Europe -  Munich

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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 1.7-2.4 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, like most other European cities, the Munich hotel market experienced a substantial decrease in performance, owing to the outbreak of the COVID-19 pandemic. This depressed performance continued in 2021, until the summer months, when the easing of local and international restrictions led to an up-tick, especially in domestic leisure demand.

Considering all the projects in the planning, construction and preopening phases, there are currently close to 5,500 additional hotel rooms due to enter the market by the end of 2024, 45% of those being independent hotels. Most of the pipeline, around 65%, falls into the upper midscale and upscale classes. Some notable new projects are the 607-room Vienna House R.evo Muenchen (December 2022), the 411-room Marriott Munich World Conference Center (2023), and the 132-room Rosewood Munich (2023).

Transaction levels in Munich, like most other European cities, were subdued in 2020. However, in 2021, Munich managed to achieve the second-highest investment volume in Germany, behind the country’s capital city, with slightly under €200 million in deals. The most notable hotel transactions that took place last year include the 256-room Courtyard by Marriott Galileo, as part of a portfolio, and the 244-room Hampton by Hilton Munich Airport South, sold as a single asset. The average price per key in 2021 increased by 4% compared to 2020.

As a result of the pandemic, hotel values in Munich dropped by 13% in 2020, but climbed back up by 4.4% in 2021, as recorded in our 2022 European Hotel Valuation Index. Even though this stands below the European average of 5.0%, 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 for a swift recovery.

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

[email protected]
  • +44 20 7878 7722 (w)
Nikola Miljković

[email protected]
  • +44 20 7878-7724 (w)
  • +44 7 593572865 (m)
Mathilde De Bona

[email protected]