Berlin is one of the fastest growing markets in Europe but also extremely competitive. With 3.5 million inhabitants, Berlin is the largest city in Germany and the capital of the Federal Republic. It ranks among the most attractive tourist locations in Germany and has an economic structure that is strongly characterized by the service industry. Measured in terms of bed nights sold, Berlin is the most attractive tourist location in Germany, whereby demand is generated in equal measure from both segments, business travel and leisure tourism. With around 25 million overnight stays in 2012, Berlin is Europe’s top hotel location after London and Paris. The economy, the trade fairs, the various political organizations and research institutions create the demand for business travel, whilst the leisure segment benefits from the continually growing city tourism and Berlin’s image as a creative culture and nightlife hot spot. The hotel market in Berlin continues to be highly dynamic on both the supply and demand side. In 2013, the number of hotel establishments rose to more than 800 with over 133,000 guest beds, which shows a significant increase in bed capacity compared with previous years. In Berlin, the average duration of 2.4 days is longer than in most other German city destinations but average room rate is still comparable low (EUR 90). This is primarily due to the ever-increasing supply of accommodation and the associated pressure in the capital.

Local peculiarities

Operating a hotel in Germany or in Berlin in particular a couple of legal peculiarities should be noted. Hotels in Germany are traditionally operated on the basis of lease agreements. Management agreements have gained market share with international chains entering the market. Currently there is a trend favoring hybrid structures combining lease and management elements. Investors should be aware that management agreements in certain situations need registration in the commercial register to be valid and hence get publically available. Lease agreements need no registration but need to fulfill a very specific written form requirement – otherwise either party can terminate the lease irrespective of an otherwise agreed fixed term.

In Germany local hotel taxes are called either Kulturförderabgabe (Culture Tax) or Bettensteuer (Bed or City Tax). In 2010 there was an explosion of such hotel taxes across Germany, possibly in reaction to a reduction in the VAT rate from previously 19% to 7 % for the accommodation services. As of beginning of 2014, the government of Berlin also intends to introduce a 5 % bed or city tax on tourist overnight stays. This tax shall not be due for business travelers. "We want Berlin to get richer and stay sexy," said Berlin Mayor Klaus Wowereit, playing on his known slogan Berlin is "poor but sexy." City officials say they hope to rake in at least 25 million euros with the new tax. Long term agreements with wholesalers, agencies or framework agreements with companies should already anticipate the introduction of such new hotel tax and provide for the option to charge such tax in addition to the agreed room rates, once in has come into force in Berlin.

Beware of using data of hotel guests: since August 31, 2012 data of hotel guests which shall be used for advertisement purposes have to be „clean“. On the occasion of various data affairs in 2008 in Germany, the German legislator introduced a stricter regime in 2009. Since September 1, 2009 the processing and use of personal data for advertisement purposes, such as hotel guest‘s name, date of birth and address, required the explicit consent of the guest (previously a so-called opt-out was sufficient). There are particularly strict regulations for emails and telephone calls. Consent must be given in writing; electronic consent is also permitted if logged by the company. The transitional period for data which were collected before September 1, 2009, expired on August 31, 2012.


With around 30 projects currently being planned, supply will continue to develop in future as well. In particular, foreign hotel chains, not yet prominent in Germany, are emerging into the Berlin hotel market. However, branch experts note Berlin’s oversupply and an ongoing price decline. Competition is tough, especially in the upscale and luxury segments. The hotel landscape is beginning to see the ripple effect since the planned 30 new hotels will increase the bed capacity by further 15,000 in the near future. Due to the size of the city, market analysts still see potential for brand establishment in several locations, whereby connection to the public transport network represents an especially decisive criterion. Most of the projected hotels will open near Alexanderplatz, around central railway stations, the Western city and the new airport. However, to be successful in Berlin’s hotel market it needs a clear strategy and a strong focus on the perspective target group. Notwithstanding Berlin remains one of the most attractive hotel locations of Germany.