Sentiment Report 2020 | 2021 - Engel & Völkers

SENTIMENT REPORT HOTEL MARKET GERMANY 2020 | 2021

Personalitiescraft hotels.The hotel industry has always been shaped and formed by greatpersonalities. By movers and shakers with a feeling for the ico-nic, the beautiful, the humane, the epicurean and certainly also for business.

We at Engel & Völkers Hotel Consulting also come from this world. We know that the hotel business is about more than justtransactions, investments and assets: It is about realizing highlyindividualized ideals. It is these material visions that make up the magic, the personality and ultimately the success of a hotel.

the hotel market is changing – not only in Germany but worldwide.

At the beginning of 2020, the COVID-19 crisis had put all stakeholders in the hotel industry into shock. Now we are trying to jointly work on possible solutions. Nevertheless, there is still a high level of uncertainty – the dependence on overcoming the virus currently makes reliable forecasts hardly possible. The second lockdown, which came into force in November, has now additionally affected the industry, while at the same time, reports about a timely availability of a vaccine are fueling the hope that the crisis will be overcome soon.

In times of market uncertainty, it is therefore of particular concern to us, to contribute to thetransparency of the hotel industry. The yearly repeated, anonymous survey of industry experts provides further insights into the market, both from the operator and investor per-spective. We wish everyone an exciting read and look forward to a personal exchange.

With kind regards,

A

B

C

OVERVIEW

2023-2024… according to 75% of the participants

+

DRIVERS FOR A FAST MARKET RECOVERY

VACCINE END OF TRAVEL WARNINGS

RECOVRERY OF AIR TRAFFIC

+

HAMBURG MUNICH

… are the most resilient hotel markets in Germany from the respondents‘ point of view

… see the continuation of the trend also post-corona

… assume a future establishment as an institutional asset class

MAIN MEASURE TO REGAIN GUESTS …

80% 66%

… COMMUNICATION WITH GUESTS

… HYGIENE MEASURES&

RESORT HOTELSDOMESTIC TRAVEL

PRE-CRISIS LEVEL IN…

&

… of the operators plan to continue expanding their hotel portfolio

88%

Source: EVHC Survey

3

A

B

C

OVERVIEW

2023-2024… according to 75% of the participants

+

DRIVERS FOR A FAST MARKET RECOVERY

VACCINE END OF TRAVEL WARNINGS

RECOVRERY OF AIR TRAFFIC

+

HAMBURG MUNICH

… are the most resilient hotel markets in Germany from the respondents‘ point of view

… see the continuation of the trend also post-corona

… assume a future establishment as an institutional asset class

MAIN MEASURE TO REGAIN GUESTS …

80% 66%

… COMMUNICATION WITH GUESTS

… HYGIENE MEASURES&

RESORT HOTELSDOMESTIC TRAVEL

PRE-CRISIS LEVEL IN…

&

… of the operators plan to continue expanding their hotel portfolio

88%

Source: EVHC Survey

Kurt Tucholsky | Journalist & Writer

Traveling is the yearning for life.”

MARKET OVERVIEW

9

1 0 %

1 4 %

1 0 %

6 6 %

1 4 %

9 %

1 4 %

6 2 %

R E S P O N D E N T S ’ A S S E S S M E N T O F W H I C H H O T E L M A R K E T W I L L R E C O V E R T H E F A S T E S T

RESILIENCE OF EUROPEAN HOTEL MARKETS

OPERATORS INVESTORS

8 % | - 2 0 % *

Source: EVHC Survey |The hotel markets IT, NL, ES, FR & GB are not displayed as <7%.

1 6 % | - 2 0 % *

2 0 % 2 0 %

1 7 % 1 2 %

1 7 % 2 1 %

1 4 % 1 4 %

1 3 % 1 6 %

1 1 % 1 0 %

7 % 6 %

DUE TO …

SHARE OF DOMESTIC TOURISM

LEISURE TOURISM INFRASTUCTURE

STABILITY OF THE HEALTHCARE SYSTEM

IMAGE OF THE DESTINATION

GOVERNMENTAL CIRIS MANAGEMENT

INFRASTRUCTURAL CONNECTION

PRICE-PERFORMANCE-RATIO

GERMANY

AUSTRIA

SWITZERLAND

OTHER

9

1 0 %

1 4 %

1 0 %

6 6 %

1 4 %

9 %

1 4 %

6 2 %

R E S P O N D E N T S ’ A S S E S S M E N T O F W H I C H H O T E L M A R K E T W I L L R E C O V E R T H E F A S T E S T

RESILIENCE OF EUROPEAN HOTEL MARKETS

OPERATORS INVESTORS

8 % | - 2 0 % *

Source: EVHC Survey |The hotel markets IT, NL, ES, FR & GB are not displayed as <7%.

1 6 % | - 2 0 % *

2 0 % 2 0 %

1 7 % 1 2 %

1 7 % 2 1 %

1 4 % 1 4 %

1 3 % 1 6 %

1 1 % 1 0 %

7 % 6 %

DUE TO …

SHARE OF DOMESTIC TOURISM

LEISURE TOURISM INFRASTUCTURE

STABILITY OF THE HEALTHCARE SYSTEM

IMAGE OF THE DESTINATION

GOVERNMENTAL CIRIS MANAGEMENT

INFRASTRUCTURAL CONNECTION

PRICE-PERFORMANCE-RATIO

GERMANY

AUSTRIA

SWITZERLAND

OTHER

7

ADR

EUR 95- 8%

3.5 mln.- 8%

BEDS

38.2%- 45%

OCCUPANCY

The fundamental data of the German hotel market in the first halfof 2020 reflect the impact of the COVID-19 pandemic. Due to theGermany-wide lockdown in March and the subsequent travelrestrictions, the volume of overnight stays decreased significantlyby -47% to 117 million. The decline in demand directly affected thelodging industry and as a result RevPAR fell by -49% to EUR 36compared to the same period of the previous year. This decline ismainly influenced by the lower room occupancy, which averaged38% in the first half of the year, while ADR decreased by only 8%.

OVERNIGHTS

EUR 36- 49%

REVPAR

117 mln.- 47%

%

P E R F O R M A N C E S N A P S H O T – G E R M A N Y

OVERVIEW OF THE FIRST HALF OF 2020

Source: | Destatis

11

BERLINEEUURR 9933

-6%

3399%%

-50%

EEUURR 3377

-53%

66..55 mmllnn..

-60%

aapppprrooxx.. EEUURR 00..3344 bbllnn..

+112%*

MUNICHEEUURR 110055

-19%

3377%%

-49%

EEUURR 3399

-59%

33..66 mmllnn..

-56%


+5%

HAMBURGEEUURR 9966

-17%

4422%%

-45%

EEUURR 4400

- 55%

33..22 mmllnn..

-56%


-32%

FRANKFURT EEUURR 110077

-5%

3388%%

-44%

EEUURR 4411

-47%

22..44 mmllnn..

-53%


-28%

COLOGNE / BONNEEUURR 110033

-8%

4433%%

-41%

EEUURR 4444

-45%

11..88 mmllnn..

-56%

aapppprrooxx.. EEUURR 00..0055 bbllnn..****

-78%

DUSSELDORFEEUURR 111199

+13%

4400%%

-43%

EEUURR 4477

-35%

11..11 mmllnn..

-56%


-46%

STUTTGARTEEUURR 110033

-6%

3377%%

-49%

EEUURR 3388

-52%

00..99 mmllnn..

-55%


-50%

TRANSACTION VOLUMEADR OCCUPANCY REVPAR OVERNIGHTS

K E Y P E R F O R M A N C E I N D I C A T O R S O F T H E F I R S T H A L F O F 2 0 2 0 I N C O O P E R A T I O N W I T H F A I R M A S

TOP 7 CITIES AT A GLANCE

Source: | E&V Research, Land Statistical Office / Percentage figures in relation to the same period of the previous year| *Includes merger of two listed real estate groups & portfolio deals | **Transaction volume only includes Cologne

9

ADR

EUR 95- 8%

3.5 mln.- 8%

BEDS

38.2%- 45%

OCCUPANCY

The fundamental data of the German hotel market in the first halfof 2020 reflect the impact of the COVID-19 pandemic. Due to theGermany-wide lockdown in March and the subsequent travelrestrictions, the volume of overnight stays decreased significantlyby -47% to 117 million. The decline in demand directly affected thelodging industry and as a result RevPAR fell by -49% to EUR 36compared to the same period of the previous year. This decline ismainly influenced by the lower room occupancy, which averaged38% in the first half of the year, while ADR decreased by only 8%.

OVERNIGHTS

EUR 36- 49%

REVPAR

117 mln.- 47%

%

P E R F O R M A N C E S N A P S H O T – G E R M A N Y

OVERVIEW OF THE FIRST HALF OF 2020

Source: | Destatis

11

BERLINEEUURR 9933

-6%

3399%%

-50%

EEUURR 3377

-53%

66..55 mmllnn..

-60%


+112%*

MUNICHEEUURR 110055

-19%

3377%%

-49%

EEUURR 3399

-59%

33..66 mmllnn..

-56%


+5%

HAMBURGEEUURR 9966

-17%

4422%%

-45%

EEUURR 4400

- 55%

33..22 mmllnn..

-56%


-32%

FRANKFURT EEUURR 110077

-5%

3388%%

-44%

EEUURR 4411

-47%

22..44 mmllnn..

-53%


-28%

COLOGNE / BONNEEUURR 110033

-8%

4433%%

-41%

EEUURR 4444

-45%

11..88 mmllnn..

-56%

aapppprrooxx.. EEUURR 00..0055 bbllnn..****

-78%

DUSSELDORFEEUURR 111199

+13%

4400%%

-43%

EEUURR 4477

-35%

11..11 mmllnn..

-56%


-46%

STUTTGARTEEUURR 110033

-6%

3377%%

-49%

EEUURR 3388

-52%

00..99 mmllnn..

-55%


-50%

TRANSACTION VOLUMEADR OCCUPANCY REVPAR OVERNIGHTS

K E Y P E R F O R M A N C E I N D I C A T O R S O F T H E F I R S T H A L F O F 2 0 2 0 I N C O O P E R A T I O N W I T H F A I R M A S

TOP 7 CITIES AT A GLANCE

Source: | E&V Research, Land Statistical Office / Percentage figures in relation to the same period of the previous year| *Includes merger of two listed real estate groups & portfolio deals | **Transaction volume only includes Cologne

9

0.81.1 1.2

1.6

3.0

4.4

5.2

4.0 4.0

4.9

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q3 2020

6.3%6.0%

5.8% 5.8%

5.4%

5.0% 4.5%

4.1% 4.0%3.8%

M A R K E T S N A P S H O T – 2 0 1 0 T O Q 3 2 0 2 0

TRANSACTION VOLUME

AAllll--RRiisskk YYiieelldd DDeevveellooppmmeenntt in % SSiinnggllee TTrraannssaaccttiioonnss / PPoorrttffoolliioo TTrraannssaaccttiioonnss in EUR bln.

1.8

Q1–Q3 2020

Source: E&V Research

A

B

C

C O N C L U S I O N | T R A N S A C T I O N V O L U M E S L O W S D O W N F O R N O W

In the first three quarters of 2020, the hotel transactions reached a volume of around EUR 1.8 billion. If the first quarter of 2020 is disregarded, hotel properties worth only approx. EUR 700 mln. havechanged hands since the first lockdown – the majority of which were even only part of an overall portfolio or a neighborhood development. Achieving the record volumes of previous years of aroundEUR 4.0 – 4.5 billion will depend on the general recovery of the hotel market and the resulting return of confidence in the asset class.

1111

0.81.1 1.2

1.6

3.0

4.4

5.2

4.0 4.0

4.9

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q3 2020

6.3%6.0%

5.8% 5.8%

5.4%

5.0% 4.5%

4.1% 4.0%3.8%

M A R K E T S N A P S H O T – 2 0 1 0 T O Q 3 2 0 2 0

TRANSACTION VOLUME

AAllll--RRiisskk YYiieelldd DDeevveellooppmmeenntt in % SSiinnggllee TTrraannssaaccttiioonnss / PPoorrttffoolliioo TTrraannssaaccttiioonnss in EUR bln.

1.8

Q1–Q3 2020

Source: E&V Research

A

B

C

C O N C L U S I O N | T R A N S A C T I O N V O L U M E S L O W S D O W N F O R N O W

In the first three quarters of 2020, the hotel transactions reached a volume of around EUR 1.8 billion. If the first quarter of 2020 is disregarded, hotel properties worth only approx. EUR 700 mln. havechanged hands since the first lockdown – the majority of which were even only part of an overall portfolio or a neighborhood development. Achieving the record volumes of previous years of aroundEUR 4.0 – 4.5 billion will depend on the general recovery of the hotel market and the resulting return of confidence in the asset class.

Engel & Völkers Hotel Consulting

The world will travel again. ”

OUTLOOK

17

3 % 1 2 % 3 8 % 3 8 % 1 0 %

9 % 3 8 % 3 8 % 1 5 %

OPE

RATO

RS

IN

VEST

ORS

M A R K E T O U T L O O K

RETURN TO PRE-CRISIS LEVEL

2 0 2 1 2 0 2 2 2 0 2 3 2 0 2 4 2 0 2 5

C O N C L U S I O N | T H E E X P E C T E D M A R K E T R E C O V E R Y F O C U S E S O N T H E P E R I O D 2 0 2 3 - 2 0 2 4

Among the market participants surveyed, 2023-2024 is emerging as the period when the German hotel market will return to its pre-crisis level of 2019. Around 10% have hopes for an earlier marketrecovery. While at the beginning of the pandemic 2023 was often mentioned as the point in time for successfully managing the crisis, more than one-third of those surveyed now only expect acomplete recovery of the German hotel market in 2024.

Source: EVHC Survey

Δ Δ Δ

1517

3 % 1 2 % 3 8 % 3 8 % 1 0 %

9 % 3 8 % 3 8 % 1 5 %

OPE

RATO

RS

IN

VEST

ORS


RETURN TO PRE-CRISIS LEVEL

2 0 2 1 2 0 2 2 2 0 2 3 2 0 2 4 2 0 2 5

C O N C L U S I O N | T H E E X P E C T E D M A R K E T R E C O V E R Y F O C U S E S O N T H E P E R I O D 2 0 2 3 - 2 0 2 4

Among the market participants surveyed, 2023-2024 is emerging as the period when the German hotel market will return to its pre-crisis level of 2019. Around 10% have hopes for an earlier marketrecovery. While at the beginning of the pandemic 2023 was often mentioned as the point in time for successfully managing the crisis, more than one-third of those surveyed now only expect acomplete recovery of the German hotel market in 2024.

Source: EVHC Survey

15

Δ Δ Δ

19

5 %

9 %

1 1 %

1 3 %

8 %

1 2 %

1 9 %

7 %

8 %

8 %

1 2 %

1 4 %

1 6 %

2 2 %

FUTURE INFLUENCING MARKET FACTORS

OPERATORS INVESTORS


C O N C L U S I O N | S T R U C T U R A L C H A N G E E X P E C T E D F O R T H E H O T E L I N D U S T R Y

According to the investors and operators surveyed, the corona crisis is leading to a structural change in the industry. Both sides expect a clearing up of the operator landscape through insolvencies,which is also reflected in the forecast of increased M&A opportunities for brands and operators. Restrictive financing is another limiting factor, which was named by the surveyed participants as adecisive impact for the coming years.

Source: EVHC Survey

INSOLVENCIES OF OPERATING COMPANIES

M&A OPPORTUNITIES FOR BRANDS AND OPERATORS

DISTRESSED ASSETS

FURTHER DIVERSIFICATION INTO NICHE MARKETS

RESTRICTIVE ALLOCATON OF FINANCING

CONVERSION OF EXISTING HOTELS TO OTHER TYPES OF USE

SALE-AND-LEASE-BACK OPPORTUNITIES

7 1 %Resumpton of air traffic (pre-crisis level)

5 0 %Recovery of the real and financial economy

8 8 %Lifting of travel warnings / entry restrictions

9 2 %Timely availability of a vaccine

4 6 %Return to face-to-face instead of online meetings

5 0 %Increased willingness to travel






OPERATORS INVESTORS



FACTORS FOR A QUICK MARKET RECOVERY

C O N C L U S I O N | T H E H O P E F O R A T I M E L Y A V A I L A B I L I T Y O F A V A C C I N E U N I T E S O P E R A T O R S A N D I N V E S T O R S

The availability of a vaccine is the decisive factor for a timely crisis recovery. This answer unites both operators and investors. Naturally, the lifting of travel warnings / entry restrictions is another keyelement in a rapid return to pre-crisis levels. The same applies to the recovery of air traffic, which will certainly also depend on the two factors already mentioned.

Source: EVHC Survey

1719

5 %

9 %

1 1 %

1 3 %

8 %

1 2 %

1 9 %

7 %

8 %

8 %

1 2 %

1 4 %

1 6 %

2 2 %

FUTURE INFLUENCING MARKET FACTORS

OPERATORS INVESTORS


C O N C L U S I O N | S T R U C T U R A L C H A N G E E X P E C T E D F O R T H E H O T E L I N D U S T R Y

According to the investors and operators surveyed, the corona crisis is leading to a structural change in the industry. Both sides expect a clearing up of the operator landscape through insolvencies,which is also reflected in the forecast of increased M&A opportunities for brands and operators. Restrictive financing is another limiting factor, which was named by the surveyed participants as adecisive impact for the coming years.

Source: EVHC Survey

INSOLVENCIES OF OPERATING COMPANIES

M&A OPPORTUNITIES FOR BRANDS AND OPERATORS

DISTRESSED ASSETS

FURTHER DIVERSIFICATION INTO NICHE MARKETS

RESTRICTIVE ALLOCATON OF FINANCING

CONVERSION OF EXISTING HOTELS TO OTHER TYPES OF USE

SALE-AND-LEASE-BACK OPPORTUNITIES

17












OPERATORS INVESTORS



FACTORS FOR A QUICK MARKET RECOVERY

C O N C L U S I O N | T H E H O P E F O R A T I M E L Y A V A I L A B I L I T Y O F A V A C C I N E U N I T E S O P E R A T O R S A N D I N V E S T O R S

The availability of a vaccine is the decisive factor for a timely crisis recovery. This answer unites both operators and investors. Naturally, the lifting of travel warnings / entry restrictions is another keyelement in a rapid return to pre-crisis levels. The same applies to the recovery of air traffic, which will certainly also depend on the two factors already mentioned.

Source: EVHC Survey

21

LESS RESILIENT

OPERATORS INVESTORS

LESS RESILIENT

9. STUTTGART | 5 8 %

10. BREMEN | 5 6 %

11. MANNHEIM | 5 3 %

12. HANOVER | 5 0 %

13. DORTMUND | 5 0 %

14. DUSSELDORF | 4 6 %

15. FRANKFURT | 4 4 %

9. NUREMBERG | 5 5 %

10. BONN | 5 4 %


12. HANOVER | 5 0 %


14. BREMEN | 4 7 %


Source: EVHC Survey

C O N C L U S I O N | H A M B U R G A N D M U N I C H A R E A T T E S T E D T H E H I G H E S T R E S I L I E N C E

There is a consensus among operators and investors that the cities of Hamburg and Munich can overcome the corona crisis the fastest. After the lockdown, Hamburg was able to show by far the bestperformance among the top cities in Germany. Confidence in Munich is probably based on the overall highly attractive business and leisure location. Those surveyed gave a conservative assessment,particularly in the case of locations with a strong increase in supply in the past or strong dependency on trade fairs and congresses.

RESILIENTOPERATORS INVESTORS RESILIENT

1. HAMBURG | 7 7 %

2. MUNICH | 6 6 %

3. LEIPZIG | 6 4 %

4. DRESDEN | 6 3 %


6 . COLOGNE | 6 1 %

7 . BONN | 5 9 %

8 . BERLIN | 5 9 %

1. HAMBURG | 7 9 %

2. MUNICH | 7 1 %

3. BERLIN | 6 9 %

4. COLOGNE | 6 1 %


6 . DRESDEN | 5 8 %

7 . LEIPZIG | 5 7 %

8 . FRANKFURT | 5 7 %


RESILIENCE OF THE KEY HOTEL MARKETS

Source: EVHC Survey

1921

LESS RESILIENT

OPERATORS INVESTORS

LESS RESILIENT


10. BREMEN | 5 6 %


12. HANOVER | 5 0 %



15. FRANKFURT | 4 4 %


10. BONN | 5 4 %


12. HANOVER | 5 0 %


14. BREMEN | 4 7 %


Source: EVHC Survey

C O N C L U S I O N | H A M B U R G A N D M U N I C H A R E A T T E S T E D T H E H I G H E S T R E S I L I E N C E

There is a consensus among operators and investors that the cities of Hamburg and Munich can overcome the corona crisis the fastest. After the lockdown, Hamburg was able to show by far the bestperformance among the top cities in Germany. Confidence in Munich is probably based on the overall highly attractive business and leisure location. Those surveyed gave a conservative assessment,particularly in the case of locations with a strong increase in supply in the past or strong dependency on trade fairs and congresses.

19

RESILIENTOPERATORS INVESTORS RESILIENT

1. HAMBURG | 7 7 %

2. MUNICH | 6 6 %

3. LEIPZIG | 6 4 %

4. DRESDEN | 6 3 %


6 . COLOGNE | 6 1 %

7 . BONN | 5 9 %

8 . BERLIN | 5 9 %

1. HAMBURG | 7 9 %

2. MUNICH | 7 1 %

3. BERLIN | 6 9 %

4. COLOGNE | 6 1 %


6 . DRESDEN | 5 8 %

7 . LEIPZIG | 5 7 %

8 . FRANKFURT | 5 7 %


RESILIENCE OF THE KEY HOTEL MARKETS

Source: EVHC Survey

23HANDLING OF PAYMENT OBLIGATONS FOR RENT | LEASE

4 %

1 2 %

1 5 %

1 6 %

2 3 %

2 8 %

WAIVER OF RENT INCREASE | SUSPENSION OF INDEXATION RULES

OPERATORS INVESTORS


NO ADAPTION NECESSARY

TEMPORARY AGREEMENT OF HYBRID MODELS**

GRANTING OF RENT | LEASE DEFERRALS

WAIVER OF RENT | LEASE PAYMENTS

EXTENSION OF THE RENT | LEASE CONTRACT

C O N C L U S I O N | O N L Y 1 O U T O F 1 0 I N V E S T O R S D I D N O T M A K E A N Y A D A P T I O N S O F O P E R A T I N G A G R E E M E N T S

Performance slumps due to the lockdown in March and the exclusion of termination under tenancy law until 1st July 2020 have let to intensive negotiations between hotel operators and owners. Thegranting of rent / lease deferrals was the most frequently chosen option. Waivers, extensions of lease terms, and hybrid models were applied almost analogously to each other as a solution. Only in 1out of 10 cases no adaptions were necessary from an investor‘s point of view.

Source: EVHC Survey | **Combination of fixed & variable lease component

The answer option ‘other' is not shown in the chart | *Percentage change from ad-hoc sentiment report in March 2020

1 9 %

3 1 % | - 2 4 % *

1 2 % | + 9 4 % *

8 % | - 2 0 % *

1 6 % | - 2 0 % *

9 % | + 1 1 5 % *

INFLUENCE ON ECONOMIC EFFICIENCY & PROPERTY VALUEM A R K E T O U T L O O K

HOW SUSTAINABLE WILL THE CUTS TO THE PROFITABILITY OF A HOTEL WITH A 25-YEAR LEASE BE?

INVESTORS‘ PERSPECTIVE: WHAT INFLUENCE WILL COVID-19 HAVE ON THE VALUE OF HOTEL PROPERTIES?

C O N C L U S I O N | I N V E S T O R S F O R E C A S T A D E C R E A S E I N T H E V A L U E O F H O T E L P R O P E R T I E S

When it comes to the question of whether the economic cutback from 2020 can be offset by the long-term nature of a lease, there is no clear opinion among the participants surveyed – neverthelessthe outlook is positive. Investors, on the other hand, fear that the value of their hotel properties will decrease. Compared to the ad-hoc survey conducted by EVHC in March 2020, the mood hasdeteriorated further.

Survey: EVHC Survey

Ø 3

.3

1: Value decrease 10: Value increase

2211 33 44 55 66 8877 99 1100

1 4 % 2 3 % 1 8 % 1 5 % 2 4 % 2 % 1 % 0 % 2 % 0 %

Ø 4

.4

AD-HOC SURVEY MARCH 2020

SENTIMENT SURVEY OCTOBER 2020

Ø 6

.2

1: The hotel will no longer be able to operate profitably 10: Cuts can be earned again in the long term

2211 33 44 55 66 8877 99 1100

2 % 2 % 6 % 1 3 % 1 1 % 1 1 % 2 6 % 2 1 % 6 % 2 %

2123HANDLING OF PAYMENT OBLIGATONS FOR RENT | LEASE

4 %

1 2 %

1 5 %

1 6 %

2 3 %

2 8 %

WAIVER OF RENT INCREASE | SUSPENSION OF INDEXATION RULES

OPERATORS INVESTORS


NO ADAPTION NECESSARY

TEMPORARY AGREEMENT OF HYBRID MODELS**

GRANTING OF RENT | LEASE DEFERRALS

WAIVER OF RENT | LEASE PAYMENTS

EXTENSION OF THE RENT | LEASE CONTRACT

C O N C L U S I O N | O N L Y 1 O U T O F 1 0 I N V E S T O R S D I D N O T M A K E A N Y A D A P T I O N S O F O P E R A T I N G A G R E E M E N T S

Performance slumps due to the lockdown in March and the exclusion of termination under tenancy law until 1st July 2020 have let to intensive negotiations between hotel operators and owners. Thegranting of rent / lease deferrals was the most frequently chosen option. Waivers, extensions of lease terms, and hybrid models were applied almost analogously to each other as a solution. Only in 1out of 10 cases no adaptions were necessary from an investor‘s point of view.

Source: EVHC Survey | **Combination of fixed & variable lease component

The answer option ‘other' is not shown in the chart | *Percentage change from ad-hoc sentiment report in March 2020

1 9 %

3 1 % | - 2 4 % *

1 2 % | + 9 4 % *

8 % | - 2 0 % *

1 6 % | - 2 0 % *

9 % | + 1 1 5 % *

21INFLUENCE ON ECONOMIC EFFICIENCY & PROPERTY VALUEM A R K E T O U T L O O K

HOW SUSTAINABLE WILL THE CUTS TO THE PROFITABILITY OF A HOTEL WITH A 25-YEAR LEASE BE?

INVESTORS‘ PERSPECTIVE: WHAT INFLUENCE WILL COVID-19 HAVE ON THE VALUE OF HOTEL PROPERTIES?

C O N C L U S I O N | I N V E S T O R S F O R E C A S T A D E C R E A S E I N T H E V A L U E O F H O T E L P R O P E R T I E S

When it comes to the question of whether the economic cutback from 2020 can be offset by the long-term nature of a lease, there is no clear opinion among the participants surveyed – neverthelessthe outlook is positive. Investors, on the other hand, fear that the value of their hotel properties will decrease. Compared to the ad-hoc survey conducted by EVHC in March 2020, the mood hasdeteriorated further.

Survey: EVHC Survey

Ø 3

.3

1: Value decrease 10: Value increase

2211 33 44 55 66 8877 99 1100

1 4 % 2 3 % 1 8 % 1 5 % 2 4 % 2 % 1 % 0 % 2 % 0 %

Ø 4

.4

AD-HOC SURVEY MARCH 2020

SENTIMENT SURVEY OCTOBER 2020

Ø 6

.2

1: The hotel will no longer be able to operate profitably 10: Cuts can be earned again in the long term

2211 33 44 55 66 8877 99 1100

2 % 2 % 6 % 1 3 % 1 1 % 1 1 % 2 6 % 2 1 % 6 % 2 %

25

9%

25%

66%

19%

37%

21%

29% 28%

12%

30% 33% 33%

14%

41%45%

33% 33%

20%

35%31%

13%

44% 42%

10%

31%

38%

31%30%

46%

15%

41%

34%

13%

37%41%

18%

OPE

RATO

R

Higher activity Constant activity Reduced activity

INVE

STO

RS

A-CITIES B-CITIES C-CITIES

The answer option ‘Do not know' is not shown in the graph

Previous year's value

LOCATION STRATEGY FOR THE NEXT 12 MONTHS

C O N C L U S I O N | R E S T R A I N T I N E X P A N S I O N F O C U S E S O N B - A N D C - C I T I E S I N P A R T I C U L A R

The currently prevailing market uncertainties due to the corona pandemic are leading to an overall more cautious expansion behavior, this particularly affects B- and C- locations. A fundamentallycontrary strategy can be seen among operators and investors for A- cities. While operators are planning more activity, the proportion of investors planning less activity has doubled.


Source: EVHC Survey

Espansion of the hotel portfolio

1 7 %

Relocation to perspective locations

2 9 %

Investments in other risk clusters

2 0 %


4 0 %No adjustment

Investments in smaller markets

1 3 %

Investments abroad

7 %

OPERATORS INVESTORS


Relocation to smaller markets

1 6 %

Relocation abroad

1 2 %

More aggressive bidding behaviour

6 %

Entry into other segments (vacation hotels, commercial housing concepts)

1 8 %

4 6 %Investments in other types of use

Increased investment in conversions

9 %

No adjustment

2 4 %

C O N C L U S I O N | F U T U R E F O C U S O N T O P D O M E S T I C L O C A T I O N S

While in recent years the focus was on switching to B- and C- locations and expanding activities abroad due to the prevailing product shortage, operators and investors are now concentrating again ondomestic markets and in particular A- locations. The interest of investors in other types of use remains consistently high, which underlines the current restraint in the hotel asset class.

ADJUSTMENT OF THE EXPANSION STRATEGY

Source: EVHC Survey

2325

9%

25%

66%

19%

37%

21%

29% 28%

12%

30% 33% 33%

14%

41%45%

33% 33%

20%

35%31%

13%

44% 42%

10%

31%

38%

31%30%

46%

15%

41%

34%

13%

37%41%

18%

OPE

RATO

R

Higher activity Constant activity Reduced activity

INVE

STO

RS

A-CITIES B-CITIES C-CITIES

The answer option ‘Do not know' is not shown in the graph


LOCATION STRATEGY FOR THE NEXT 12 MONTHS

C O N C L U S I O N | R E S T R A I N T I N E X P A N S I O N F O C U S E S O N B - A N D C - C I T I E S I N P A R T I C U L A R

The currently prevailing market uncertainties due to the corona pandemic are leading to an overall more cautious expansion behavior, this particularly affects B- and C- locations. A fundamentallycontrary strategy can be seen among operators and investors for A- cities. While operators are planning more activity, the proportion of investors planning less activity has doubled.


Source: EVHC Survey

23

Espansion of the hotel portfolio

1 7 %

Relocation to perspective locations

2 9 %

Investments in other risk clusters

2 0 %


4 0 %No adjustment

Investments in smaller markets

1 3 %

Investments abroad

7 %

OPERATORS INVESTORS


Relocation to smaller markets

1 6 %

Relocation abroad

1 2 %

More aggressive bidding behaviour

6 %

Entry into other segments (vacation hotels, commercial housing concepts)

1 8 %

4 6 %Investments in other types of use

Increased investment in conversions

9 %

No adjustment

2 4 %

C O N C L U S I O N | F U T U R E F O C U S O N T O P D O M E S T I C L O C A T I O N S

While in recent years the focus was on switching to B- and C- locations and expanding activities abroad due to the prevailing product shortage, operators and investors are now concentrating again ondomestic markets and in particular A- locations. The interest of investors in other types of use remains consistently high, which underlines the current restraint in the hotel asset class.

ADJUSTMENT OF THE EXPANSION STRATEGY

Source: EVHC Survey

27

The trend towards domestic travel will also continue post-corona…

Hotel operating companies in the city hotel industry will increasingly expand into leisure destinations…

Resort hotels will establish itself as an asset class for institutional investors…

SENTIMENT OF THE RESORT HOTEL INDUSTRY

Entry into long-stay segment announced |Acquisitions in long-stay segment announced

Serviced apartments portfolio will be further expanded

SENTIMENT OF THE SERVICED APARTMENT SEGMENT

Agreement InvestorsAgreement Operators

C O N C L U S I O N | R E S O R T H O T E L S A R E C L A S S I F I E D A S N E W I N S T I T U T I O N A L A S S E T C L A S S

The resilience of the holiday hotel industry in the corona crisis has increased the attention of operators and investors to this sub-asset class. More than two thirds of the investors surveyed see astronger involvement of institutional investors in the future. Serviced apartments were also able to make their performance more stable during and after the lockdown due to many long-term guests.The segment is viewed even more positively by investors than by hotel operators – more than one third plan to further expand their portfolio.


NICHES AS ‘CRISIS WINNERS'?

77%

43%

65%

84%

55%67%

The answer option ‘do not know' is not shown in the graph

Source: EVHC Survey

22%32%

21%

38%

38 % 61 % 69 %21 % 36 % 44 %19 % 31 % 33 %29 % 46 % 54 %0%

20%

40%

60%

80%

100%

Source:

-49 %

-22 %-14 %

-76 %

-55 % -49 %

-75 %-64 %

-54 %-65 %

-43 % -37 %

14 % 15 % 20 %

-25 %-13 % -11 %

-22 %-28 %

-21 %-29 %

-12 % -13 %

C O R O N A - E X C U R S I O N I N C O O P E R A T I O N W I T H F A I R M A S

AA DD RR

C O N C L U S I O N | R E S O R T H O T E L S H A V E W E A T H E R E D T H E C R I S I S R E L A T I V E L Y B E T T E R D U R I N G T H E S U M M E R M O N T H S

International travel restrictions and the resulting increase in domestic demand have mitigated the consequences of the COVID-19 crisis for resort hotels in Germany. The leisure tourism businesseslisted in Fairmas‘ database were even able to increase their net room rate by an average of 16%. In the top 3 cities this development could not be observed, but both occupancy and room rateimproved during the summer due to the low incidence of infection.

OO CC CC ..

162 € 182 € 179 €80 € 75 € 76 €99 € 85 € 81 €92 € 91 € 92 €

J U N E 2 0 2 0 J U L Y 2 0 2 0 A U G U S T 2 0 2 0

CHG.TO LY

CHG:TO LY

CITY VS. COUNTRYSIDE – PERFORMANCE IN SUMMER 2020

RREESSOORRTT HHOOTTEELLSS** BBEERRLLIINN MMUUNNIICCHH HHAAMMBBUURRGG

16 %

-20 %

-28 %

-59 %

Æ J U N – A U G 2 0 2 0

56% 34%

174 € 84 €

RREESSOORRTT HHOOTTEELLSS** TTOOPP -- 33

2527

The trend towards domestic travel will also continue post-corona…

Hotel operating companies in the city hotel industry will increasingly expand into leisure destinations…

Resort hotels will establish itself as an asset class for institutional investors…

SENTIMENT OF THE RESORT HOTEL INDUSTRY

Entry into long-stay segment announced |Acquisitions in long-stay segment announced

Serviced apartments portfolio will be further expanded

SENTIMENT OF THE SERVICED APARTMENT SEGMENT

Agreement InvestorsAgreement Operators

C O N C L U S I O N | R E S O R T H O T E L S A R E C L A S S I F I E D A S N E W I N S T I T U T I O N A L A S S E T C L A S S

The resilience of the holiday hotel industry in the corona crisis has increased the attention of operators and investors to this sub-asset class. More than two thirds of the investors surveyed see astronger involvement of institutional investors in the future. Serviced apartments were also able to make their performance more stable during and after the lockdown due to many long-term guests.The segment is viewed even more positively by investors than by hotel operators – more than one third plan to further expand their portfolio.


NICHES AS ‘CRISIS WINNERS'?

77%

43%

65%

84%

55%67%

The answer option ‘do not know' is not shown in the graph

Source: EVHC Survey

22%32%

21%

38%

25

38 % 61 % 69 %21 % 36 % 44 %19 % 31 % 33 %29 % 46 % 54 %0%

20%

40%

60%

80%

100%

Source:

-49 %

-22 %-14 %

-76 %

-55 % -49 %

-75 %-64 %

-54 %-65 %

-43 % -37 %

14 % 15 % 20 %

-25 %-13 % -11 %

-22 %-28 %

-21 %-29 %

-12 % -13 %

C O R O N A - E X C U R S I O N I N C O O P E R A T I O N W I T H F A I R M A S

AA DD RR

C O N C L U S I O N | R E S O R T H O T E L S H A V E W E A T H E R E D T H E C R I S I S R E L A T I V E L Y B E T T E R D U R I N G T H E S U M M E R M O N T H S

International travel restrictions and the resulting increase in domestic demand have mitigated the consequences of the COVID-19 crisis for resort hotels in Germany. The leisure tourism businesseslisted in Fairmas‘ database were even able to increase their net room rate by an average of 16%. In the top 3 cities this development could not be observed, but both occupancy and room rateimproved during the summer due to the low incidence of infection.

OO CC CC ..

162 € 182 € 179 €80 € 75 € 76 €99 € 85 € 81 €92 € 91 € 92 €

J U N E 2 0 2 0 J U L Y 2 0 2 0 A U G U S T 2 0 2 0

CHG.TO LY

CHG:TO LY

CITY VS. COUNTRYSIDE – PERFORMANCE IN SUMMER 2020

RREESSOORRTT HHOOTTEELLSS** BBEERRLLIINN MMUUNNIICCHH HHAAMMBBUURRGG

16 %

-20 %

-28 %

-59 %

Æ J U N – A U G 2 0 2 0

56% 34%

174 € 84 €

RREESSOORRTT HHOOTTEELLSS** TTOOPP -- 33

John Willard Marriott | Founder of Marriott Corporation

Good timber does not growwith ease – the stronger thewind, the stronger the trees.

”

OPERATORS Good timber does not grow

with ease – the stronger thewind, the stronger the trees.

31

O P E R A T O R S

CHALLENGES OF THE INDUSTRY

C O N C L U S I O N | T H E C R I S I S W I L L L E A D T O A N A D J U S T M E N T O F T H E P R O J E C T P I P E L I N E

As a result of the Covid-19 pandemic, the reasons for not closing operator contracts have shifted compared to the previous year‘s survey. The owner‘s price and lease expectations or higher biddingcompetitors were mentioned less frequently. Market uncertainties or difficulties with external financing, on the other hand, are novel obstacles to the conclusion of contracts due to corona. One outof eighth operator also states that a right of withdrawal has been exercised in the case of developments.

…of the interviewed operators stated that in the past

months a right of withdrawal was exercised for project

developments due to Covid-19.

12%

Source: EVHC Survey

Risk distribution in the contract

1 2 %

Uncertainty caused by Covid-19

1 7 %

Difficulties with debt financing

9 %

Property quality

6 %

3 1 %Price | lease expectations of the owner

Higher bidding competitor

2 1 %

Difficulties in obtaining guarantees | collateral

2 %

REASONS FOR NOT SIGNED OPERATING AGREEMENTS TERMINATION OF CONTRACTS FOR PROJECT DEVELOPMENTS

2931

O P E R A T O R S

CHALLENGES OF THE INDUSTRY

C O N C L U S I O N | T H E C R I S I S W I L L L E A D T O A N A D J U S T M E N T O F T H E P R O J E C T P I P E L I N E

As a result of the Covid-19 pandemic, the reasons for not closing operator contracts have shifted compared to the previous year‘s survey. The owner‘s price and lease expectations or higher biddingcompetitors were mentioned less frequently. Market uncertainties or difficulties with external financing, on the other hand, are novel obstacles to the conclusion of contracts due to corona. One outof eighth operator also states that a right of withdrawal has been exercised in the case of developments.

…of the interviewed operators stated that in the past

months a right of withdrawal was exercised for project

developments due to Covid-19.

12%

Source: EVHC Survey

Risk distribution in the contract

1 2 %

Uncertainty caused by Covid-19

1 7 %

Difficulties with debt financing

9 %

Property quality

6 %

3 1 %Price | lease expectations of the owner


2 1 %

Difficulties in obtaining guarantees | collateral

2 %

REASONS FOR NOT SIGNED OPERATING AGREEMENTS TERMINATION OF CONTRACTS FOR PROJECT DEVELOPMENTS

29

1. DOMESTIC DEMAND | 14%

2. SIZE OF THE MARKET (A vs. C) | 14%

3. DEVELOPMENT PERSPECTIVE | 13%

4. SUPPLY GROWTH | 11%

5. REACHABILITY | 10%

6. COMPETITION | 9%

HOW DO YOU PROPORTIONALLY DRIVE YOUR GROWTH? MOST IMPORTANT CRITERIA WHEN SELECTING A CITY DESTINATION

O P E R A T O R S

LOCATION CRITERIA AND GROWTH STRATEGIES

C O N C L U S I O N | F U R T H E R G R O W T H T O S E C U R E L O N G - T E R M M A R K E T P O S I T I O N

Around 90% of the surveyed operators want to continue expanding and secure market shares. In comparison to the previous year, the growth strategy presents a contrasting picture. 3 out of 4operators see growth opportunities through the takeover of existing hotels and the purchase of operating companies. New development projects will take a back seat for the time being. The currentfocus in the selection of city destinations is also on sustainable and long-term market characteristics.

Source: EVHC Survey

… of the operators stated that they are

still planning to expand their hotel

portfolio despite Covid-19.88%DEVELOPMENT PORTFOLIO TAKEOVERS

CONSOLIDATIONS OF OPERATORS

3 9 % | - 3 8 % L Y 4 6 % | + 5 9 % L Y

1 3 % | + 7 6 % L Y

3131

1. DOMESTIC DEMAND | 14%

2. SIZE OF THE MARKET (A vs. C) | 14%

3. DEVELOPMENT PERSPECTIVE | 13%

4. SUPPLY GROWTH | 11%

5. REACHABILITY | 10%

6. COMPETITION | 9%

HOW DO YOU PROPORTIONALLY DRIVE YOUR GROWTH? MOST IMPORTANT CRITERIA WHEN SELECTING A CITY DESTINATION

O P E R A T O R S

LOCATION CRITERIA AND GROWTH STRATEGIES

C O N C L U S I O N | F U R T H E R G R O W T H T O S E C U R E L O N G - T E R M M A R K E T P O S I T I O N

Around 90% of the surveyed operators want to continue expanding and secure market shares. In comparison to the previous year, the growth strategy presents a contrasting picture. 3 out of 4operators see growth opportunities through the takeover of existing hotels and the purchase of operating companies. New development projects will take a back seat for the time being. The currentfocus in the selection of city destinations is also on sustainable and long-term market characteristics.

Source: EVHC Survey

… of the operators stated that they are

still planning to expand their hotel

portfolio despite Covid-19.88%DEVELOPMENT PORTFOLIO TAKEOVERS

CONSOLIDATIONS OF OPERATORS

3 9 % | - 3 8 % L Y 4 6 % | + 5 9 % L Y

1 3 % | + 7 6 % L Y

Danny Meyer | Restaurateur & CEO of USHG

Hospitality exists when you believe the other

person is on your side.”

INVESTORS

37

C O N C L U S I O N | D E L T A O N P R I C E E X P E C T A T I O N S B E T W E E N S E L L E R S A N D B U Y E R S S T I L L E X I S T S

The main reason for unsuccessful transactions is given by about two thirds of the respondents with seller‘s price expectations and uncertainties by Covid-19. At the same time, there is still a significantdelta in the respective purchase price expectations. 87% state a range between 10% and 30%. Therefore, only 27% of the investors state that lower purchase prices can be achieved at present.

Source: EVHC Survey

I N V E S T O R S

TRANSACTION DYNAMICS IN TIMES OF COVID-19

DELTA IN PRICE DETERMINATION

0-10% 10-20% 20-30% 30-40% 40-50% +50%

… of the investors surveyed stated that lower purchase

prices can be achieved.

27%Lacking or unfavorable conditions of bank financing

1 2 %


1 2 %

Risk diversification

1 0 %

Deal structure

5 %

3 0 %Seller‘s asking price

Uncertainty due to Covid-19

2 8 %

REASONS FOR NOT SUCCESSFULLY COMPLETED TRANSACTIONS

Quality of the property

3 %

Δ 6%

Δ 44% Δ 43%

Δ 6% Δ 1% Δ 1%

I N V E S T O R S

CORONA-RELATED INFLUENCES ON THE HOTEL INVESTMENT MARKET

C O N C L U S I O N | P R O J E C T D E V E L O P M E N T S W I L L A D A P T T O T H E ‘ N E W N O R M A L '

The investor‘s outlook for the industry has brightened from March to October 2020 and ‘only’ 30% of those surveyed fear significant effects. In the area of project developments, the answersconcentrate on the changed framework conditions of the financing banks. A termination of the process is indicated by 14% of the investors.

Source: EVHC Survey

CHANGES IN PROJECT DEVELOPMENTS

’Higher financing costs' | 'Concept change' ‘New interested parties in the sales process'

March 2020October 2020

IMPACT ON THE INDUSTRY

March 2020

Delays in regulatory approval processes

1 0 %

None

3 %

2 5 %Pausing the process

6 %

Change in financing terms

2 4 %

Others

2 %

Postponement of board decisions at financing banks

1 6 %

Time delay due to standstill on construction sites

Termination of the process

1 3 %

SIG

NIF

ICAN

TRE

COG

INZA

BLE

LOW

NO

EFF

ECTS

1 4 %

3 %

3 0 %

8 %

5 4 %

6 %

5 3 %

3 2 %

3537

C O N C L U S I O N | D E L T A O N P R I C E E X P E C T A T I O N S B E T W E E N S E L L E R S A N D B U Y E R S S T I L L E X I S T S

The main reason for unsuccessful transactions is given by about two thirds of the respondents with seller‘s price expectations and uncertainties by Covid-19. At the same time, there is still a significantdelta in the respective purchase price expectations. 87% state a range between 10% and 30%. Therefore, only 27% of the investors state that lower purchase prices can be achieved at present.

Source: EVHC Survey

I N V E S T O R S

TRANSACTION DYNAMICS IN TIMES OF COVID-19

DELTA IN PRICE DETERMINATION

0-10% 10-20% 20-30% 30-40% 40-50% +50%

… of the investors surveyed stated that lower purchase

prices can be achieved.

27%Lacking or unfavorable conditions of bank financing

1 2 %


1 2 %

Risk diversification

1 0 %

Deal structure

5 %

3 0 %Seller‘s asking price

Uncertainty due to Covid-19

2 8 %

REASONS FOR NOT SUCCESSFULLY COMPLETED TRANSACTIONS

Quality of the property

3 %

Δ 6%

Δ 44% Δ 43%

Δ 6% Δ 1% Δ 1%

35

I N V E S T O R S

CORONA-RELATED INFLUENCES ON THE HOTEL INVESTMENT MARKET

C O N C L U S I O N | P R O J E C T D E V E L O P M E N T S W I L L A D A P T T O T H E ‘ N E W N O R M A L '

The investor‘s outlook for the industry has brightened from March to October 2020 and ‘only’ 30% of those surveyed fear significant effects. In the area of project developments, the answersconcentrate on the changed framework conditions of the financing banks. A termination of the process is indicated by 14% of the investors.

Source: EVHC Survey

CHANGES IN PROJECT DEVELOPMENTS

’Higher financing costs' | 'Concept change' ‘New interested parties in the sales process'

March 2020October 2020

IMPACT ON THE INDUSTRY

March 2020

Delays in regulatory approval processes

1 0 %

None

3 %

2 5 %Pausing the process

6 %

Change in financing terms

2 4 %

Others

2 %

Postponement of board decisions at financing banks

1 6 %

Time delay due to standstill on construction sites

Termination of the process

1 3 %

SIG

NIF

ICAN

TRE

COG

INZA

BLE

LOW

NO

EFF

ECTS

1 4 %

3 %

3 0 %

8 %

5 4 %

6 %

5 3 %

3 2 %

39

3 0 %

2 4 %5 %

1 9 %

2 2 %

RELEVANT ASPECTS FOR FUTURE CONTRACTUAL AGREEMENTS

C O N C L U S I O N | C O R O N A C L A U S E , H I G H E R S E C U R I T Y A N D L O C A T I O N Q U A L I T Y A S A N A N C H O R O F S T A B I L I T Y

As a result of the crisis, investors are trying to strengthen / expand their security structure. In addition to a corona clause, this should primarily be done through a stronger security / guarantee packagein rental agreements. In addition, investments are increasingly focused on location quality and operator creditworthiness. It is astonishing that rent amount are cited as the most relevant investmentcriterion by only 13% of investors.

Source: EVHC Survey | *Combination of fixed & variable lease components

I N V E S T O R S

QUALITATIVE ASPECTS FOR FUTURE INVESTMENTS

4 . R E N T A L L E V E L S 1 3 %

3 . M A R K E T D E V E L O P M E N T 1 8 %

5 . C O N T R A C T 1 2 %

6 . G U A R A N T E E S 1 1 %

2 6 %1 . L O C A T I O N

2 0 %

MOST RELEVANT INVESTMENT CRITERIA

CORONA CLAUSE

STRONGERSECURITY PACKAGE

PERFORMANCE-CLAUSE

HYBRID LEASE MODEL*

NO INDIVIDUALSOLUTIONS REQUIRED 2 . O P E R A T O R C R E D I T W O R T H I N E S S

C O N C L U S I O N | G E R M A N Y I S E X P A N D I N G I T S P O S I T I O N A S A N A N C H O R O F S T A B I L I T Y W I T H I N E U R O P E

Around 70% of investors believe that the German hotel market has the most attractive risk-return profile in Europe. This figure has again increased significantly compared to the previous year(approx. 50%). This view also gives a third of the investors surveyed confidence that the pre-crisis level in terms of transaction volume can be reached again in 2-3 years. However, there has been asignificant shift in the expectations regarding the equity ratio. Contrary to expectations, the equity ratio is stated lower by investors than in the previous year.

Source: EVHC Survey

I N V E S T O R S

MARKET ASSESSMENT & INVESTMENT STRATEGY

EQUITY RATIO FOR INVESTMENTS… THE GERMAN HOTEL PROPERTY MARKET…

… has the most attractive risk/return profile in Europe

… will achieve a similar transaction volume in the medium term (2-3

years) as in 2019

68%

54%UP TO 25%

3 9 % | + 9 % L Y

26–50%

4 5 % | + 4 5 % L Y

OVER 75% 8 % | - 2 7 % L Y

51–75% 8 % | - 6 3 % L Y

3739

3 0 %

2 4 %5 %

1 9 %

2 2 %

RELEVANT ASPECTS FOR FUTURE CONTRACTUAL AGREEMENTS

C O N C L U S I O N | C O R O N A C L A U S E , H I G H E R S E C U R I T Y A N D L O C A T I O N Q U A L I T Y A S A N A N C H O R O F S T A B I L I T Y

As a result of the crisis, investors are trying to strengthen / expand their security structure. In addition to a corona clause, this should primarily be done through a stronger security / guarantee packagein rental agreements. In addition, investments are increasingly focused on location quality and operator creditworthiness. It is astonishing that rent amount are cited as the most relevant investmentcriterion by only 13% of investors.

Source: EVHC Survey | *Combination of fixed & variable lease components

I N V E S T O R S

QUALITATIVE ASPECTS FOR FUTURE INVESTMENTS

4 . R E N T A L L E V E L S 1 3 %

3 . M A R K E T D E V E L O P M E N T 1 8 %

5 . C O N T R A C T 1 2 %

6 . G U A R A N T E E S 1 1 %

2 6 %1 . L O C A T I O N

2 0 %

MOST RELEVANT INVESTMENT CRITERIA

CORONA CLAUSE

STRONGERSECURITY PACKAGE

PERFORMANCE-CLAUSE

HYBRID LEASE MODEL*

NO INDIVIDUALSOLUTIONS REQUIRED 2 . O P E R A T O R C R E D I T W O R T H I N E S S

37

C O N C L U S I O N | G E R M A N Y I S E X P A N D I N G I T S P O S I T I O N A S A N A N C H O R O F S T A B I L I T Y W I T H I N E U R O P E

Around 70% of investors believe that the German hotel market has the most attractive risk-return profile in Europe. This figure has again increased significantly compared to the previous year(approx. 50%). This view also gives a third of the investors surveyed confidence that the pre-crisis level in terms of transaction volume can be reached again in 2-3 years. However, there has been asignificant shift in the expectations regarding the equity ratio. Contrary to expectations, the equity ratio is stated lower by investors than in the previous year.

Source: EVHC Survey

I N V E S T O R S

MARKET ASSESSMENT & INVESTMENT STRATEGY

EQUITY RATIO FOR INVESTMENTS… THE GERMAN HOTEL PROPERTY MARKET…

… has the most attractive risk/return profile in Europe

… will achieve a similar transaction volume in the medium term (2-3

years) as in 2019

68%

54%UP TO 25%

3 9 % | + 9 % L Y

26–50%

4 5 % | + 4 5 % L Y

OVER 75% 8 % | - 2 7 % L Y

51–75% 8 % | - 6 3 % L Y

41

INTERNATIONAL 57%

NATIONAL 43%

Ø 125 ROOMS

< 50 HOTELS | 77%

> 50 HOTELS | 23%

COMPANY SIZE SEGMENTATION

OWN BRAND 59%

FRANCHISOR 9%

FRANCHISEE 22%

INDIVIDUAL HOTEL 11%

COMPANY STRUCTURE

21%

38%

30%

10%

BUDGET

MIDSCALEUPSCALE

LUXURY

Source: EVHC Survey

CORE+ 31%

CORE 26%

OPPORTUNISTIC 25%

NATIONAL 72%

VALUE ADD 19%

STRATEGIC ORIENTATION

102mln. EUR

-64% LY

Ø TRANSACTION VOLUME SEGMENTATION

26%

34%

30%

10%

HOTEL OPERATORS PROFILES IN DETAILS

INTERNATIONAL 28%

BUDGET

MIDSCALEUPSCALE

LUXURY

INVESTORS PROFILES IN DETAIL

In which the surveyed investors are involved

INTENTION OF THE STUDYThe Sentiment Report Hotel Market Germany2020 | 2021 is intended to reflect the market mood ofthe industry from the perspective of operators andinvestors and to raise awareness of possible trends andmarket developments.

29.09 – 19.10Period of the survey

ONLINE-SURVEY

Form of the survey

2211

The Sentiment Report is published by Engel und VölkersHotel Consulting every year in the 4th quarter. The4th edition is naturally influenced by the currentsituation around the corona crisis. Through thecooperation with Fairmas, Engel & Völkers HotelConsulting gained exclusive access to market data thatillustrate the effects of Covid-19.

BACKGROUNDO P E R A T O R S47%

METHODOLOGY

53% I N V E S T O R S

250+P A R T I C I P A N T S

Source: EVHC Survey

3941

INTERNATIONAL 57%

NATIONAL 43%

Ø 125 ROOMS

< 50 HOTELS | 77%

> 50 HOTELS | 23%

COMPANY SIZE SEGMENTATION

OWN BRAND 59%

FRANCHISOR 9%

FRANCHISEE 22%

INDIVIDUAL HOTEL 11%

COMPANY STRUCTURE

21%

38%

30%

10%

BUDGET

MIDSCALEUPSCALE

LUXURY

Source: EVHC Survey

CORE+ 31%

CORE 26%

OPPORTUNISTIC 25%

NATIONAL 72%

VALUE ADD 19%

STRATEGIC ORIENTATION

102mln. EUR

-64% LY

Ø TRANSACTION VOLUME SEGMENTATION

26%

34%

30%

10%

HOTEL OPERATORS PROFILES IN DETAILS

INTERNATIONAL 28%

BUDGET

MIDSCALEUPSCALE

LUXURY

INVESTORS PROFILES IN DETAIL

In which the surveyed investors are involved

INTENTION OF THE STUDYThe Sentiment Report Hotel Market Germany2020 | 2021 is intended to reflect the market mood ofthe industry from the perspective of operators andinvestors and to raise awareness of possible trends andmarket developments.

29.09 – 19.10Period of the survey

ONLINE-SURVEY

Form of the survey

2211

The Sentiment Report is published by Engel und VölkersHotel Consulting every year in the 4th quarter. The4th edition is naturally influenced by the currentsituation around the corona crisis. Through thecooperation with Fairmas, Engel & Völkers HotelConsulting gained exclusive access to market data thatillustrate the effects of Covid-19.

BACKGROUNDO P E R A T O R S47%

METHODOLOGY

53% I N V E S T O R S

250+P A R T I C I P A N T S

Source: EVHC Survey

39

As an independent, international consulting company, Engel & Völkers Hotel Consulting regularly publishes market reports on all aspects of the hotel realestate world. In addition, EVHC reacts to market fluctuations with ad-hoc reports and expert surveys and thus continuously reflects the sentiment within thehotel industry.

SS EE NN TT II MM EE NN TT RR EE PP OO RR TTHotel Market Germany 2019 | 2020

HH OO TT EE LL MM AA RR KK EE TT RR EE PP OO RR TTGermany 2020

AA DD HH OO CC SS EE NN TT II MM EE NN TT RR EE PP OO RR TT Survey among hotel owners and developers on the corona crisis

PUBLISHED MARKET REPORTS 2019 | 2020

LEGAL NOTICE & AUTHORS

Engel & Völkers Hotel Consulting GmbHLicense partner of Engel & Völkers Commercial GmbH

Stadthausbrücke 5 20355 HamburgDeutschland

Telefon: +49 (0) 40-36 88 10-150www.engelvoelkershotel.com

Fairmas GmbH

EUREF-Campus 1310829 BerlinDeutschland

+49 30 322 940 520www.fairmas.com

ANDREAS EWALD Founding Partner +49 (0)40 36 88 101 50 [email protected]

MATTHIAS HAUTLI Director +49 (0)40 36 88 101 54 [email protected]

ROMAN DIRSCHERL Consultant +49 (0)40 36 88 101 55 [email protected]

DISCLAIMERAll content included in the Sentiment Market Report is for general information purpose only and Engel & Völkers Hotel Consulting assumes no responsibility for possible errors. Thus, the drawn market overview cannot substitute in-depth research as well as expert consultation. Although this report was written with great diligence, claims of entire validity, integrity and/or currency cannot be guaranteed, especially in terms of occasional instances. The information in this report is true and complete to the best of our knowledge, but Engel & Völkers Hotel Con-sulting GmbH, a licensee of Engel & Völkers and/or Fairmas GmbH cannot be held liable for any content.

Picture Source: unsplash.com: Andrew Welch, Ian Dooley, Michael Browning, shutterstock

As an independent, international consulting company, Engel & Völkers Hotel Consulting regularly publishes market reports on all aspects of the hotel realestate world. In addition, EVHC reacts to market fluctuations with ad-hoc reports and expert surveys and thus continuously reflects the sentiment within thehotel industry.

SS EE NN TT II MM EE NN TT RR EE PP OO RR TTHotel Market Germany 2019 | 2020

HH OO TT EE LL MM AA RR KK EE TT RR EE PP OO RR TTGermany 2020

AA DD HH OO CC SS EE NN TT II MM EE NN TT RR EE PP OO RR TT Survey among hotel owners and developers on the corona crisis

PUBLISHED MARKET REPORTS 2019 | 2020

Sentiment Report 2020 | 2021 - Engel & Völkers

Documents

Transcript of Sentiment Report 2020 | 2021 - Engel & Völkers