Hotels & Hospitality. Hotel Intelligence Berlin. Knowledge, strategy results

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1 Hotels & Hospitality Hotel Intelligence Berlin 213 Knowledge, strategy results

2 2 Hotel Intelligence: Berlin Snapshot Berlin is Germany s most visited city and ranks among the most popular tourist destinations in Europe. The city benefits from its status as the capital of Germany and has a large number of historic and cultural sights that attract a large share of leisure travellers. Even though Berlin has experienced a significant increase in hotel supply over the last decade, the hotel development pipeline is set to slow down in the midterm, allowing existing hoteliers to capitalise on strong demand growth. Solid trading performance and Germany s second highest RevPAR have lead to Berlin establishing itself as a preferred hotel investment market in the country, with the city accounting for almost half of Germany s hotel transaction volume in 212. Economy The local economy is mainly dominated by services, together with high-tech industries such as pharmaceuticals, biomedical engineering and renewable energies. Berlin accommodates the headquarters and subsidiaries of numerous multinational corporations. However, Berlin s economic development has traditionally lagged behind other key German destinations, resulting in a lower proportion of higher-yielding corporate demand. Berlin enjoys a far-reaching reputation in the creative arts industry and is a global hub for the music, film, fashion and advertising industries. Among the most important annual events are the Berlinale and Berlin fashion week, which attract combined total of around 8, visitors to the city every year. Trade fair & congress Berlin: Trade fair participants and events Participants (in million) Participants Events Sources: Berlin Trade Fair, Jones Lang LaSalle Hotels & Hospitality Berlin is a leading MICE destination and according to the ICCA, regularly ranks among the world s most popular congress destinations. In 212, the city placed 3rd worldwide after Paris and Vienna, hosting a total of 172 international events and counting around 1.8 million visitors. However, the trade fair in Berlin plays a somewhat minor role in the Berlin tourism trade as the city does not show major fluctuations in visitation levels during busy event periods, nor an obvious trade fair cycle Events

3 Hotel Intelligence: Berlin 3 Major events in the city include the ITB, the Internationale Grüne Woche and the IFA, all taking place annually. Trade fair capacity was extended after the completion of the Berlin ExpoCenter Airport in September 212, adding an additional 15, sq. m. of exhibition space. In 214, the newly-built CityCube Berlin will begin operations and replace the ICC Berlin, which is scheduled for renovation works until 217. Whilst likely to affect congress demand in the short term, these projects are also expected to further support Berlin s position as a key international trade fair venue in the long term. Airport Upon the opening of the newly-built Berlin Brandenburg International Airport (BER), scheduled for 215, passenger capacity will increase to around 45 million annually. As a result, the number of direct flights is forecast to rise, improving international accessibility and enhancing Berlin s reputation as one of the worlds leading MICE destinations. Furthermore, the opening of the airport is expected to attract higher yielding passenger demand, which will likely have a positive impact on ADR growth in the future. Hotel supply Berlin: Hotel supply 22 - June 213 Berlin: Airport passenger volume all airports 22 YTD June 213 Passengers (in million) YTD Total passenger volume Jun 12 YTD Jun 13 Sources: Arbeitsgemeinschaft Deutscher Verkehrsflughäfen (ADV), Jones Lang LaSalle Hotels & Hospitality Berlin is currently served by two main airports, Berlin- Schönefeld and Berlin-Tegel, with the city representing Germany s third largest transportation hub after Frankfurt and Munich. Data suggests that Berlin s airports are the country s fastest growing in terms of passenger numbers, displaying a compound annual increase (CAGR) of 7.7% between 22 and represented Berlin s third consecutive record year in terms of passenger volume, with a total of 25.2 million passengers travelling through Berlin s airports, resulting in a year-on-year increase of 4.9%. Establishments Jun 13 Establishments Beds Sources: Statistical Office Berlin-Brandenburg, Jones Lang LaSalle Hotels & Hospitality As at June 213, Berlin s hotel market comprised of 531 hotels, representing a total of 15,58 beds. Hotel supply in Berlin has increased steadily in the past decade, with a CAGR (between 22 and 212) of 1.9% and 5.8% in numbers of establishments and beds, respectively. In line with other German cities, 3- and 4-star hotels witnessed the largest increases in supply in the past decade and today account for around 69.5% of graded bed supply. Despite this, the number of 5-star hotels in the city is comparatively high (a total of 26), with the latest additions being the Waldorf Astoria Berlin and the design boutique hotel Das Stue. New supply is primarily located in the city centre and the city district of Berlin Mitte, with several hotels also opening at the new BER airport Beds (in 's)

4 4 Hotel Intelligence: Berlin Even though the hotel development pipeline will remain active in the next few years, it is expected to slow down in the medium to long term, which will allow existing hotels to strengthen their market positioning. Hotel demand Berlin: Hotel demand 22 - YTD June 213 Overnights (in million) YTD Jun YTD Jun 13 Overnights Arrivals 12 Sources: Statistical Office Berlin-Brandenburg, Jones Lang LaSalle Hotels & Hospitality 212 represented the 1 th consecutive record year in terms of hotel demand, with the city reaching 9.3 million arrivals and for the first time exceeding the 2 million overnight stays in Hotels & Hotels Garni (an increase of 9.4% and 11.1% year-on-year, respectively). In the past decade (22-212), Berlin has seen a steady increase in arrivals and overnights, with average growth rates of 8.3% and 7.9%, respectively Arrivals (in million) Top feeder markets Berlin: Nationality mix by overnights % 1.8% 2.% 2.2% 2.5% 3.% 3.9% 4.9% 17.9% 5.8% 6.8% 13.5% 7.2% Sources: Statistical Office Berlin-Brandenburg, Jones Lang LaSalle Hotels & Hospitality Even though demand in Berlin is still primarily driven by domestic arrivals, the number of international guests has increased from 29.3% of total overnights in 22 to 42.5% in 212 (a CAGR of 12.5%), clearly demonstrating Berlin s growing international appeal. The most important international source markets are the Scandinavian countries (13.5% of all international overnights), the UK (9.5%), the Benelux states (9.4%), Italy (8.1%) and the USA (7.2%). The Berlin hotel market also benefits from limited seasonal fluctuations compared to other major cities in Germany, with higher demand usually occurring during the traditional holiday periods. 8.1% 9.5% 9.4% Scandinavia UK Benelux Italy USA Spain & Portugal France Switzerland Russia Austria Israel Poland Australia Brasil China incl. Hong Kong Others At year-to-date May 213, tourism development in Berlin continued to look promising, as both arrivals and overnights saw a notable increase of 5.5% and 11.4%, respectively.

5 Hotel Intelligence: Berlin 5 Trading performance Hotel market outlook Berlin: Hotel trading performance 22 - YTD June 213 ARR / RevPAR in EUR YTD YTD Jun Jun ARR (EUR) RevPAR (EUR) Occupancy (%) Sources: STR Global, Jones Lang LaSalle Hotels & Hospitality 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Even though Berlin represents Germany s second best performing hotel market in terms of RevPAR (after Munich), average room rates (ARR) in the city have struggled to achieve significant growth in the past (with CAGR between 22 and 212 at -.5%). By the end of 212, Berlin s ARR was at EUR 14. This suppressed trading performance can be explained by the strong increase in hotel supply in the last decade together with a larger share of more price sensitive leisure travellers visiting the city, putting pressure on achievable room rates. Occupancy As Germany s leading tourism destination and one of Europe s most visited cities, Berlin s hotel market is expected to remain robust going forward into 214. The city s reputation as a leading tourist destination will be supported by the completion of several infrastructural developments currently underway, including the renovation of the ICC Berlin and the opening of Berlin International Airport (BER). Despite the repeated postponement of the airport s opening having a negative impact on Berlin s image in the short term, it is expected that international accessibility will greatly increase once completion is realised, supporting Berlin s attractiveness to higher yielding guests and allowing local hotels to charge higher room rates in the future. Whilst the supply pipeline is set to remain active in the next two years, it is expected to slow down considerably in the medium to long term. The continuous strong demand trends are expected to absorb new supply, likely allowing the city s hoteliers to strengthen their position in the market and increase room rates moving forward. However, occupancy has shown a positive CAGR of 2.1% between 22 and 212. By the end of the year, average occupancy in Berlin reached 75.%. Owing to the continued strength in occupancy levels, RevPAR in Berlin has shown a CAGR of 1.7% over the last ten years, reaching EUR 15.2 by the end of 212. As at YTD June 213 the positive trend continued, with the city recording a.9% increase in RevPAR compared to the same period last year.

6 6 Hotel Intelligence: Berlin Appendix 1: Berlin hotel developments 1 Berlin hotel developments (as at August 213) Hotel Location Rooms Grade Due date Recently Opened Indigo Hotel Berlin Centre Hardenbergstrasse Hardenbergstrasse Q1-12 Meininger Hotel Berlin Airport BER Alexander-Meissner-Strasse Q2-12 Indigo Hotel Berlin Centre Alexanderplatz Bernhard-Weiss-Strase Q2-12 Holiday Inn Berlin Alexanderplatz Thea Nolte-Baehnisch-Strasse Q2-12 Hostel One8 Alexanderplatz Otto-Braun-Strasse Q2-12 Almodóvar Hotel Berlin Boxhagener Strasse 6 4 Q3-12 Das Stue Drakestrasse Q4-12 The Waldorf Astoria Hardenbergstrasse Q1-13 Winters Hotel Berlin Mitte The Wall at Checkpoint Charlie Zimmerstrasse Q1-13 B&B Hotel Berlin Airport Am Flughafen Q Hotel Berlin Mitte Invalidenstrasse Q1-13 Wyndham Grand Potsdamer Platz Hallesche Strasse Q1-13 Generator Hostel Berlin Mitte Oranienburger Strasse Q2-13 Amedia Hotel Knesebeckstrasse Q2-13 Monbijou Hotel Monbijouplatz Q2-13 Hotel Klee Bundesallee Q2-13 Ibis & ibis budget Berlin Kurfürstendamm Wittenbergplatz/Bayreuther Strasse 348 2/3 Q2-13 Total Rooms Recently Opended 2,872 New Developments 213 Under Construction Smart Stay Berlin-Charlottenburg Wilmersdorfer Strasse 5 3 Q2-13 Leonardo Boutique Hotel Berlin Bertold-Brecht-Platz 31 4 Q3-13 Novum Design & Style Hotel Franklinstrasse 22/ tba Q3-13 Hotel am Steinplatz Marriott Autograph Collection Steinplatz 85 5 Q3-13 InterCity Hotel Berlin Central Station Katharina-Paulus-Strasse Q4-13 Total Rooms Source: Jones Lang LaSalle Hotels & Hospitality

7 Hotel Intelligence: Berlin 7 Appendix 1: Berlin hotel developments 2 Hotel Location Rooms Grade Due date New Developments 214 Under Construction 25hours Bikini Berlin Budapester Strasse Q1-14 Riu Plaza Berlin Martin-Luther-Strasse/Kleiststrasse Q1-14 Ibis styles Berlin Klosterstrasse Klosterstrasse Q2-14 Motel One Leipziger Platz Leipziger Platz Q2-14 Titanic Hotel am Gendarmenmarkt Friedrichstrasse/Gendarmenmarkt 28 5 Q2-14 Holiday Inn O2 World Friedrichshain-Kreuzberg Q2-14 Steigenberger Hotel Am Kanzleramt Berlin Ella-Trebe-Strasse 34 5 Q2-14 Motel One "Upper West" Breitscheidplatz Q3-14 Amano Hauptbahnhof Invalidenstrasse/Heidestrasse 25 3 Q4-14 Dormero Hotel Stralauer Platz Stralauer Platz Q4-14 Titanic Hotel Chausseestrasse Total Rooms 214 3,171 New Developments 215 Under Construction Hotel Barcelona Grunerstrasse Four Points by Sheraton Schützenstrasse Q3-15 Grimm's Hotel Flottwellpromenade Flottwellstrasse Steigenberger Airport Hotel Berlin Brandenburg Airport Ibis Berlin Hauptbahnhof Main Train Station New Developments 215 Proposed Amano Hackescher Markt Hackescher Markt 11 3 Q3-15 Amano Friedrichstrasse Friedrichstrasse Amano Apartment Hotel Linienstrasse/Alte Schönhauser Strasse Green Lodge Schloss Charlottenburg Quedlinburger Strasse Total Rooms 215 1,726 Total Rooms Proposed/Under Construction ,887 Source: Jones Lang LaSalle Hotels & Hospitality

8 8 Hotel Intelligence: Berlin Appendix 2: Berlin infrastructure developments 1 Berlin infrastructure developments (as at August 213) Under construction Berlin Brandenburg Airport (BER) BER Business Park Berlin The new Berlin Brandenburg Airport is currently being constructed on the site of the former Schoenefeld Airport. Opening of the airport has been postponed several times and to date, operations are expected to initiate in 215. The airport will feature a six-storey terminal building and two runways. Upon opening, Berlin Brandenburg Airport will cater to some of 27 million passengers, increasing to a maximum of 45 million passengers per annum by 22. The BER Business Park occupies a total area of some 15 hectares and is the biggest connected business park in Berlin. In 21, the first of six sections of land use were completed, mainly featuring industrial areas for logistics and production as well as office space. BER Airport City Berlin City West Since 21, some 16 hectares of commercial areas with 1, parking spaces connected to the new terminal of the BER are under development. The main focus is on airport-related services for individual and business travellers, such as offices, hotels, congress and conference facilities, gastronomic outlets, fitness and leisure centres, spa and health-related services as well as entertainment and cultural venues. At present, parts of the Airport City have already been completed, e.g. the 4-star Steigenberger Hotel with 332 rooms opposite the new terminal, which is however, only scheduled to open in 215. City West is an area in the western part of central Berlin and currently one of the most important reconstruction areas of the city. Today, the area is subject to major development projects around Kurfürstendamm, Breitscheidplatz and Tauentzienstrasse. These developments include the construction of the "Bikini Berlin" project opposite the Kaiser- Wilhelm-Gedächtniskirche, comprising office and retail facilities, the 4-star 25hours Bikini Berlin (149 rooms, opening in Q1 214) and entertainment space. In addition, the "UPPER WEST" totalling some 53, sq. m. is being built on the remains of the old Schimmelpfenghaus, with completion scheduled for 215. This development consists of a tower building and will accommodate a 582-room Motel One hotel as well as space for office and residential use. CityCube Berlin ICC Berlin The CityCube Berlin exhibition hall, comprising approx. 12, sq. m. of meeting space, will open at the beginning of 214 to (temporarily) replace the International Congress Centre (ICC), which then will be refurbished. This venue, featuring eight conference halls and eight meeting rooms for up to 1, delegates, is being developed on the site of the Deutschlandhalle with direct access to the trade fair. Source: Jones Lang LaSalle Hotels & Hospitality

9 Hotel Intelligence: Berlin 9 Appendix 2: Berlin Infrastructure developments 2 Under construction Stadtschloss (Humboldt Forum) Headquarters of the Ger-man Intelligence Service (BND) Leipziger Platz The reconstruction of the former Stadtschloss, which started in 212, will replace the previous Eastern German parliament building Palast der Republik. In 214, the shell of the building is planned to be finalised with completion of the main building scheduled for 218. The Stadt-schloss will also include two museums and a library, which are likely to open in 219. The construction of the new headquarters of the BND at Chausséestrasse in the centre of Ber-lin started in 27 and will be completed in 215. Besides the main building (26, sq. m.), it will comprise a technical and logistics centre, a school complex as well as a visitor centre. This development triggered the construction of other commercial and residential projects in the surrounding area, which are expected to further enhance the attractiveness of the neighbourhood and represent additional demand generators for the hotels around Berlin's main train station. Being under development for several years, the area arround Leipziger Platz has recently reached a new milestone, when the construction of the city square started in early 212. With a total investment of EUR 8 million, the project includes some 21, sq. m. of retail, office, residential and hotel use, with the 2-star Motel One scheduled to open in 214. Completion of the entire project is scheduled for 214/215. "Europacity" Proposed/Approved Tempelhofer Freiheit Source: Jones Lang LaSalle Hotels & Hospitality The Europacity is a 4 hectares development area located in proximity to Berlin's main train station and the Charité University Clinic. Today, plans for the development of the Europacity quarter foresee a mixed use area including residential, office and retail use as well as the InterCity Hotel Berlin main train station. Currently, there is no official date of completion for the project, however, due to its size, it is assumed to take another three to five years. The former Tempelhof Airport occupies an area of some 386 hectares and benefits from its relative proximity to Berlin's city centre. Following its closure in 28, the area has remained unused, offering potential for re-development. Current plans show the conversion of the airport into a green city park. The former airport buildings and the area around the airfield will see a mix of residential and office use, further enhancing the demand and the quality of life in this area.

10 Hotel Intelligence: Berlin Jones Lang LaSalle s Hotels & Hospitality Group serves as the hospitality industry s global leader in real estate services for luxury, upscale, select service and budget hotels; timeshare and fractional ownership properties; convention centers; mixed-use developments and other hospitality properties. The firm s more than 265 dedicated hotel and hospitality experts partner with investors and owner/operators around the globe to support and shape investment strategies that deliver maximum value throughout the entire lifecycle of an asset. In the last five years, the team completed more transactions than any other hotels and hospitality real estate advisor in the world totaling nearly US$25 billion, while also completing approximately 4, advisory and valuation assignments. The group s hotels and hospitality specialists pro-vide independent and expert advice to clients, backed by industry-leading research. For more news, videos and research from Jones Lang LaSalle s Hotels & Hospitality Group, please visit: This report is confidential to the recipient of the report. No reference to the report or any part of it may be published in any document, state-ment or circular or in any communication with third parties without the prior written consent of Jones Lang LaSalle Hotels & Hospitality, including specifically in relation to the form and context in which it will appear. We stress that forecasting is a problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making forward projections involves assumptions in respect of a considerable number of variables which are acutely sensitive to changing conditions, variations in any one of which may significantly affect the outcome and we draw your attention to this factor. Jones Lang LaSalle Hotels & Hospitality makes no representation, warranty, assurance or guarantee with respect to any material with which this report may be issued and this report should not be taken as an endorsement of or recommendation on any participation by any intending investor or any other party in any transaction whatsoever. This report has been produced solely as a general guide and does not constitute advice. Users should not rely on this report and must make their own enquiries to verify and satisfy themselves of all aspects of information set out in the report. We have used and relied upon information from sources generally regarded as authoritative and reputable, but the information obtained from these sources may not have been independently verified by Jones Lang LaSalle Hotels & Hospitality. Whilst the material contained in the report has been prepared in good faith and with due care, no representation or warranty is made in relation to the accuracy, currency, completeness, suitability or otherwise of the whole or any part of the report. Jones Lang LaSalle Hotels & Hospitality, its officers, employees, subcontractors and agents shall not be liable (to the extent permitted by law) to any person for any loss, liability, damage or expense ( liability ) arising directly or indirectly from or connected in any way with any use of or reliance on this report. If any liability is established, notwithstanding this exclusion, it shall not exceed $1,.

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