Hotelproperties are an attractive investment in Upper Bavaria

Offene Tür zu einem Hotelzimmer - Hotels gehören auch zum Assetclass im Portfolio von Zinshaus Oberbayern

Upper Bavaria has been attracting tourists since the 19th century with its beautiful lakes, Germany’s highest mountains, its impressive natural landscapes and vibrant cities. But Bavaria is not only a popular destination for tourists from home and abroad.
Around half of all visitors, at least in Munich, are conference and business travellers. This depends on international fairs which takes place in Munich at the one hand and at the other hand on Upper Bavaria as an important economic area with many export-oriented companies.This circumstance makes Upper Bavaria one of the most interesting and strongest hotel markets in Europe. Zinshaus Oberbayern GmbH gives you a brief overview of things you should pay attention when buying hotel real estate and how the market could develop over the next few years.

Current development

In the first seven months of 2018, 24 million (55 million in whole Bavaria) overnight stays accounts to the region Upper Bavaria and its capital Munich. Compared with the same period of the previous year, this corresponds to a growth of 7% and in Munich even of 11%. Upper Bavaria takes up approximately 24% of the total area of ​​Bavaria and has almost a half of all overnight stays in whole Bavaria. Therefore, Upper Bavaria is the most popular tourism region in Bavaria.
In addition to these high visitor numbers, strong room revenues and high occupancy rates can be added. According to a study by Colliers from 2018, the revenue per available room (RevPAR) in Germany is 68 EUR and in Munich even 84 EUR. The average occupancy rate in Munich is about 76.2%. The ratio of guests from Germany and abroad is about 50%. The current figures confirm the upward trend in the hotel real estate market which has been rising constant for several years now in Upper Bavaria and especially in Munich.

When it is advantageous to invest in an hotel real estate?

The hotel as a real estate investment has developed to an important asset class for institutional investors. Munich, and thus Upper Bavaria, has been one of the most attractive hotel markets for investors over years. In Munich, a gross yield of 3.80% can be achieved. In other regions of Upper Bavaria outside of Munich a yield rises depending on the hotel category up to approximately 5.50%.
Beside the good prerequisites discussed above, in the case of a hotel investment, it is important to look at following things: creditworthiness of the tenantry, the number of rooms, the hotel classification, modernization requirements , and the connection to public local and long-distance traffic.
In particular, the competitive situation between owner-managed hotels and hotels managed by an international hotel chain (especially in 2 to 4 star segment) should be considered.

Good preconditions for an investment are: hotel is equally attractive to both tourists and business travellers, has at least 40 rooms and is well-connected with public traffic as well it is situated in a strong economic area.

Future development

The Munich hotel market is one of Germany’s top 3 hotel hot spots and therefore a very interesting target for visitors and investors. Around 12,000 new hotel rooms are already planned for the next few years in Greater Munich and according to this, Munich and Upper Bavaria are staying a very popular location for investments in the hotel real estate asset.

Zinshaus Oberbayern GmbH is also responsible for commercialization of hotels and would be glad to help you on any questions around the hotel market in Upper Bavaria.

Zinshaus Oberbayern GmbH, your broker for investment properties in Upper Bavaria.