Branded full-service hotels in Berlin reported a solid increase in profits in the 12 months to March 2025, as higher room occupancy and a modest rise in average daily rates (ADR) helped offset growing operational costs.
According to new data from Cushman & Wakefield and HotStats, gross operating profit per available room (GOP PAR) grew by 4.1% year-on-year, even as expenses rose by 9.6%.
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This hotel market growth was primarily driven by room revenue, with revenue per available room (RevPAR) climbing 7.3% over the year.
However, profit margins declined slightly, as rising payroll and operating expenses absorbed much of the gains.
Rooms performance leads revenue growth
Hotel occupancy in Berlin increased by 4.5 percentage points during the year, with average daily rates up 2.6%, leading to a 7.3% growth in RevPAR.
The winter months showed particularly strong occupancy gains, with January 2025 up 15.3%, December 2024 up 14.8%, and November 2024 up 11.9% compared to the same period a year earlier.
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By GlobalDataIn the first quarter of 2025, RevPAR continued to rise, up 4.3% from Q1 2024. This was mainly supported by a 5.0% increase in occupancy, while ADR slipped by 0.7%.
The result was a small GOP PAR improvement of 0.3% in Q1, indicating a slower pace of profit growth early in the year.
Supply declines as closures outpace new openings
Berlin’s hotel supply contracted slightly over the year, falling 0.1% as closures outweighed new openings. A net loss of 63 rooms was recorded, with five hotels closing and four new properties opening or rebranding.
The closures included conversions of former hotels into alternative uses, such as refugee accommodation and mixed-use developments.
Notable additions included upper-upscale hotels in central Berlin, such as the newly branded Radisson Collection and Roomers Berlin. However, most of the net loss occurred in Berlin Centre West and the city’s outer boroughs, where 668 and 311 rooms were removed from supply, respectively.
The contraction in room supply helped support occupancy growth, particularly during off-peak months, giving existing operators an advantage despite rising cost pressures.
Rising costs limit profit margin gains
Operational expenses rose sharply, led by a 12.6% increase in payroll costs, which climbed from €51.3 to €57.8 per available room.
The food and beverage department saw the largest rise in staffing costs, up €3.1 PAR, followed by rooms staff at €1.9 PAR. This increase reflected both higher occupancy and the minimum wage hike implemented in January 2024.
Other operational expenses grew by 12.7%, with notable increases in contract services and sales and marketing costs. Despite a 10.7% decline in utility costs, total cost of sales also increased by 3.8%, driven by food and beverage and room operations.
Although nominal GOP PAR improved, the GOP margin declined from 30.7% to 29.6%, with only 15.9% of total revenue growth reaching the bottom line.
The findings point to a competitive Berlin hotel market, where rising room demand is counterbalanced by operational cost inflation and structural shifts in supply.
