Thursday, 2 July 2026
Germany’s hotel sector recorded another year of growth in 2025, supported primarily by domestic tourism, while hotel property values and investment activity continued to recover, according to a market analysis by Union Investment and bulwiengesa.
Germany registered a record 497.5 million overnight stays during 2025, with domestic travel remaining the main driver of demand. International tourism also increased, although at a more modest pace.
According to the report, hotel performance is increasingly being driven by underlying operating fundamentals rather than temporary factors such as major events. Following the boost provided by trade fairs, conferences and the UEFA European Championship in 2024, investors are placing greater emphasis on revenue growth, operating costs, location quality and the strength of hotel operators.
The hotel investment market also strengthened during 2025. Transaction volume reached approximately €1.9 billion, representing an increase of more than one-third compared with 2024 and broadly in line with the average annual investment activity recorded between 2020 and 2024.
Large single-asset transactions accounted for around three-quarters of completed deals, while portfolio transactions also returned to the market.
Prime yields remained broadly stable at around 5.25%, although stronger market liquidity and renewed interest from core and core-plus investors contributed to modest yield compression for selected prime assets. Pricing continued to depend heavily on asset quality, location, operator strength and lease structures.
The report estimates that the investment-grade German hotel market increased in value by approximately 2.8% during 2025, reaching around €66.1 billion compared with €64.3 billion a year earlier.
Most of this increase was driven by new hotel supply rather than appreciation of existing assets. Almost 10,000 investment-grade hotel rooms were completed during the year, adding an estimated €1.5 billion to the market.
New development activity shifted increasingly towards regional cities and tourism destinations outside Germany’s largest metropolitan areas. Only around one-fifth of newly completed hotel rooms were delivered in the country’s major cities, with developers focusing more heavily on smaller urban centres and leisure markets.
The report also highlights the growing importance of redevelopment and conversion projects. Approximately one-third of all hotel rooms completed during 2025 were created through the conversion or repositioning of existing buildings.
These projects were concentrated mainly in the midscale and upscale hotel segments, although several luxury repositionings were also completed. Operators in the serviced apartment and long-stay sectors are increasingly converting former hotels, office buildings and mixed-use properties into new accommodation concepts.
According to the authors, conversions have become particularly important in Germany’s largest cities, where limited development land and high land costs make new construction more difficult. Refurbishment and adaptive reuse are therefore becoming increasingly important strategies for expanding hotel capacity while improving the value of existing assets.
Union Investment and bulwiengesa expect hotel room supply to continue growing at a similar pace during 2026, with redevelopment and conversion projects remaining a key feature of the German hotel investment market.
