Operator Insolvencies in the Hotels, Hospitality & Leisure Sector: Consequences, Risks and Opportunities

Background

Revo Hospitality Group (“Revo”; until 2025: HR Group), one of Europe's largest multi brand hotel operators, has filed for insolvency proceedings, mainly under self-administration, for around 140 group companies on 16 January 2026. The group operates hotels under its own brands as well as a franchise partner for internationally known hotel chains. In Germany and Austria, approximately 125 hotels are supposed to continue operations during the insolvency proceedings, with all approximately 5,500 employees remaining employed. The company cited its rapid expansion, leading to duplicate structures and integration challenges, as one reason for its current economic situation. Recent acquisition-driven growth involved substantial costs, whilst occupancy levels and projected revenues for 2025 did not develop as expected by the company. Revo is only the latest, however most prominent insolvency case after the hotel operator insolvency proceedings of Lindner Hotels AG and Achat Hotel Group, each under self-administration, which have both ended successfully with approval of the respective insolvency plan by their respective creditors. Contemplated reasons for the economical instabilities of those two operators were the consequences of the pandemic, of Ukraine war and general cost increases (staff, energy and other supplies, financing interest rates).

Market Impact

The Revo insolvency proceedings may trigger a fundamental reassessment of risk across Germany's, Austria's and potential further hotel investment and leasing market. Property owners and investors could become increasingly sensitive to operator creditworthiness, potentially demanding greater transparency (e.g. concerning business case and creditworthiness of operators), more contractual flexibility (e.g. with additional extraordinary lease termination rights of landlords) and enhanced legal and economical due diligence assessments. Brand partners may scrutinise more carefully whether operators can sustainably finance quality standards over the long term and to which extent business plans are resilient against market impacts. Aggressive portfolio acquisitions could become rarer and subject to more rigorous financial review. Financing and security requirements are likely to tighten, with lenders applying heightened scrutiny to business cases, particularly occupancy and room rate forecasts, and cost structures. This cautious environment may also create opportunities for selective acquisitions and renegotiation of lease or management agreements on more favorable terms. In general, it can be expected that the German hotel investment market is gaining further momentum in 2026, but capital increasingly seeks proven concepts, transparent cash flows and operator flexibility. Value-add strategies centred on repositioning and operational optimization may gain further traction, with some owners possibly seeking real property assets without existing operators or with expiring lease or management agreements, with the flexibility to exchange the respective business partner, in order to retain control and mitigate counterparty risk. 

Strategic Considerations for Property Owners and Potential Investors

Several considerations may emerge for the Hotel Sector going forward. Property owners will likely seek to avoid accumulation of outstanding payments of financially stretched operators. Also, property owners affected by insolvency of an operator might be willing to sell the respective property in order to avoid the insecurity that the lease agreement might be early terminated by the operator upon short notice in line with German Insolvency Law, eliminating the landlord's cash flow deriving from the respective lease. Operators who own the hotel property operated by them, might be willing to sell the property in order to increase their liquidity and lease the property back for further operation (sale and leaseback).

Long, inflexible, fixed lease terms — once seen as providing stability, plannability and cash flow securitization — could possibly divert to a liability in future sale processes, depending on the operator's financial strength. Operational efficiency is likely to become increasingly important: strict budget adherence, automation including AI-driven appliances, streamlined operation models and joint supply chains may prove essential, as labor-intensive concepts and stand-alone concepts increasingly face cost pressure. Contractual agility may also gain importance with a shift towards flexible determination of the (turnover) rent, fees, property related costs and respective adjustment clauses. Ultimately, the Revo insolvency, giving its size, could mark a power shift: property owners and investors may find themselves negotiating from a position of greater strength vis-à-vis operators, with more assertiveness in demanding increased securitization and more insights and intervention/decision rights concerning the respective operator's business case.

Legal Framework and Key Mechanisms

German Insolvency Law provides for two principal types of proceedings: (a) regular insolvency proceedings (Regelinsolvenzverfahren), where an independent insolvency administrator, appointed by the insolvency court, takes full control of the proceedings; and (b) self-administration proceedings (Eigenverwaltung), where the existing or newly appointed debtor's management proceeds the insolvency under supervision of a court-appointed custodian.

Several key legal mechanisms may come into play. The opening of insolvency proceedings does not automatically terminate lease agreements, which – until further notice – continue. The insolvency administrator (or in debtor-in-possession cases, the debtor with custodian consent) may terminate lease agreements for the insolvent debtor as tenant with three months' notice to the end of the month, regardless of the original contract term and notice periods. This could affect landlords who may face vacant properties and the respective need to find replacement operators with short notice.

From the opening of insolvency proceedings, ongoing rent and operating costs generally qualify as priority mass claims (Masseverbindlichkeiten) payable from the insolvency estate, while pre‑insolvency payment arrears constitute ordinary insolvency claims and are satisfied only on a quota basis. Landlords’ termination rights are restricted under German Insolvency Law: termination of a lease by the landlord based on payment defaults occurred prior to the filing for insolvency of the tenant is prohibited, and respective contract clauses are generally invalid. Termination may again be possible if payment arrears arise after filing for insolvency, potentially justifying extraordinary termination under statutory lease law. Landlords may benefit from a statutory landlord’s lien (Vermieterpfandrecht) over movable assets brought into the leased premises, provided such items are owned by the tenant, which in practice often requires clarification of ownership. Guarantees/sureties (Bürgschaften) may generally be called upon depending on their terms, whereas cash security deposits are typically only realised after termination of the lease. The insolvency administrator may contest certain pre‑insolvency transactions if they have disadvantaged the creditors of the insolvency estate. The restructuring process may involve an insolvency plan (Insolvenzplan) requiring creditor and court approval.

How We Can Help

With approx. 280 lawyers in Germany and in total over 1,600 lawyers across 34 offices in key business centers in particular throughout Europe, the Middle East, Asia-Pacific and North Africa, and a sector focus on Hotels, Hospitality & Leisure, we are well positioned to support potential bidders and investors in hotel restructuring and distressed transactions. We provide full-service support across all aspects of hotel investments, developments and operations, including real estate, corporate, finance, employment, IP, franchising, and data protection. Our team assists clients through all stages of the hotel property lifecycle — from acquisition and disposal to lease, management and financing agreements. Our practical approach is supported by decades of experience in the Hotels, Hospitality & Leisure Sector, including specialized insolvency expertise.