German Leisure Guests to the Rescue
By Matthew Costin Global Director (Hotels & Hospitality), BDRC Continental | March 19, 2014
A booming German leisure market is welcome relief for European hoteliers, reports recent research from BDRC CoGerman leisure guests to the rescue!
The German hotel market has performed relatively well through the recent economic crisis. Of the 5 biggest European markets, only Germany has delivered anything more than negligible growth in demand for hotel rooms over the last 12 months.
It A booming German leisure market is welcome relief for European hoteliers, reports has not all been good news. The German corporate travel market has continued to contract, but this has been more than compensated by the growth of leisure. German hotels have benefited from a 7% year-on-year increase in demand from Germans staying in hotels in their own country for leisure reasons, while the growth in outbound (international) German leisure volume has been even higher at 11.8%, delivering an estimated 114 million international leisure room nights in the last 12 months. Hotels in Mediterranean destinations such as Spain, Italy and Turkey have been the major beneficiaries.
Domestically, the outlook for German hotels is generally optimistic. The Ifo Business Climate Index, an early indicator for economic development in Germany, has sat well above the December 2012 figure for the first few months of 2013 and rose for the 3rd consecutive month in July. RevPar is forecast to rise a further 2-4% in 2013. Occupancy is likely to be steady, while rates are predicted to shift upwards. Furthermore, Germany remains an attractive market for hotel investors, with lenders more comfortable about offering credit than in most other European countries.
The Emergence of the German Economy Tier
Germany is famous for its family-run Gasthäuser which tend to offer fairly basic accommodation, but when it comes to hotel brands, it is traditionally seen as an upscale-orientated market. Yet the supply-side landscape of the German hotel industry is changing; Accor's economy brand, Ibis (taken together with its sub-brand variants Ibis Budget and Ibis Styles), now has the largest bedroom inventory in Germany; furthermore, local operator Motel One, also operating at the top end of the economy tier, has more than doubled its presence in the last 4 years, while French brand B&B has also expanded significantly in Germany.
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