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Analysis

In Leipzig, hospitality keeps pace

Businesses and hotel operators are increasingly interested in this destination which enjoys a revived economic activity, solid cultural ambition and inexpensive real estate. Because of East Germany's historically low prices and costs the hotel supply is mostly mid and upscale and is developing at a moderate rate.

Leipzig, the biggest city in Saxony with more than 550,000 inhabitants, an historic merchant city known for its imperial trade fairs, is now a focal point for many corporations, which are attracted to its dynamism and low rent: BMW, Porsche, and Siemens have offices there, as does Amazon with its brand new center for logistics. And yet, the cradle of Johann Sebastien Bach, Felix Mendelssohn and Richard Wagner is also a city of culture: Germany’s publishing capital, it is also home to one of the oldest universities in Germany, founded in 1409. In honor of its cultural and political importance, Leipzig is home to the vast German National Library, as well as the Federal Administrative Court.

The city’s chain hotel supply is dominated by the midscale category, with 42.2% of the existing supply. Properties in the economy categories represent only 26.1% of the total capacity of hotel operators; while this share is still weak, it has been growing regularly for a few years. Finally, upscale chain hotels represent almost one third of Leipzig’s supply with 31.7% of the city’s hotel rooms present on this segment.

Increasingly present on the German market, the hotel chain B&B opened a second property in the Saxon city in 2015: B&B Hotel Leipzig-City. This 96-room hotel is located in the middle of the historic center, between Marktplatz and the Central station, not far from the University’s buildings. On the midscale segment, an address belonging to Grand City Hotels opened last year to the north of the city. Located in the Gohlis neighborhood, near the Stadion des Friedens, the City Inn Hotel Leipzig has 68 rooms.

While Leipzig’s hotel supply posts moderate growth across the year 2015, this is also true for its performances. From January to December, the Revenue per available room is up by only 2.5%, due to a 0.8 point drop in occupancy rate. The increase in average daily rate allowed the RevPAR to grow and rates increased by 3.6% at hotels in the city in 2015, versus 2.6% throughout Germany.

In 2016, one of the new properties that should leave its mark on innovations in the Saxon city is the Innside Leipzig hotel, a noteworthy addition to the city’s upscale supply: after the renovation of the historic Kosmos Haus, the hotel will welcome its first clients in its 153 rooms and suites starting in September. The Günnewig Hotel Vier Jahreszeiten was also rebranded in 2016, and will join the German group Centro Hotels. The 67-room address is located across from Leipzig central station, 500 meters from the city center and the zoological park.

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