For a comprehensive review of the Europe market, click below:
HVS In-Depth Europe Hotel Valuation Index:
2023
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In recent years, Munich has consistently earned top marks from leading business journals and institutes as a business location. Munich’s economic importance and strength within Germany is founded on several important pillars: the diverse economic structure, the wide range of growing industries and the successful composition of global players and SMBs (small- and medium-sized businesses), which all offer substantial growth opportunities. Munich is Germany’s leading city in the sectors of IT and communications technology, media, finance and life sciences. The city has also risen to prominence as a cultural and artistic centre, benefitting from many attractions, including several festivals with international appeal.
The above factors contribute to strong leisure and corporate demand, but the city also benefits from strong MICE demand. As with any major MICE destination, the performance of this segment is dependent on which biennial or triennial events are held in the city in any given year; overall, however, Munich typically sees 1.7 million to 2.4 million MICE visitors a year.
Munich has benefitted from impressive tourism growth in the past decade. 2019 saw a continued strong increase in visitor numbers at 5.9% year-on-year, derived from healthy growth in both domestic and international visitation. Munich’s relatively even split between international and domestic demand, and the good balance of business and leisure demand, provides continued confidence in Bavaria’s capital. The cyclical nature of the MICE market must be considered when analysing growth trends. Although 2019 had the benefit of both BAU and BAUMA trade fairs, the two most important MICE events for the city, the market recorded a slight decrease in RevPAR, which was mainly driven by the decrease in average rate. In 2020, the pandemic outbreak impaired hotel performance. This depressed performance continued into 2021, until the summer months, when the easing of local and international restrictions led to an up-tick, especially in domestic leisure demand. 2022 data show a strong recovery in occupancy and average rate for the market from March onwards. Munich’s hotel market experienced strong summer and autumn seasons, as both leisure and corporate demand consolidated demand levels and pushed average rates.
Considering all the projects in the planning, construction and preopening phases, there are currently close to 3,000 additional hotel rooms (18 projects) due to enter the market in the next few years; 45% of which are independent hotels. About half of the pipeline (48%) falls into the upper midscale and upscale classes, and the remaining projects are equally split between upper upscale and luxury (roughly 25%) and economy and midscale (the remaining 25%) projects. Some notable new projects are the 398-room Marriott Munich City West (June 2023), the 132-room Rosewood Munich (December 2023) and the 70-room Mandarin Oriental Munch (opening date not yet announced).
Transaction levels in Munich, like most other European cities, were subdued in 2020 and 2021, although Munich managed to achieve the second-highest investment volume in Germany in 2021, behind the country’s capital city. In 2022, transaction volumes remained substantial and the most notable hotel transactions included the 300-room Hotel Munich and the 257-room Holiday Inn Erlenhofpark, both sold as single assets. As a result of the pandemic, hotel values in Munich dropped by 13% in 2020, but climbed back up by 4.4% in 2021 and a further 6.5% in 2022, well above the European average of 3.3%. Overall, Munich remains one of the strongest hotel markets in Germany. Given its market liquidity, mix of leisure and business tourism, robust domestic demand and the planned addition of a third runway at the airport by 2025, Munich is well positioned to continue its swift recovery.
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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