HVS Webinar Report: Hotel Insolvencies in Germany: Distress or Opportunity?

On Wednesday, 17th June, HVS, together with our partner Bird & Bird, welcomed 143 delegates to a webinar to explore the current landscape of hotel insolvencies in Germany.

The session began with an introduction by Jürgen Schlinkmann, partner at Bird & Bird, who outlined the relevance of the topic in light of recent high-profile insolvency proceedings involving major hotel operators in Germany. 

Elie Kaufman, Senior Counsel at Bird & Bird, then offered a detailed overview of German insolvency law as it applies to the hotel sector, explaining the three main grounds for insolvency under German law—illiquidity, over-indebtedness, and threatening illiquidity—and the statutory obligations for management to file for insolvency. He outlined the different types of insolvency proceedings, including regular and self-administration processes, and highlighted the complexities arising from the capital-intensive and multi-contractual nature of hotel operations. Special focus was placed on the treatment of lease agreements and management agreements, and on the handling of furniture, fixtures, and equipment (FF&E) in insolvency scenarios, noting the various rights and claims that may arise among owners, operators, lenders, and suppliers. The presentation also addressed recent trends in risk allocation, such as increased rent security requirements and the emergence of hybrid contract models with turnover-based rents, as well as the importance of clear contractual arrangements to avoid disputes over FF&E.

Following this thorough legal overview, Tim Barbrook, Head of Debt Advisory at HVS, provided the capital markets perspective on hotel distress. He clarified that recent insolvencies should not be seen as a loss of confidence in the German hotel sector, but rather as a reflection of business models and capital structures being tested by a new environment of higher financing costs and increased operational expenses. He noted that most distressed situations are resolved through refinancing or restructuring rather than formal insolvency, and that many affected hotels remain fundamentally sound as businesses. 

Tim went on to outline the key factors lenders consider in distressed situations—such as the business's viability, management quality, sponsor support, and the credibility of the business plan—and stressed the importance of transparency, realism, stakeholder alignment, and speed in successful restructurings. He described how financial stress can manifest operationally, affecting maintenance, supplier relationships, and staff retention. He reiterated that Germany remains an attractive market for well-capitalised investors seeking opportunities amid disruption. “These situations should not be interpreted as a loss of confidence in hotels or in Germany as a market. Rather, they reflect the reality that a number of business models and capital structures are being tested now in a very different environment from the ones in which they were initially created."

Our expert panel was then convened, albeit with communication difficulties which foiled the plans of HVS Chairman, Russell Kett, to moderate from a cruise ship in the North Sea. Fortunately, Jürgen Schlinkmann was on hand to take up the reins, and a lively discussion ensued.

Panellists agreed that the current wave of insolvencies represents a structural correction rather than a systemic crisis, with the main drivers being increased financing and operational costs, inflexible lease structures, and the exposure of weaknesses in certain business models. 

I think the system is correcting, not collapsing. That will be my take on the current station, where we have small number of large operators that take in big risks

Asli Kutlucan, CEO Europe at Adina Hotels

I would see it as a structural correction... the times now has exposed fundamental weaknesses in an operator model that was high risk and is simply not functioning in the current financial climate, so it’s a house correction, but definitely an opportunity coming out of this as well

Simge Kocabayoglu, Legal Counsel at IHG Hotels & Resorts

The discussion highlighted the particular vulnerability of lease-based models in the current climate, the importance of aligning rent increases with market performance, and the need for greater transparency and communication between owners and operators. 

We are in the German market, in a very, very price-sensitive market, so it’s not easy to... adjust the prices on the room rates, so yeah, that’s a little bit of a challenging thing to adjust

Meinhard Kirschner, Legal Executive, Novum Hospitality

Some operators are really proud of over ambitious contracts, and I think it’s the same or a similar attitude have developers or owners... when I hear how high the rent is they want, I think that’s very greedy still

Maria Puetz-Willems, Founder and Editor-in-Chief of HospitalityInside

The Panellists also emphasised the role of technology and digitalisation in managing costs, the significance of brand strength and operator expertise in asset recovery, and the necessity for solution-driven, collaborative approaches among all stakeholders—including lenders, administrators, and brands—during restructuring processes.

Throughout the event, interactive polling questions engaged the audience on topics such as the primary drivers of distress, the most vulnerable operating structures, the impact of recent insolvencies on investment appetite, and the perceived opportunities arising from hotel distress. 

The majority of participants identified rising financing costs and inflation as key challenges, with lease-based models seen as particularly at risk. Despite the challenges, many attendees expressed increased interest in distressed opportunities, especially in repositioning underperforming hotels and acquiring distressed assets.

The session concluded with a Q&A segment addressing practical legal questions on lease termination rights, the distinction between illiquidity and threatening illiquidity, and the importance of early intervention and transparent communication in preventing and managing insolvency situations. 

The final panel question – how speakers would deploy €100 million into Germany today – drew answers focused on acquiring and repositioning distressed or underperforming assets rather than pursuing new developments, reflecting and reinforcing earlier points about this being a period of structural correction and opportunity in existing stock rather than a growth cycle for greenfield projects.

Overall, the message was one of cautious optimism: while the sector faces significant headwinds, there are substantial opportunities for those able to navigate the complexities of the German hotel market with strategic insight, legal acumen, and collaborative problem-solving.

Download the presentations here