Stuttgart hotel market on the fast track

According to a new report by Europe’s leading broker and hotel property adviser Christie + Co, in co-operation with STR Global, the leading provider of market information to the global hotel industry, Stuttgart is becoming increasingly attractive to both hotel operators and investors, fuelled by the ongoing railway and urban development project ‘Stuttgart 21’

With Stuttgart’s hotel market rapidly gathering pace and a number of exciting property developments under way, the city looks set to retain its position as one of the German ‘Big Seven’(Hamburg, Frankfurt, Düsseldorf, Cologne, Stuttgart, Munich and Berlin).

Capital of Germany’s Baden-Württemberg state, Stuttgart has long been renowned as a manufacturing and technology hub. Mercedes-Benz and Porsche both have headquarters and museums there, making the city a popular destination for motor enthusiasts and business travellers. In recent times there has been a huge boost in cultural tourism, thanks to increased recognition of the city’s acclaimed ballet, art galleries, remarkable zoo and botanic garden (Europe’s largest) and the surrounding wine region.

The steady growth in tourism is reflected in the increase of overnight stays in hotels, which in 2014 spiked up by 8.5% from the previous year, and up by 46% from 2005 to 2014. The city has also registered a year-on-year increase of about 12% in RevPAR and an occupancy rate of circa 70% – approximately a 7.5% gain from 2013.

Lorina Callenberg, Consultant Investment & Letting at Christie + Co in Munich, says: “These stats are encouraging developers and investors to hunt for sites in the region. Until recently, Stuttgart was not quite up there among Germany’s primary hotel property investment locations. However the ‘Stuttgart 21’ Project - which will transform the city’s historic station into a high-tech hub offering speedy rail links from Paris to Budapest, has resulted in a multitude of new hotel developments.”

Stuttgart’s hilly setting has made it difficult for developers to find suitable construction space so the lion’s share of new project developments are taking place on the city’s outskirts. However, a number of projects concentrate in the new Europaviertel (European Quarter), close to Stuttgart’s central station. A new kid on the block is the 5-Star ‘Cloud No 7’, a striking 18-storey skyscraper with residential and hotel space which promises to be the landmark of the Europaviertel. Operated by the Steigenberger Group, the hotel will offer 275 contemporary bedrooms and is expected to open next summer.

A plethora of comfort and mid-budget hotels are scheduled to open within the next two years to make room for a burgeoning stream of leisure travel. Projects in the pipeline include a Holiday Inn Express, a Hampton by Hilton, a Nordic Pure hotel and a Moxy Hotel.

Stuttgart has also recently welcomed a handful of new openings; the 165 bedroom Aloft Stuttgart, a 4-Star lifestyle brand by Starwood Hotels & Resorts, is situated a stone’s throw from ‘Cloud No 7’ and housed in a brand-new complex made up of the hotel, retail units, offices and housing. In response to increasing international visitors, the 155-bedroom hotel opened its doors this summer. Due to the strong operating fundamentals, rising levels of air travel and overflow demand being pushed outward from city-centre hotels, Christie + Co expects developers will continue to target the area around the Stuttgart airport.

Lorina concludes: “Stuttgart’s hotel market is profiting from an upward trend in leisure travel and short city trips. The sector stands to gain immensely from enhanced accessibility through the ‘Stuttgart 21’ project, which will raise the city’s attractiveness both nationally and internationally.”