Berlin hotels experience 9.3% RevPAR decline in 2009

8 March 2010

Hotels in Berlin experienced a 9.3% decline in RevPAR in 2009 compared to the previous year, despite it being the city’s best ever year for tourism and overnight stays, according to the latest city review by Christie + Co, using data provided by STR Global.

Despite being the city’s best ever year for tourism with 8.3 million arrivals (+4.5% compared to the previous year) and overnight stays with 18.9 million (+6.2% compared to the previous year), room occupancy across hotels in Berlin declined by 1.2 percentage points, while average room rate (ARR) dropped by 7.6% as a result of additional supply and the global economic downturn.

According to quarterly data, occupancy figures did stabilise in the third quarter of 2009 (+1.0% compared to the previous year) and in the fourth quarter (-0.3% compared to the previous year). The year-to-date figures for 2010 have continued to be encouraging. In January, Berlin registered double digit RevPAR growth, driven by increasing occupancy and average room rate.

Berlin has seen a continuous growth of hotel supply over the past several years. Over the last twelve months, 17 new hotels with over 3,000 bedrooms have entered the market. Approximately three quarters were three- and four-star hotels, whilst the remainder were budget hotels. In addition, 20 development projects are still in the pipeline, totalling almost 5,000 new rooms, which are set to be added to the market over the next two years. The development of new hotels in Berlin is set to continue after 2011, with several hotels already at the planning stage or just about to enter the construction phase.

Transactional activity in the Berlin hotel sector slowed down dramatically in 2009 as a result of the challenging financial environment, with no significant hotel transactions taking place during the year. Only a few smaller hotels changed hands in 2009, with the majority of these transactions being leasehold deals.

Armin Bruckmeier, Christie + Co’s Head of Advisory & Valuation Services in Germany, said: “Berlin recorded increasing arrivals and overnight stays, from both Germany and abroad during 2009, however occupancy and ARR still dropped due to increasing competition and the economic downturn. We expect this competitive pressure to further increase as a result of the number of hotel projects still in the pipeline.

“Another consequence could be the stagnation or even further decline of occupancy rates going forward. Since many ’newcomers’ are expected to gain market share by adopting an aggressive pricing policy, we believe that Berlin average room rates – low by national and international comparison in the first place – will come under even more pressure.

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For further information on this press release, please contact: Mark Wingett at Christie + Co. Tel: 020 7227 0794. mark.wingett@christie.com