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In recent years, Munich has consistently ranked highly in leading business journals and institutes as a premier business destination. Munich's economic strength within Germany rests on several key pillars: its diverse economic landscape, the presence of a wide range of growing industries, and the successful blend of global players and SMEs (small- and medium-sized enterprises), all of which offer significant growth opportunities. Munich leads Germany in pivotal sectors such as IT, communications technology, media, finance, and life sciences. Additionally, it has emerged as a vibrant cultural and artistic centre, boasting numerous attractions and internationally acclaimed festivals.

The above factors contribute to strong leisure and corporate demand, however, the city also enjoys robust MICE (Meetings, Incentives, Conferences, and Exhibitions) demand. Similar to other prominent MICE destinations, the performance of this segment hinges on the scheduling of biennial or triennial events hosted in the city in any given year. Nevertheless, Munich consistently attracts between 1.7 and 2.4 million MICE visitors annually.

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. The pandemic depressed performance in both 2020 and 2021, until the summer months, when the easing of local and international restrictions led to an up-tick, especially in domestic leisure demand. 2022 saw a significant improvement in hotel performance in Munich. While hotel demand recovered to more than 80% of the historical volume during the year, average rates returned to more than 95% of the pre-pandemic level in real terms, which led to real RevPAR constituting nearly 80% of its 2019 level by the end of 2022. Both the average rates and occupancy increased further in 2023, although the 2023 RevPAR still remained almost 15% behind 2019 levels in real terms.

There are currently over 2,500 rooms over 21 projects in the pipeline which are due to enter the market over the next couple of years. The pipeline is more heavily geared towards more budget properties; around 75% of the rooms in the pipeline will be on the Economy, Midscale and Upper Midscale positionings, while 65% of the projects will be independent. Notable projects include the 107-room Luxury Collection Koenigshof hotel (opening Q2 2024), the 358-room Ibis Styles Munich Airport (opening Q1 2025) and the 70-room Mandarin Oriental, whose opening date remains uncertain.

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. These transactions included the 300-room Hotel Munich and the 257-room Holiday Inn Erlenhofpark, both sold as single assets. Three transactions occurred in the Munich market in 2023. The select-service hotel Pension am Hauptbahnhof, bought by an undisclosed investor, was sold for €7.5 million in March. The 269-room Motel One, bought by family office Wirtgen Group from Concrete Capital, transacted for an undisclosed amount in September and lastly, the 54-room select-service Azimut Erding was bought by a German company in October. This property, sold in a portfolio deal for an undisclosed amount, will be managed by operator Andante Hotel.

Munich hotel values decreased by 1.5% in 2023 and remain 4.6% below the 2019 levels. Munich remains one of the strongest hotel markets in Germany. Given its historical 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 recovery, as corporate and MICE demand recover further.

ADR, Demand, Occupancy, RevPAR, and Supply Projections:

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Change In Value For Market: (€Euro)

Munich RevPAR Change (€Euro)

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For more information, please contact:

	Sophie Perret, MRICS, MBA Managing Director [email protected] +44 0 2078787722 (w) +44 0 7725781037 (m)
	Julia Dzerkach Associate [email protected] +44 0 2078787742 (w) +44 0 7912240964 (m)
	Clemence Sennavoine Associate [email protected] ++44 0 7736273439 (m)