Why hotel prices are stagnant in Berlin despite growing occupancy rates

Straying from the traditional hotel market, an estimated five million visitors to Berlin last year chose to stay in unregulated, privately rented vacation apartments instead of registered hotels, according to estimates by local industry and the city government.

While overall hotel stays have risen and hotel construction continues, the popularity of budget apartment rentals has put a clamp on hotel room rates—and that has caused a large chunk of lost business, the industry says. At the same time, the vacation-apartment trend has become a significant segment of Berlin's growing real-estate market, garnering investment interest from far and wide.

The hotel industry and vacation renters themselves say the trend started expanding rapidly about five years ago, as websites sprang up to market the rooms.