Europe -  Frankfurt, Germany

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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 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 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. While passenger numbers at Frankfurt Airport decreased slightly in 2016, figures for 2017 and 2018 indicate two strong years of growth with year-on-year increases of 6% and 8% to reach 69.5 million passengers by the end of 2018. Arrivals at the airport are expected to continue to increase as the development of the third terminal began in the autumn of 2015. The first construction phase of Terminal 3 is scheduled for completion in 2023, with a capacity of around 14 million passengers a year, increasing the overall airport capacity to 78 million passengers.

The 2018 hotel performance was a mixed bag. While hotels at the upper-end of the spectrum recorded a slight decrease in RevPAR driven by continued pressure on average rate, the rest of the market grew broadly in line with inflation. The outlook is nevertheless relatively bright as 2019 is expected to be a strong fair year and the city has started to welcome a number of new companies (especially banks) which have decided to move from London in light of Brexit.

Frankfurt witnessed a couple of new openings in 2018 including the 414-room IntercityHotel Frankfurt Hauptbahnhof Süd, the 470-room Motel One Kornmarkt Arkaden, the 196-room Hampton by Hilton Frankfurt Airport and the 167-room Hilton Garden Inn Frankfurt City Centre. The pipeline for the city remains substantial, including among others the 430-room Meliá Frankfurt (2019), the 238-room Hotel Indigo Frankfurt (2020), the 375-room nhow Frankfurt (2021), the 428-room NH Collection Frankfurt Messe (2021), the 155-room Kimpton Frankfurt (2023), the 180-room Hyatt House Frankfurt City as well as various budget hotels.

The investment market continues to be strong with a number of transactions in 2018, including the Sheraton Frankfurt Hotel & Conference Centre for €122 million (€121,000 per room) in January, the 467-room InterContinental Frankfurt (undisclosed) in May, the 344-room niu Air-Hotel Frankfurt in September, the InterCity Hotel Frankfurt Airport (part of the Invesco DE Portfolio) in March, and the Marriott and the Aparthotel Adagio (both part of the Westend Gate 2018 Portfolio) in July. Overall, Frankfurt recorded a 1.3% increase in hotel values in 2018.

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.

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For more information, please contact:

Sophie Perret, MRICS, MBA
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Magali Castells
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