Market Beat Germany - FY 2025

INVESTMENT ACTIVITY

The German hotel investment market in 2025 showed strong recovery, with total transaction volume reaching around €1.9 billion, up over 50% from 2024. Prime urban and leisure assets attracted the most investor interest, driving competitive bidding and modest yield compression. Domestic and international buyers actively pursued high-quality hotels, while portfolio deals and larger single-asset transactions added liquidity. Hotels in secondary locations also saw growing attention, offering attractive income and value-add potential. Supported by robust operating performance, high occupancy, and resilient ADR trends, the market is poised for continued investor confidence into 2026, with opportunities across core, core-plus, and repositioning strategies.

PRIME YIELDS

Prime hotel yields in Germany are showing early signs of compression, supported by strong operating performance, resilient demand, and a limited supply of top-tier, institutional-grade assets. Competitive investor activity, particularly in major urban locations, is placing downward pressure on prime returns. Secondary location assets show greater yield dispersion, reflecting differences in risk profile, repositioning needs, and required capital expenditures, creating opportunities for value-add strategies.

SUPPLY & DEMAND

Demand in Germany’s hotel sector remains robust, continuing to rise from already record-breaking levels. In contrast, supply is expanding only moderately and is carefully managed. This imbalance between strong demand and controlled growth supports stable occupancy, healthy revenues, and reliable pricing across the German hotel landscape.

PERFORMANCE

Germany closed 2025 with relatively stable operating performance. Average occupancy reached nearly 68% (+0.7 percentage points vs. 2024), while ADR decreased to around €117 (-1.8% vs. 2024). As a result, RevPAR declined marginally to €78.8 (-0.8% vs. 2024). Overall performance therefore remained broadly stable year-on-year, with the slight improvement in occupancy offset by a reduction in average daily rates.