For a comprehensive review of the Europe market, click below:
HVS In-Depth Europe Hotel Valuation Index:
2023
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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. The first construction phase was initially scheduled for completion in 2023; however, owing to delays caused by the pandemic, it is now not expected to open any time before 2026, at the earliest. With a capacity of around 21 million passengers a year, the new terminal will increase the overall airport capacity to around 91 million passengers.
Frankfurt’s hotel performance prior to the pandemic was stable in terms of occupancy, operating slightly below 70%. 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. Frankfurt experienced a severe downturn in hotel trading in 2020 and H1 2021 as a result of the pandemic. The summer of 2021 witnessed a slight uplift in occupancy over 2020 as measures eased and travel and visitation slowly resumed. The early months of 2022 remained low compared to historical levels owing to the Omicron variant of the virus, but occupancy recovered thereafter, and the months of May and July almost matched historical levels in terms of volume. Overall, 2022 ended up with a significant RevPAR increase compared to 2021, but still remained at around 70% of the 2019 performance.
Frankfurt’s pipeline stands at around 5,200 new rooms coming to the market in the next few years and more than 3,000 of those new rooms fall into the upscale category. This marks a 16% increase in the current supply, and is one of the heaviest pipelines in Europe. The most relevant new openings are the 527-room Steigenberger Congresshotel Gateway Gardens (Q4 2024), the 181-room Hyatt House Frankfurt City Goetheplatz (Q1 2025) and the 155-room Kimpton Frankfurt am Main (Q1 2025).
The investment landscape in Frankfurt remained somewhat quiet over the course of 2022 with only a couple of hotels exchanging hands. The most notable were the sale of the 143-room Mercure Hotel Frankfurt Airport for an undisclosed sum and the 121-room Grandhotel Hessischer Hof for around €32 million.
In 2022, Frankfurt registered a modest increase in hotel values of 3.0%, as indicated in our Hotel Valuation Index 2023, though values still remain below 2019 levels. Frankfurt’s substantial business demand is expected to continue to normalise over the next few months, but the lack of leisure demand for this market has resulted in a slower pace of recovery. Additionally, the substantial new supply is likely to put pressure on occupancy levels in the short term, although the strategic location of this market and its economic significance should lead to a recovery to pre-pandemic levels of performance.
The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide.
Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the
hospitality investment market.
In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely
insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related
restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.
Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with
an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide
insights on the likely trajectory of decline and recovery for hotel values.
For the Latest Information and Analysis on the Impact of COVID-19Click Here
If you’d like to speak to someone personally to review details of our most current analysis, please don’t hesitate to contact
us directly.
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