64.5 million passengers. The development of a new terminal is underway which will be able to handle an additional 15 million passengers per year upon its completion in 2022.

While the hotel market recorded a healthy RevPAR growth in 2015, mainly driven by an increase in average rate, 2017 mirrored the performance of 2016 with an occupancy level in line with historical performance and a slight decrease in average rate, resulting in a modest decrease in RevPAR. We also note that the increase in minimum wage in January 2017, combined with the low unemployment environment, have put more pressure on operational margins.

Frankfurt witnessed a couple of new openings in 2017 and its pipeline remains substantial, including among others, the 414-room Intercity Hotel Frankfurt Hauptbahnhof Süd (2019), the 506-room Scandic Hotel Frankfurt Hafenpark (2021), the 225-room Diaoyutai (a Chinese brand part of MGM Hospitality Group) scheduled to open in 2019, as well as numerous budget hotels. Overall, more than 6,500 additional rooms are expected to enter the market by 2021 as the city hopes for significant growth in light of its attractiveness for financial institutions post-Brexit. 

The investment market witnessed a couple of transactions in recent months, including the 300-room Le Meridien Parkhotel Frankfurt for €85 million (€283,000 per room) in January 2018, the 1008-room Sheraton Frankfurt Hotel & Conference Centre for €122 million (€121,000 per room), also in January 2018, and the 125-room Mercure Frankfurt Eschborn Süd for €16 million (€129,000 per room) in November 2017. In addition, we also note the sale of two Holiday Inn Express hotels (Frankfurt Airport and Frankfurt Messe) as part of the Tidal portfolio in August 2017.

Frankfurt is the largest financial centre in continental Europe and ranks among the world’s leading financial centres. It is home to the European Central Bank, Frankfurt Stock Exchange and several large commercial banks. In addition, the city has a long tradition of staging trade fairs, and the Messe Frankfurt is one of the largest trade fair venues in the world, hosting events such as the Frankfurt Motor Show (the world’s largest motor show), the Frankfurt Book Fair (the world’s largest book fair) and the Musikmesse (the world’s largest music fair). Although some key trade fairs are held biennially or triennially, demand remains relatively constant compared to other markets as smaller trade fairs generate significant demand during years with fewer key events.

Owing to its central location within Germany and Europe, Frankfurt is a major air, rail and highway transport hub. Frankfurt Airport is one of the busiest airports in the world in terms of passenger traffic and the city’s central railway station is one of the largest rail hubs in Europe. Passenger numbers at Frankfurt Airport grew year-on-year from 2010 to 2015 and recorded a slight decrease in 2016 (-0.4%). The development of a third terminal has begun and is expected to be completed by 2021, resulting in an increase in total capacity from 64 million to 77 million passengers. While most visitation to Frankfurt is driven by business and trade fair demand, leisure visitation is increasing year-on-year owing to the popularity of events such as the Frankfurt Christmas Market and efforts from the city to promote cultural and historic highlights.

Following a year of solid RevPAR growth in 2015, which was mainly driven by an increase in average rate, in 2016 the Frankfurt hotel market recorded an occupancy in line with historical performance and a slight decrease in average rate, resulting in a modest decrease in RevPAR of approximately 2%. There is currently a substantial pipeline in Frankfurt including the 291-room Meliá Frankfurt, scheduled to open early 2019; the 410-room Steigenberger Frankfurt am Hauptbahnhof, scheduled to open by the end of 2018; the 225-room Diaoyutai, a Chinese brand (part of MGM Hospitality Group), scheduled to open by the end of 2017; and numerous budget hotels. Overall, more than 5,000 additional rooms are expected to enter the market by 2020 as the city hopes for significant growth in light of its attractiveness for financial institutions post-Brexit. 

After a relatively quiet 2015 in terms of transactions, 2016 witnessed seven transactions including the prestigious Villa Kennedy, which was acquired by GEG German Estate Group from Hausinvest Europa for €76,600,000 million (€470,000 per room) in March, and the Holiday Inn Quartier Gateway Gardens in the airport area, which was sold by Münchner Grund and Hotelinvest to Hansainvest for €45,000,000 million (€156,000 per room). Additionally, we note that the future Hyatt Place Frankfurt Airport, the future Motel One Kornmarkt Arkaden, the future Novum Style Mayfarthstrasse and the future Novum Style Niddastrasse were also sold, although the prices paid remain undisclosed.

Change In Value For Market: (€Euro)

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Frankfurt RevPAR Change (€Euro)

Frankfurt RevPAR (€Euro)

For more information, please contact:

Sophie Perret, MRICS, MBA
sperret@hvs.com
  • +44 20 7878 7722 (w)
Simon Hulten
shulten@hvs.com
  • +44 020 7878-7775 (w)