Europe -  Frankfurt

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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, the Frankfurt Stock Exchange and several large commercial banks. In addition, the city has a long tradition of staging trade fairs and is home to Messe Frankfurt, one of the largest trade fair venues in the world. Owing to its central location within Germany and Europe, Frankfurt is a major air, rail and road transport hub. Frankfurt Airport is one of the busiest airports in the world in terms of passenger traffic (the fourth busiest in Europe) and the city’s central railway station is one of the largest rail hubs in Europe. In 2015, the development of the airport’s third terminal began. Once finished it will enable the airport to welcome around 20 million additional passengers a year; however, since the management of the airport doesn’t expect passenger volumes to return to pre-pandemic levels before 2026, as of March 2022 there are no plans to inaugurate Terminal 3 any earlier than that.

Frankfurt’s recent hotel performance prior to the pandemic was stable in terms of occupancy, operating slightly below 70.0%. On the other hand, the average rate declined by around 1.5% on average from 2016 to 2019, resulting in an average RevPAR decrease of around 2.0% in the same period. Following the COVID pandemic, Frankfurt experienced a severe downturn in hotel trading. The majority of the city’s hotels  closed in March, with some reopening in May or June only to close again in the autumn, following a new outbreak. The market experienced a further downturn in 2021 with RevPAR decreasing more than 10.0% year on year.

Frankfurt’s pipeline stands at around 5,200 new rooms coming to the market in the next couple of years and over 3,000 new rooms fall into the upscale category. This marks a 17.0% increase compared to the current supply and is one of the heaviest among the European cities. The most relevant new opening are the 375-room NHOW Frankfurt ( May 2022), the 506-room Scandic Frankfurt Hafenpark (June 2022) and the 416-room NH Collection Frankfurt ( February 2023).

The investment landscape in Frankfurt remained quiet over the course of 2021 with only notable transaction being the sale of the 163-room Villa Kennedy operated by Rocco Forte group. The hotel transacted for around €95 million or €580,000 per room and was bought by Conren Land, a real estate investor, which invests mainly into office properties.

In 2021, Frankfurt registered a modest increase in hotel values of 2.1%, as indicated in our Hotel Valuation Index 2022. Frankfurt’s substantial dependency on business demand is expected to continue to challenge to some extent the return to normalised performance levels for this market, as MICE, and especially corporate demand take longer to recover than leisure demand. Additionally, the substantial new supply is likely to further depress occupancy levels in the short term, although the strategic location of this market and its economic significance help to ultimately anticipate a recovery to pre-pandemic levels of performance.

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: More than -10%

For more information, please contact:

Sophie Perret, MRICS, MBA
Senior Director
[email protected]
  • +44 20 7878 7722 (w)
  • +44 0 7725781037 (m)
Nikola Miljković
Associate
[email protected]
  • +44 0 2078787724 (w)
  • +44 0 7593572865 (m)