What Investors and Operators Need to Do Now: Germany’s mood has shifted, the Neue Zürcher Zeitung recently warned that the country risks sliding into an 'Abwärtsspirale' – a downward spiral of weak consumption and low investment that is already visible in retail and gastronomy.

In parallel, Handelsblatt describes an “Investitionsstreik” by German corporates that is braking growth.

For hotel real estate, this is not abstract macro commentary. It is already showing up in performance metrics and transaction behaviour.

1. Germany’s reality check: stabilisation with softer rates

Specialist advisor Christie & Co describes 2025 as a consolidation year for the German hotel market. In its German Hotel Market Snapshot 2025 (published in 2026), Christie & Co concludes that, after an exceptional event‑driven 2024, nationwide RevPAR in 2025 is around 1.1% below the previous year, largely because average rates came under pressure while occupancy held up.

A‑cities still sit above the national RevPAR average, but many B‑cities are operating at a noticeable discount, typically in the mid‑teens below the national level.

At the same time:

• Wage costs remain structurally higher than when many long‑term leases were signed.
• Energy and utilities are still well above the pre‑crisis baseline.
• Refinancing is happening in a fundamentally different interest‑rate environment.

CBRE’s Germany Real Estate Market Outlook 2025 underscores this picture: a structurally challenging economy, cautious institutional investors, and only selective capital deployment into hotels, even as other asset classes (particularly offices) struggle.

In short, the operating environment of 2025/26 no longer matches the assumptions embedded in many German hotel business plans.

2. Why margins are really under pressure

The core issue is not a collapse in demand. It is the combination of:

• Softening ADR in a number of secondary and tertiary locations,
• Persistently elevated operating costs for staff and energy, and
• Higher interest costs at refinancing.

This three‑way squeeze is compressing GOP margins even in professionally managed properties. For weaker concepts, it pushes cash flows towards levels that are difficult to support under fixed‑rent leases and high leverage.

This is precisely the risk profile sketched by the NZZ: if households delay discretionary spending and corporates delay investment, hospitality is left between cost inflation and a more cautious guest – with limited ability to simply “price it away”.

3. What owners and operators can still do

The right response is not to wait for a macro turnaround. It is to accept where we stand and act accordingly.

For owners and lenders

• Triage the portfolio, asset by asset. Distinguish clearly between:
• Reopen contracts where the business works but the structure does not. Fixed‑rent leases that were calibrated to zero interest rates and “revenge‑travel” peaks are fragile. Hybrid rent models (lower base + turnover component) or management agreements with performance fees spread risk more realistically between owner and operator.
• Invest only where earnings power truly changes.Capex that does not move ADR, RevPAR mix or operating efficiency deserves scrutiny. 

The priority should be:

• value‑preserving investments (capex that prevents structural obsolescence or regulatory issues), and
• targeted, revenue‑enhancing measures that can be underwritten on today’s demand and cost assumptions.

For operators

• Productivity before pure cuts. The goal is not “fewer people at reception”, but better service per euro of payroll: re‑designed service flows, cross‑trained teams, technology that removes non‑guest‑facing tasks.
• Sharper positioning. Hotels that try to be “a bit of everything” struggle most in a price‑sensitive market. A clear segment focus – and the discipline to decline misaligned business – matters more than another marketing campaign.
• F&B realism.Many hotel restaurants and bars still consume capital and management attention without returning it. 

In some cases, the rational move is to:

• shrink the footprint,
• partner with a local operator, or
• shift to a leaner, more local concept. 

Across both sides, the common denominator is that contract structures and concepts must catch up with the new cost and demand reality.

4. Looking beyond Germany: CEE and Canada in 2026

For some investors, the next question is whether to offset German exposure with other geographies. Two directions stand out: Central & Eastern Europe (CEE) and Canada.

Central & Eastern Europe (CEE)

Cushman & Wakefield’s CEE Hospitality Marketbeat H1 2025, which is referenced again in its 2026 CEE market overview, shows a markedly different cycle: 

• RevPAR across the CEE‑6 capitals (such as Warsaw, Prague, Budapest and Bucharest) was around 9% higher than a year earlier,
• driven by roughly 7% ADR growth and improving occupancy levels.
• All capitals had already exceeded their 2019 RevPAR benchmarks, with Warsaw, Sofia and Prague among the top performers.
• Hotel investment volumes reached their highest level since 2019, led by Prague and Warsaw, and Cushman explicitly expects this “positive momentum” to continue into 2026, supported by a strong transactions pipeline and additional product coming to market.

For DACH capital, this means CEE offers:

• measurable RevPAR growth,
• improving liquidity, and
• yields that remain above Western European core markets, 

with the added nuance that some markets are euro‑denominated or closely linked to the euro, while others (e.g. Poland, Czech Republic, Hungary, Romania) introduce local‑currency exposure that needs to be priced and, where appropriate, hedged.

But it is not a simple swap of “Germany out, CEE in”. Legal frameworks, currency exposure in some markets, political risk and the need for strong local operating partners all require deliberate, city‑by‑city allocation rather than broad regional bets.

Canada

On the other side of the spectrum, CBRE’s Hotels Canada Industry 2026 Outlook and its coverage in outlets such as Building.ca describe a more mature, stable cycle:

• RevPAR in most Canadian markets is forecast to remain 2–4% above 2025 levels in 2026, keeping growth positive but moderate.
• National occupancy is expected to hover around 66% through 2025–2027, rather than climb materially higher.
• ADR is projected to rise towards about CAD 216 in 2026 and CAD 221 in 2027, while supply growth, which has been below 1% per year since 2019, is expected to pick up to around 1.5% in 2026 and 2.1% in 2027.
• CBRE highlights the role of Canadians prioritising domestic travel in stabilising hotel performance, even as broader economic headwinds persist. 

For euro‑denominated investors, Canada provides not only geographical but also currency diversification into the Canadian dollar. That CAD exposure can be attractive from a portfolio‑construction perspective, but it also requires a clear hedging policy and an understanding of how FX will affect euro‑denominated returns.

Canada is therefore best viewed as a portfolio stabiliser: transparent, politically predictable, and underpinned by diversified domestic and international demand. It is not a distress market – pricing for prime assets reflects strong domestic and North American competition – but it can be a useful component in a wider international allocation where the aim is steady income rather than opportunistic yield spikes.

5. What this means for decision‑makers in hotel real estate

Taken together, the signals from Germany, CEE and Canada point to a few clear priorities for boards, investment committees and credit teams:

• Accept that the reference point has shifted. Business plans built on the cost of capital and demand dynamics of 2017–2022 are no longer a safe guide. Stress‑testing should assume flatter ADR, structurally higher operating costs and more conservative refinancing terms.
• Move from passive holding to active portfolio surgery. Well‑located, resilient assets deserve focused capital and management attention. Underperforming but fixable hotels require decisive repositioning. Properties that are structurally misaligned may need an orderly exit while capital markets still allow it.
• Treat contracts as instruments, not constants. Leases and management agreements drafted for a different cycle can be part of the problem. Renegotiating fixed‑heavy structures, rebalancing risk‑sharing, and aligning capex responsibilities are central levers for protecting value.
• Use diversification as a tool, not a narrative. CEE can offer growth and yield, but with higher volatility and the need for strong local capabilities. Canada can stabilise income streams, but rarely at distressed pricing. Any international allocation should be anchored in a clear portfolio role, not just a desire to “go abroad”.
• Anchor decisions in data, not mood. Headlines about “Abwärtsspirale” and “investment strikes” capture sentiment, but the real work lies in comparing assets and markets on cash flow resilience, downside protection and alignment between capital and operations.

For investors, lenders and operators, the current phase is demanding – but it is also clarifying. Portfolios that emerge stronger from this cycle will be those where difficult arithmetic is faced early, and where capital, contracts and concepts are aligned with the realities of 2026 rather than the memories of 2019.

Drafted with support from an AI writing assistant. All views and experiences are my own.

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Hospitality Real Estate | Deal Structuring, Lease Advisory & Investment Consulting