Germany’s Hotel Market: Divided Outlook, Rising Credit Risks

The mood in Germany’s hotel investment market remains complex and divided. While the outlook for individual companies and the industry as a whole has improved slightly compared to last year, uncertainty clouds the revenue expectations of hotels. At the same time, trends are becoming increasingly polarized.

These are the key findings of the 13th HospitalityInside Investment BAROMETER 2025, an annual survey conducted each autumn by the Augsburg-based trade magazine HospitalityInside in cooperation with Union Investment.

Moderate Recovery, Diverging Dynamics

Among the four indices measured, the Development Index has shown a clear upswing this year, fully recovering last year’s losses. According to the report, “30% rate the development as good or very good (2025: 17%),” marking a notable increase in confidence.

In contrast, the Operations Index continues its downward trend that began in 2023. Expectations for hotel revenue performance have weakened further: only “39% expect a good or very good development (2024: 55%),” while “30% foresee a poor development (2024: 19%).” Despite this, the overall index suggests a moderate recovery, reflecting “a selective brightening of sentiment.”

Investment Hotspots: From Southern Europe to DACH

Investors are reassessing markets and categories based on their risk-adjusted return potential, a key factor also influencing credit rating assessments within the hotel and real estate sectors. Southern Europe, particularly Spain, remains a key magnet thanks to its strong business and leisure segments. However, as yields compress, interest is also “spilling over into Italy.”

Meanwhile, the DACH region (Germany, Austria, Switzerland) — considered a “home market” for many investors — is seeing renewed attention. In terms of hotel categories, investor focus is polarizing toward Budget/Economy and Luxury/Lifestyle concepts, both perceived as offering greater resilience and more stable cash flows, which tend to support better credit profiles for operators and owners alike.

Polarity in the Market and its Credit Implications

This polarization has direct implications for creditworthiness. Properties operating in stable segments with clear demand — particularly those with strong brand operators and efficient cost structures — are more likely to maintain favorable credit ratings. Conversely, midscale hotels facing margin pressure and volatile demand may experience rating downgrades or higher refinancing costs.

According to Löcher, success in the midscale segment now hinges on “a strong location quality and a robust brand-operator mix” to remain competitive — and by extension, creditworthy — in a tightening financing environment.

Survey Profile

A total of 85% of respondents identified themselves as hoteliers, owners/investors, or consultants. The majority (56%) focus their activities in the DACH region. The survey was conducted between September 26 and October 28, 2025.