GBI's Nittka highlights resilience of the German serviced apartment sector

George Sell George Sell Uploaded 29 June 2020

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Germany: Reiner Nittka, CEO of Germany's largest hotel real estate developer GBI AG, says serviced apartments "are coping much better" with the crisis than hotels.

Nittka said: "About two thirds of the properties across Germany remained open during the lockdown. Even at the lowest point of the Covid-19 crisis, they registered an occupancy rate of 30 to 35 per cent, and GBI's SMARTments business in some cases even scored significantly higher. And now things are looking up noticeably. The current four per cent market share of serviced apartments in the lodging market is set to increase significantly. By 2022 the supply is expected to increase by 50 per cent nationwide, from 31,300 to around 47,000 units."

"From March to June 15, we had an occupancy rate of 45 per cent across the German SMARTments business, instead of the usual 90 per cent. RevPAR is around €20; in 2019 it was € 42. This decline by almost half is painful, of course, but compared to the hotel market as a whole, it is significantly better. After all, the situation has reversed during the pandemic as was proved by our analyses of the very fresh RevPAR figures from STR for our Berlin, Munich and Hamburg locations. Normally, the RevPAR in these locations is twice as high on average for the entire hotel market as in our SMARTments. During the crisis, however, the situation was overturned: the RevPAR in the SMARTments is twice as much as the hotel market as a whole in these cities. This shows quite impressively how popular and crisis-proof our range of products is. The first investors have already noticed this and approached us about these remarkable figures. And this performance also continues in the upswing. Some of our properties have been doing particularly well since the first easing of restrictions a few weeks ago. In Berlin City West, we have a booking level of 83 per cent for June. You can even anticipate full occupancy again. In Hamburg, we even had to turn down guests for our property on the Outer Alster at the end of May because the City of Hamburg had stipulated a maximum occupancy rate of 60 per cent," Nittka added.

Nittka also pointed pout the changing guest demographic during the past few months: "There have been some significant changes during the crisis months. Commuters, consultants and project staff stayed at home - and are now slowly coming back again. However, the fact that more than 40 per cent of the rooms have been occupied since the beginning of the crisis is also due to new groups of guests emerging. Corporate contingent tenants sent in crisis teams and SMARTment business became a welcome home office alternative, booked both by companies and directly by employees fleeing the confinement and noise at home. Word got around that a comfortable workplace, great internet and the kitchenette for self-catering was waiting for them. In the evening then it was back home again. Hospitals, with which we cooperated anyway related to further training courses, now saved stressed employees from having to travel long distances to and from their homes. And there were short-term business travellers who saw in us the ideal opportunity to practice the required social distancing. And in summer, families will stay with us during their city breaks. Those who have remained loyal to the SMARTments business the entire time are people who have not yet found a permanent home after moving to a new city, usually for job reasons - they use SMARTments in the transition phase."

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