Hotel Hijinks

Breakfast Not Included

€50 extra? But I swear I only watched the movie preview. Source: DPA
€50 extra? But I swear I only watched the movie preview.
  • Why it matters

    Why it matters

    The exorbitant hotel rates are one reason trade fair attendance in Germany is down.

  • Facts

    Facts

    • One hotel in Frankfurt charges €1,000 for a room that usually goes for €59 per night.
    • Those charging the most are in cities with international trade shows attracting foreign visitors.
    • Trade fairs are trying to convince hotels to offer a few rooms at “fair” rates.
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    Audio

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The tiled floor in the breakfast room is reminiscent of the 1980s and the ornately cheap furnishings have a touch of the 1950s. But the price the Frankfurt Garni charges for a room in the middle of each September quickly brings visitors back to the present day – the three-star hotel demands €1,000 per night, without breakfast.

The price then drops down to the normal €59 per night on September 20, with a clear reason: Automechanika, the trade fair for the automotive parts industry with more than 75,000 visitors, closed its doors just a few hundred meters away. Two weeks later, just in time for the Frankfurt Book Fair, the hotel raised the rates to €1,000 again.

But hotel guests aren’t just complaining about being ripped off during trade fairs in Frankfurt. “We now have good communication with hoteliers,” said Klaus Dittrich, CEO Messe Munich International, a trade fair firm. “But the issue remains a perennial one.” He said there are “black sheep.”

The white sheep are clearly in the minority across Germany. A random sampling conducted by Handelsblatt shows that in cities such as Frankfurt, Hanover or Nuremberg it is almost impossible to find a room during a trade fairs that hasn’t tripled or quadrupled in price from the week before.

The biggest markups, according to a comparison of the rooms offered on the Hotel Reservation Service (HRS) portal, happen during the Nuremberg International Toy Fair. Those looking to book a room there in January pay an average of 480 percent more. That also takes into consideration the hotels that are 12 kilometers away in the cities of Erlangen or Fürth.

 

Germanys Most Expensive-01

 

Recently, rooms during the IAA commercial vehicles trade fair in Hanover were almost unaffordable. The prices there were an average of 404 percent more expensive than the week before. “At the comparatively smaller trade fair locations there is not the same hotel room capacity as there is in Munich or Berlin,” said a spokeswoman from the Hannover Trade Fair.

But that only partially explains the heavy price premiums. In Leipzig, which is almost the same size as Hanover, the prices for the almost 170,000 visitors to the Book Fair in mid-March are currently 213 percent more than the hotel rates of the week before.

Harald Kötter from the Association of the German Trade Fair Industry said: “Trade shows such as those attract visitors from the region, and therefore there are fewer additional overnight stays.” Most hotel bottlenecks occur, he said, at the trade fairs attracting many foreign visitors.

Those include tech show CeBIT and the Industrie industrial fair, both held in Hanover. The fact that the hotel rates there quadruple during the trade fairs may be one of the reasons why they have lost almost one-quarter of their professional visitors since 2011. “The German trade fairs have become too expensive for foreigners, especially Americans,” said Marlies Schäfer from the German engineering association VDMA. Many companies now only send a smaller contingent.

“The black sheep of the hotel industry are biting the hands that feed them,” said Munich’s trade fair boss Mr. Dittrich.

A study done by his colleagues in Frankfurt prove how much truth there is in what he says. Market research by the Ifo Institute found that there are 1.75 million overnight stays in Frankfurt annually for trade fairs, or 29 percent of all room bookings. If the industry meetings were to take place somewhere else, as was threatened by the Frankfurt Book Fair a few years ago, then €310 million in turnover would be at stake for the city’s hotel industry, according to the study.

Six months before a trade fair in Munich began, the hotels cancelled the room reservations in order to offer the rooms at a rate three-times as high.

In order to avoid worse from happening, four years ago the Hanover Trade Fair convinced selected hoteliers to offer a limited number of rooms at a “fair price,” which have since been marketed by the trade fair under “Selected Hotels.” There is a similar project underway in Düsseldorf.

But the potential for discontent remains large. Visitors to the Drupa printing equipment trade fair in Düsseldorf complain that hotels only rent out their rooms for the entire duration of the trade fair. And some reportedly demand a deposit of 75 percent two years in advance.

In Munich, hoteliers enraged VDMA, the German engineering association. Companies reserved hotel rooms three years in advance of the Bauma, the trade fair for construction machinery. Six months before the trade fair began the hotels cancelled the room reservations in order to offer the rooms at a rate three-times as high. After a letter of protest, the mayor vowed improvement — with a clear result. “Nothing has improved,” said VDMA spokeswoman Ms. Schäfer.

The Bavarian hotel and restaurant federation finds nothing objectionable in the pricing. “I can’t understand such a discussion in a country with a free market economy,” said federation president Ulrich Brandl. He said that in the end it comes down to supply and demand, like with airline tickets. In addition, he said, there are days outside of the major events when hotels have to book overnight stays at considerably below cost. The prices during the trade fairs balance these out, he said.

But the hotels are possibly bumping up against the legal limits – or more specifically, those in Paragraph 138 of Germany’s Civil Code (BGB). It condemns a transaction “through which someone reaps benefits from the predicament of another by exploitation,” which “stand to benefit in striking disparity,” such as price gouging.

So far, no one has sued over the inflated prices, said July Thöle of the law firm Beiten Burkhardt. “A lawsuit,” said the lawyer, “wouldn’t be completely hopeless.” In the end, it would be possible to find evidence in specific cases exploitative pricing.

At first glance, the online portal Airbnb seems to promise an easing of price levels. According to Airbnb, it brokered 30,000 private rooms for the recent Munich Oktoberfest. But there is the threat of disillusionment here, too. Private owners are already asking nightly rates of more than €200 for the Nuremberg International Toy Fair.

The Caravan tourism and RV trade fair in Stuttgart shows how things can be done differently. At the end of January, more than 240,000 camping enthusiasts meet there without pushing the hotel rates up even a little. But it helps to have a motor home.

 

Christoph Schlautmann covers the retail sector for Handelsblatt. To contact the author: Schlautmann@handelsblatt.com

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