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Hotels | Tourism is one of Austria´s most important industries. The country had in total 135 million over night stays in 2015 (2,5%). Located in the heart of Europe, the unspoilt nature, the beautiful mountain regions and lakes, the rich history, the special relationship to music, the many cultural sites and diverse cities and regions, Austria has all it takes to be a perfect tourist destination. Visitors also value the safety, the excellent infrastructure, the hospitality of its population and that one can visit the country in summer and winter. Furthermore, the clever focus on certain segments of the travel market and the fact that many international organisations are headquartered in Austria or maintain major offices, e.g. OPEC or the United Nations, add to its success as a travel destination. Vienna has managed to establish itself as one of the world´s most important congress towns and is third in the global ranking of the UIA (Union of International Associations) behind Singapore and Brussels, but ahead of international hotspots like London, Tokyo or Paris.

All these aspects offer investors in hotels and commercial real estate great opportunities. Hotel investments account for approximately 20% of the commercial property market in Austria. Vienna being the most important market. Two thirds of all tourists visiting Austria choose its capital as their main destination (i.e. in 2015 Vienna achieved an increase of 5.9% in overnight stays), followed by Salzburg and Linz. The majority of investments are in 4* hotels, even though the sale of one of Vienna´s landmark hotels, the 5* Imperial to an investor from the UAE created the most media buzz in 2016. Not only city tourism, but also winter tourism set new records in arrivals and overnight stays in 2015. This makes investments in hotels and commercial property in winter sport destinations increasingly attractive. Here Tyrol is the strongest region, followed by Salzburg.

Austria has been for some time and still is a popular target for commercial property investments by international buyers. Investors with a strong equity base are able to achieve excellent returns on equity due to the very low interest level in the market. Insurances companies and funds are under pressure to generate returns for their investors and are also focusing on investments in commercial property.

Hotel Investments Continue To Be In Demand

2015 saw a substantial increase in hotel investments compared to the previous year. In total, transactions amounted to € 310 million, € 80 more than in 2014 whereby most of the deals were concluded in the second half of the year. One of the single most important transactions was the sale of a whole portfolio of 10 hotels, 2 of which are in Vienna, by an Austrian investor to a hotel investment group from the United States. However, there were also a number of hotels in Austria´s federal regions that changed ownership.

The outlook for 2018 is very positive with several hotels up for sale. Despite new hotels opening their doors recently in Vienna, the occupancy rate of luxury hotels remains high at 65-70%. This is due to the limited number of suitable locations and properties which restricts further developments in the Viennese hotel market. At the same time, a further rise in arrivals and over-night stays is expected for Vienna and Austria in general, which makes investments into hotels and commercial property in tourist hotspots, Vienna and Salzburg in particular, all the more attractive.
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