Hoteliers believe the German hotel industry has yet to recover fully from COVID-19 levels in many markets. A spate of hotel-form insolvencies in Europe’s largest economy have raised questions about the country’s principal hotel model: leases.
Where there is hotel distress, there is hotel opportunity, and investors have shown increased interest, notably in repositioning underperforming assets.
At a recent webinar titled “Hotel insolvencies in Germany: Distress or opportunity?” hosted by business consultancy HVS Hodges Ward Elliott and legal firm Bird & Bird, panelists said that amid some sector distress, owners and investors are increasingly terminating traditional fixed-lease models in favor of hotel management agreements.
There is concern that many German hotel leases were created for an era now gone.
This is leading owners to shift to management agreements to mitigate risks, especially in a period in which inflation and rising operational costs have added pressure on bottom lines in a market known for guest price sensitivity. The situation is not limited to just Germany, panelists noted.
Three recent prominent insolvencies in Germany — Achat (late 2024; per CoStar, 32 hotels), Lindner Hotels (also in late 2024; also 32 hotels) and Revo Hospitality, formerly HR Group (early 2026; 208 hotels) — have been blamed on aggressive expansion, rather than an overall structural problem in the market.
Achat and Lindner did arrange recovery agreements in 2025 that allowed them and their hotels to continue in operation.
Insolvency administrators in Germany hold significant powers to accept or reject contracts, and that influence can notably affect the performance of leases and management agreements immediately upon insolvency proceedings starting.
Timothy Barbrook, head of debt advisory, HVS Hodges Ward Elliott, said most distress in Germany is resolved before formal insolvency steps are taken.
“The problem often is not the hotel but the capital structure,” he said, adding there is no doubt financing has become more costly.
Elie Kaufman, senior counsel, Germany, Bird & Bird, said pressure originates from higher interest costs; labor cost inflation; rising operating expenses; deferred capital expenditure following COVID-19; slower than expected recovery in some markets; and capital structures established in a lower interest-rate environment.
He added mounting pressure leads to situations in which there is far less flexibility in a lease contract.
There always is hope, panelists added.
Simge Kocabayoglu, senior director, legal counsel, Europe, IHG Hotels & Resorts, said the period post-pandemic has exposed fundamental weaknesses, but her opinion is that the market is seeing a correction — and an opportunity.
Sign of the times
Consensual fixes are the preferred methodology when hotels start to falter, panelists said.
Early engagement, transparency, realistic business planning, simplicity, willingness to consider recapitalization and a focus on preserving operational performance are key, Barbrook said.
“The earlier problems are shared the better. … I do not believe the recent increase in distress in Germany is a reflection on the overall health and interest in German hotels,” he said.
What is under risk, he added, are “highly opaque lease structures where the value is unclear.”
Maria Pütz-Willems, editor in chief, HospitalityInside, put it more bluntly. She said she often did not see who was willing to do what was needed in situations of distress.
“I see conservative, stubborn minds in many cases,” she said.
Asli Kutlucan, CEO, Adina Hotels, agreed with the notion that Germany is going through a correction, not a collapse.
“The lease structure as seen in Germany is unsustainable. When you sign a lease for 20 years, and you give yourself a rent increase every year regardless of the market, then you are losing your delta. There is the need for an adjustment mechanism,” she said.
She added that for some hotels, especially branded midscale properties, the weight of fee payments has become untenable.
Panelists said competition for hotels during all these years has not gone away but that everyone has seen “sensible” bids often “bettered,” even if the data points to more commonsensical profit-and-loss numbers.
The contribution of average daily rate is hindered by price sensitivity, said Meinhard Kirchner, legal executive, Novum Hospitality.
“Germany is a very price-sensitive market, which does not aid the offsetting of increased costs,” he said.
Barbrook added that the situation now in Germany is one in which investors are seeking good hotel assets and a degree of differentiation.
He said lender security is the key to reviving the German market following real-estate property valuations seen all over Germany in 2023, mostly as a result of interest rates.
Transparency is helped by the German law that hotels have to certify their asset values, but Barbrook added that the signs of distress in the country are more obvious than hoteliers would like them to be. High staff turnover is one such red flag.