Financing a hotel project in Germany and most European countries alike continues to be a difficult undertaking, all the more so because the large international hotel chains are increasingly detaching themselves from long-term leasing relationships or rather, are no longer entering into them.  This means that the main part of the investment risk goes to the owner or investor of the hotel.  As, with regard to the financing aspect, the hotel development is basically in direct competition with other investment options, this risk must be taken into account and reflected in an appropriate rate of return.

Depending on the form of hotel operation (lease or management, franchise or owner-operated) and the risk distribution, the return on investment and the guarantees required by the project’s financial partners will vary.  Investors will have the least requirements of the large hotel chains since these are presumed to pose the smallest risk in terms of a hotel’s chances of success.  Hence, in Central Europe, banks, including German banks, are financing more and more pure management agreements without any guarantees whatsoever.