SHERIDAN, WYOMING -- July 10, 2026 -- BNP Paribas Real Estate reports that Germany's hotel investment market recorded approximately 790 million EUR in transaction volume during the first half of 2026, matching prior-year performance despite a shift toward smaller deal sizes. The market registered more than 50 completed transactions by mid-year, the highest count since 2019, reflecting broader market participation even as average deal size declined to approximately 15 million EUR. International investors accounted for 52 percent of market activity, drawn by strong performance indicators and guest occupancy levels at or above pre-pandemic benchmarks across key German hospitality markets.
Second Quarter Activity Drives Market Recovery After Slow Start
The market placed 475 million EUR in transactions during the second quarter alone. This accelerated pace offset a slower first quarter and brought the half-year total to within 4 percent of the 2025 result. Last year's performance included trophy asset sales such as the Mandarin Oriental in Munich and the Steigenberger at Kanzleramt in Berlin. Alexander Trobitz serves as Managing Director and Head of Hotel Services at BNP Paribas Real Estate GmbH.
Transaction count increased substantially compared to recent years. The 35 deals recorded in each of the two prior first-half periods and just 28 in 2023 contrast with this year's broader activity. Smaller transactions now dominate. The average deal volume has remained at approximately 15 million EUR since 2022, with the exception of the first half of 2025.
Munich and Berlin Lead Investment Activity Despite Volume Declines
Munich recorded approximately 131 million EUR in hotel investment volume through mid-year, down 50 percent from the first half of 2025. Berlin followed closely with roughly 128 million EUR, representing a 29 percent year-over-year decline. Both markets shifted from large trophy asset transactions to smaller and mid-sized deals. Munich activity included the sale of the Excelsior Hotel, which BNP Paribas Real Estate advised, along with multiple serviced apartment investments.
Hamburg generated approximately 34 million EUR in transactions, down 32 percent year-over-year. Cologne recorded 22 million EUR, a 73 percent decline. Düsseldorf saw modest improvement at 22 million EUR on a low base. Frankfurt stood out positively after three years of weak mid-year results from 2023 through 2025, completing its first large transaction in that period.
Mid-Sized Deals Between 10 Million and 100 Million EUR Drive Two-Thirds of Volume
Transactions in the 10 million to 100 million EUR range each contributed between 21 and 25 percent of total investment volume. Combined, these mid-sized deals accounted for approximately two-thirds of market activity. Small transactions under 10 million EUR represented just over 16 percent of market share. Deals exceeding 100 million EUR contributed roughly 17 percent, driven primarily by the sale of the nationwide Penta Hotel portfolio.
The distribution reflects current financing conditions. Buyers and sellers find common ground more readily in the middle market segment despite ongoing challenges in the lending environment. The financing landscape grew more difficult following interest rate adjustments in response to geopolitical developments and rising inflation pressures.
Guest Occupancy and Performance Metrics Exceed Pre-Pandemic Levels
Domestic tourism drove strong performance in early 2026. Guest counts and overnight stays in top vacation destinations and business travel hubs exceeded both prior-year figures and pre-pandemic levels. Key performance indicators across the hospitality sector showed continuous improvement, demonstrating strengthening economic viability in the accommodation industry.
These operational fundamentals attracted international capital to German hotel assets. Foreign investors now hold a 52 percent market share. Strong user market conditions create the foundation for attractive investment opportunities across multiple property types and geographic markets within Germany.
Pipeline of Mid-Sized and Large Transactions Points to Stronger Second Half
The supply of available investment product continues to expand. The pipeline shows particular depth in the middle volume segment where financing remains accessible. Several transactions exceeding 100 million EUR are currently in the market. Some large deals may close before year-end despite higher financing costs.
BNP Paribas Real Estate expects full-year results to match 2025 performance. A total approaching 2 billion EUR appears realistic based on current pipeline visibility and transaction momentum. The second half typically accounts for a larger share of annual volume as institutional investors complete due diligence and financing arrangements on larger assets.
For detailed market analysis and investment data on German hotel real estate, visit https://www.realestate.bnpparibas.de