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Munich, Germany's secret motor, a tourist destination that is gaining speed

Benefiting from a solid economy, the second most visited destination in the country after Berlin, Germany's southern capital is well-known to tourism clientèle. Munich has events and a developed tourism industry to rely on, particularly in terms of welcome and hotel supply, to further increase its international arrivals and renown.

Key figures:

  • Population: 2.4 million
  • Surface : 31 hectares
  • Number of chain hotels: 116
  • Number of chain rooms: 21,670
  • Tourist arrivals: 13.4 million nights in 2014
  • Primary supply markets: United States, Italy, United Kingdom, Russia, Switzerland, Austria

Munich, the third city in Germany in terms of population after Berlin and Hamburg, is the capital of Bavaria, the biggest Land in the country in terms of surface area and second in terms of population. The region is characterized by a dense economic fabric marked by the industrial sectors and new technologies, which both focus on export, as well as by the publishing and communications sector. It also has many areas of competition and is considered Germany's most innovative region. Bavaria contributes 17.7% of the GDP, behind Rhineland in North-Westphalia, and in 2013 posted the lowest unemployment rate in the country (3.8%). Its capital Munich concentrates many headquarters, especially in the industrial sectors (BMW, Siemens). It is also the number-two financial market place, after Frankfurt, thanks to the presence of many insurance companies, of which the leading one is Allianz. These assets allow the Bavarian capital to post the highest per capita buying power in Germany (29,689€ versus 21,441€ on average for the country), far ahead of its capital, Berlin, and even Frankfurt. Tourism is also one of Munich's important economic sectors, and benefits particularly from its location in the heart of an attractive region: Bavaria.

A very familiar destination to international clientèle

Bavaria is the leading tourist destination in Germany with a total of 85.2 million nights recorded in 2014, or close to 20% of the country's overall tourist arrivals. Domestic tourism dominates in the region, where it represents 80% of nights.

The capital of Bavaria, Munich, experienced steady growth in tourist arrivals for twelve years. In 2014, it posted 13.4 million nights, representing a 3.4% increase over 2013, as the second most visited destination in Germany after Berlin. Munich nonetheless stands out in Bavaria for its arrivals that are much more international: with 6.7 million nights, international tourists thus generated half the nights in the city in 2014, resulting in faster growth (+5.1%) than that for domestic clientèle (+3.5%). Munich alone concentrates 40.1% of international clientèle in Bavaria.

Americans continue to constitute the leading source market for the Bavarian capital, with close to 749,000 nights in 2014. Italy is becoming the second tourist nationality in the city after 2.8% growth, surpassing 516,000 nights, with the United Kingdom closing the podium with 508,370 nights (+4.4%). The year 2014 was marked by the strong drop in Russian clientèle due to diplomatic tension regarding the Ukraine and the fall of the ruble: with 472,850 nights or a drop by 9.9% compared to 2014, it became the 4th source market, and its arrivals have continued to decrease since the beginning of the year 2015 (-37%). The neighboring markets of Germany, Switzerland and Austria, are logically among the city's traditional clientèle and generate 420,000 and 354,900 nights. In addition to these traditional European markets, Munich's awareness has grown and the city attracts increasing numbers of new Middle Eastern and Asian clientèle, whose demand has grown steadily in recent months. After growing by 16.6%, the Gulf countries as a whole represent 613,000 nights in 2014, which is the equivalent of the city's second tourist source market. Chinese and Brazilian clientèle represent a more modest volume, showing double-digit growth on the year (16.4% and 13.5% respectively).

Due to the international appeal of Munich, the Franz-Josef Strauss airport is the 7th largest airport in Europe in terms of traffic in 2014 with 39.7 million passengers, a figure that is up by 2.7% with respect to 2013, and by more than 21% over 2009. In order to manage the steady growth in arrivals an extension of Terminal 2 will open in 2016 and a project foreseeing the creation of a third runway has been approved in order to bring the airport's capacity to 58 million passengers.

Renown tourism driven by events 

Munich's economic importance and the presence of several corporate headquarters make it a leading business destination in Germany. The Bavarian capital nonetheless benefits from a balanced distribution between business and leisure clientèle. It has many infrastructures for events, particularly ICM (Internationales Congress Center München) operated by the Messe München, and the Olympia Park München, a former stadium built for 1972 Olympics that currently hosts cultural and athletic events. In 2014, the Messe München organized 13 fairs and 202 exhibitions in the city that brought in 18 million visitors and 32,800 exhibitors. Among the most important are the biannual fair IFAT (World's Leading Trade Fair for Water, Sewage, Waste and Raw Materials Management), which had more than 135,000 visitors, the crafts fair IMH and the home and crafts fair Heim+Handwerk (more than 120,000 each), and also, the fair for travel and leisure that had about 114,000 visitors.

Munich's tempo is also set by several major cultural events. The city is famous for its Oktoberfest, the popular beer festival at the beginning of the fall. Last year no less than 6.3 million visitors, including close to three-quarters of Bavarian origin, spent 15 days tasting a few million liters of beer. Two other famous international events also take place each year in the Bavarian capital: the Opera Festival and Filmfest. Christmas markets also contribute to the city's renown. Finally, in terms of sports, the city also enjoys an international reputation thanks to its soccer club, FC Bayern Munich, whose matches are organized in the Allianz Arena (75,000 places) and attract supporters to the city.

In addition to its dense events calendar, Munich also relies on leisure tourism and a long list of important museums, including the Deutsche Museum dedicated to science and technology, and the city's art museums  (Alte Pinakothek,  Neue Pinakothek and the  Pinakothek der Moderne) which constitute a complex of museums covering the history of painting from the 14th century until today. As the city is a short stay, weekend and evening destination, the goal of the tourist office is to lengthen stays by valorizing the quality of life and authenticity of the city, to respond to demand from the German speaking community, which is a key market for the city, and increase tourist spending, particularly of foreign clientèle.

A structured hotel industry that appeals to operators

Hoteliers fully benefit from growth in tourist arrivals and the many events organized in the city center. According to data published by MKG Hospitality, between January and August 2015, Munich's occupancy rate was no less than 76.8%, up 0.6 points with respect to the same period last year. The average daily rate increased 0.9% to reach 105.7€. The growth of these two indicators allows the RevPAR to progress by 1.7% and settle at 81.2€. All the categories improved performances on the period, mostly driven by the increase in average daily rate while the occupancy rate remains stable in the economy and upscale segments, the midscale segment being the only one to post a bigger increase (+3.2%).

Accompanying the dynamism of demand, the hotel supply in Munich, particularly that of chains, developed considerably. As of January 1, 2015, Munich had close to 400 hotels, including 116 chains with 21,670 rooms. The strong presence of business and international clientèle attracts major hotel groups: the chain supply continued to grow by 3.5% in 2015, and increased by 6,500 additional rooms in 5 years, through conversions or new constructions. This chain supply is dominated by upper categories: the upscale represents almost half the city's chain supply (48.5%) and the midscale close to one third, while the economy segment represents only 20% of the number of rooms, which proportion has been rapidly increasing for several years.

The French group Accor is the leading group on Munich's market with 4,319 rooms; its umbrella brand Ibis leads the ranking with 1,722 rooms. The American group Starwood Hotels & Resorts is the second group in the city, with half as many rooms as its French counterpart, followed by the German group Motel One with its single brand totaling 1,556 rooms in 7 properties. In 2014, several groups experienced growth in their supply in the Bavarian capital: Hilton, Wyndham through its brand Ramada, B&B Hotels, and Accor through its brands Ibis Budget and Adagio Aparthotel. New brands entered the market in 2015, such as Nordic Pure.

Thanks to a full pipeline, Munich's supply will grow in the years to come. After opening a hotel in the city in 2014, Leonardo Hotels, which owns Fattal Hotels, expects two new properties to open: the Leonardo Hotel Munich City Olympiapark and the Leonardo Hotel Munich City North for 265 additional rooms. In 2016, 25hours Hotels and Super 8 by Wyndham will also open properties in the Bavarian capital. In 2017, the Meininger group will open a second property and Hyatt Hotels & Resorts inaugurate its first hotel in Munich with 275 rooms under the brand Andaz in Germany. Finally, Steigenberger, already present through its brand Intercity, will establish an upscale property in the same year with 292 rooms under its eponymous brand.

The "secret capital" of Germany is thus one of the most appreciated destinations in the country. Known for its economic dynamism and its MICE infrastructures, it attracts business tourists, while its lifestyle quality and events make it popular among leisure tourists. With largely international renown, its growing reputation as a tourist destination attracts growing numbers of hotel investors. Munich is thus able to reveal its ambitions to become one of the primary tourist destinations on the Old Continent.

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