In Denmark, there are no laws specifically governing the contractual relationship between a buyer and seller in a hotel transaction, which in Denmark is most commonly carried out as a commercial real estate transaction. The main rule is thus the principle of freedom of contract ‒ although certain legislation may apply to different elements of the transaction (eg, legislation related to lease, tax and VAT, environment, planning, construction, financing, and employment).

Most Danish hotel transactions contain a lease aspect where the Danish Commercial Lease Act is the main source of law (see 3.3 Hotel Lease Agreements (Regulatory Aspects). In addition to a lease agreement, the parties also often enter into a development agreement regarding the construction or refurbishment of the hotel. In such development agreements, the parties usually agree to apply the construction standards in AB18/ABT18 (General Conditions for Turnkey Contracts of 2018). The AB18/ABT18 standards are a set of general conditions that are widely used in construction in Denmark and are prepared by a committee consisting of people appointed by the relevant minister and representing owners, contractors, suppliers, and technical advisers. The standards are recognised throughout the construction industry and courts but only apply (in full or partly) if the parties have agreed on their application.

The structure of hotel transactions follows the same trends in structure as other real estate transactions in Denmark. Generally, share deals remain the preferred choice of structure in most Danish commercial real estate transactions. However, asset deals are still the preferred structure for lower-value transactions (below DKK100 million), which do not trigger a high registration fee. In Denmark, an asset deal triggers a fixed registration fee of DKK1,850 plus a variable registration fee of 0.6% of the purchase price. Such fees do not apply to share deals. Especially in larger transactions, this is a big economic advantage, making the share deal the preferred structure. In smaller transactions, the asset deal excels owing to the simplicity and transparency of this deal structure.

Hotel transactions are partly and indirectly public in Denmark.

Share deals are indirectly public owing to the various corporate registrations in the Danish Central Business Register usually required in connection with a transaction. Such registrations include information about members of the management and direct and indirect ownership, thereby making it possible to deduce that an acquisition has taken place and also to identify the buyer. The purchase agreement and the terms of the transaction (including the purchase price) are, however, not public.

Asset deals are indirectly public in Denmark, as title holders to a property (both current and historical) appear in the Danish Land Registry together with the registered deed of conveyance, making it possible to identify the parties. Generally, the purchase price also appears in the Danish Land Registry. The purchase agreement itself is, however, not public.

Foreign investors are generally allowed to invest in Denmark. This includes acquisitions of hotels, which are considered commercial real estate.

Danish Real Estate Acquisition Act

Under the Danish Real Estate Acquisition Act, persons with no connection to Denmark cannot acquire real estate without permission from the Danish Ministry of Justice; however, this requirement does not apply to commercial properties such as hotels. This means that foreign investors are free to acquire hotels without having to meet residency requirements or other restrictions that apply to private or holiday homes.

Danish Investment Screening Act

Under the Danish Investment Screening Act (based on EU regulation), measures have been taken to prevent foreign direct investments and certain special economic activities from posing a threat to national security or public order in Denmark. The law introduces a screening system in the form of a sector-based authorisation scheme for investments and agreements in sectors deemed most sensitive to national security or public order, combined with a cross-sector voluntary notification scheme. The screening system allows for intervention against foreign direct investments and special economic agreements that are assessed to potentially pose a threat to national security or public order in Denmark.

Although the hotel sector in general will not be considered as sensitive to national security or public order, the regulation can in principle apply ‒ for example, if the hotel is located close to military installations or if the location has a strategic placement. Other examples of a potential intervention could be if the foreign investor has links to states or organisations considered to pose a national security risk.

Lease agreements, management agreements and franchise agreements are three distinct legal types of agreements used within the hotel sector. Each provides a different ownership and management structure.

Where lease agreements focus on the terms for a hotel operator to use the property owner’s premises to operate a hotel as the operator’s own business, the hotel operator will – under a management agreement – operate the hotel on behalf of the property owner and the contractual set-up will thus focus on the services the hotel operator provides to the property owner with regard to the daily operations and management of the hotel. In a hotel franchise set-up, the property owner or the operator (as the case may be) will operate and manage the hotel under a specific brand name and must adhere to the franchisor’s brand standards and business concept. The choice of agreement type depends on the parties’ needs and desires for ownership, control, and financial risk.

Hotel lease agreements are by far the most common ownership and management structure within the hotel sector in Denmark. Only a limited number of management and franchise agreements are entered into in Denmark. There are also examples of privately owned and operated hotels ‒ ie, where the hotel operator owns the premises itself.

Please refer to the Denmark Trends and Developments chapter of this guide for a more thorough introduction to the Danish hotel market and the prevalent ownership and management structure.

Lease agreements are by far the most common type of contractual set-up within the Danish hotel sector and also preferred by the majority of investors. However, there have been a few cases where specialised hotel investors are willing to take on more of the operational risk. In such cases, the parties will often enter into a management agreement instead of a lease agreement.

Management agreements are contracts where a hotel operator assumes responsibility for the day-to-day operation and management of the hotel on behalf of the owner. The purpose of a management agreement is to ensure the professional operation of the hotel where the operator implements the owner’s policies and strategies without the owner being involved in the day-to-day management. The management company typically receives a fee for its services, which can be based on the hotel’s turnover or profits.

As previously mentioned in 3.1 Common Hotel Ownership and Management Structures, hotel management agreements are rarely used in Denmark. When used, the terms will be negotiated on a case-by-case basis to meet the specific demands and needs of the parties in question.

Lease agreements are usually entered by the hotel operator as tenant and a property investor as landlord. The purpose of the contract is to delineate the terms governing the hotel operator’s use of the premises from the lease commencement date. The landlord rarely has any influence over the hotel operations but usually generates rental income based on the hotel operator’s turnover. The non-operational framework is particularly beneficial for property investors who ‒ for example, owing to fund regulations ‒ cannot assume any operational risk.

Structure and Terms

The structure of a hotel lease agreement depends on whether the arrangement includes a development aspect and whether a separate development agreement is executed concurrently with the lease agreement. Furthermore, the structure will inevitably be tailored to the specific property and the parties’ requirements. Nevertheless, a standard structure typically encompasses the following elements:

• description of the leased premises;
• use of the leased premises;
• commencement date;
• termination;
• rent (minimum rent, variable rent, adjustment of rent, etc);
• operating and utility costs;
• reporting requirements;
• landlord’s access to the leased premises;
• maintenance, repair and renewal;
• FF&E (furniture, fixtures and equipment) reserve;
• FF&E, OS&E (operating supplies and equipment) and IT;
• alterations to the leased premises;
• insurance;
• subletting, assignment, and change of control;
• vacation of the leased premises;
• VAT;
• security;
• ESG;
• confidentiality; and
• governing law and dispute.

For a detailed description and analysis of some of the key terms (and prevailing trends) within Danish hotel lease agreements, please refer to the Denmark Trends and Development chapter of this guide.

Regulatory Aspects

The primary source of law governing business lease agreements in Denmark is the Danish Commercial Lease Act. Previous commercial lease regulation was heavily influenced by tenant protection considerations and numerous mandatory provisions. However, the current Danish Commercial Lease Act is largely based on the principle of freedom of contract, allowing the parties to tailor the lease agreement to their specific needs. Nonetheless, there are still some mandatory provisions that cannot be enforced to the detriment of the tenant and which, consequently, are important to be aware of when negotiating lease agreements in Denmark. Additionally, all the optional provisions will apply unless explicitly derogated from in the lease agreement.

The mandatory provisions include the following.

• The specification requirement ‒ according to which, the lease agreement must specify which types of expenses in addition to the rent the tenant must pay to the landlord. The estimated size of each expense must be specified as well. If the lease agreement does not include these specifications, the landlord is generally not entitled to charge the expense(s) in question. The specification requirement can be particularly challenging in development cases where the hotel agreement is executed at a very early stage before project documents are developed, a local plan is adopted, a building permit is obtained, etc, as the areas and associated costs are not known yet.
• The exhaustive list of termination reasons ‒ according to which, the landlord can only terminate the lease agreement:
1. if the landlord wants to use the leased premises itself;
2. if the leased premises must be vacated owing to demolition or conversion of the property;
3. if the tenant has failed to maintain good order; or
4. if it is very urgent for the landlord to be released from its obligations under the lease agreement.

This mandatory rule is likely the most burdensome for the landlord and represents a significant departure from regular Danish contract law. The combination of limited termination reasons and the open-ended nature of most leases (more on this in the following bulleted item) makes it crucial to account for market fluctuations and balance the interests of both parties when negotiating lease agreements, which can be challenging.

• The regulation on time-limited agreements ‒ according to which, a time limitation can be disregarded if it was not sufficiently justified by the circumstances of the landlord at the date of the agreement. This mandatory rule is the reason most hotel lease agreements in Denmark are open-ended. It can cause challenges when negotiating lease agreements with international investors or operators, as time-limited leases are customary in many other jurisdictions, making the framework difficult to grasp for non-Danish parties.
• The regulation regarding termination for cause – according to which, the landlord can only terminate the lease agreement with immediate effect owing to the 11 specific reasons listed in the Danish Commercial Lease Act. Even if one of those reasons is present, the landlord cannot terminate for cause if the matter held against the tenant is deemed to be of minor importance (ie, a materiality qualifier).

Franchise agreements are agreements whereby a franchisor grants a franchisee (typically the hotel operator) the right to operate its own business under the franchisor’s brand and business concept. The franchise can be operated from the hotel operator’s own premises (which is not that common in Denmark) or under a lease contract with a property investor. In Denmark, the typical structure for franchise agreements involves a lease agreement between the property owner and the operator, as well as a franchise agreement between the operator and the franchisor.

The purpose of a franchise agreement is to expand the franchisor’s brand and business concept through the franchisee’s operation of the hotel. Franchise agreements differ from managements agreements in that the franchisee typically operates the hotel as an independent business, but subject to the franchisor’s concept and standards.

As previously mentioned in 3.1 Common Hotel Ownership and Management Structures, franchise agreements are rarely used in Denmark. When used, the terms will be negotiated on a case-by-case basis to meet the specific demands and needs of the parties in question.

In principle, there are no limitations on how hotel transactions can be financed in Denmark. However, they are usually financed through traditional bank loans and credit mortgage loans.

Denmark is believed to have one of the world’s most effective models for financing real estate (including hotel transactions) through credit mortgage loans. This model is based on principles that are more than 200 years old, making it a well-tested system with historically low and transparent funding rates. The model offers a variety of products, making it highly adaptable to different financing needs. Owing to its well-known model and attractive pricing, credit mortgage financing is typically the preferred form of financing for hotel transactions.

Bank loans are sometimes used for bridge financing until credit mortgage loans ‒ which are long-term financing ‒ come into place. This typically occurs within a period of one to six months after closing. Bank loans are then made available to finance the buyer’s payment of the purchase price and, if applicable, on refinance existing debt. Subsequent credit mortgage loans are used to refinance the bank loans.

Bank lending, when used as bridge financing, is unsecured and typically more expensive, has a short duration, and is sometimes provided on uncommitted basis. This can often be acceptable for borrowers if credit mortgage financing is committed at the time of signing. Additionally, bank loans are usually made available by banks affiliated with the mortgage credit institutions that provide the credit mortgage loans.

In the simplest terms, credit mortgage institutions issue pools of covered mortgage bonds to investors, which are backed by mortgages over real estate as a funding source for their lending. This is also known as the “balance” principle and is a key characteristic of the mortgage credit model.

As noted, credit mortgage loans come in a variety of forms, including fixed-rate loans, adjustable-rate loans, capped-rate loans, green loans, or floating-rate loans. Depending on market conditions, credit mortgage financing in the form of floating-rate loans (eg, CIBOR 6M) can be coupled with a hedge to mitigate the interest rate exposure. Some products have an implied hedging element, such as adjustable-rate loans.

Although not distinctive for hotel transactions, it is important to note that in all Danish transactions where the target is a Danish limited liability company, any such company cannot secure or otherwise financially assist the buyer (or any other third party) in financing the purchase sum for the shares in that company (or any shares in its parent company). As credit mortgage financing requires security over real estate by law, the structuring of a share deal needs to be carefully carried out from a financing perspective. In an asset deal, the seller will often allow for the buyer to register the mortgage on the property prior to closing, provided always that the buyer and the mortgage institute guarantee to clear the debt if the transaction is not completed.

Credit mortgage financing triggers substantial stamp duties ‒ currently 1.45% of the face value mortgage registered against the property.

Foreign financers may be subject to licence requirements. However, it depends on how hotel financing is provided and if foreign financers are holding a license in another jurisdiction that is part of the European Economic Area (EEA).

Pursuant to the Danish Financial Business Act, if the hotel financing is provided without any presence in Denmark (eg, via a branch, agent or distributor) by a foreign financer holding a licence issued by member of the EEA, then the foreign financer must notify the regulator of its home state in which it holds the licence. The foreign financer can provide hotel financing in Denmark once the Danish Financial Supervisory Authority has been notified by the regulator that oversees the foreign financer. Provision of hotel financing by a foreign financer through a branch, agent or distributor in Denmark is subject to a registration requirement pursuant to the Danish Anti-Money Laundering Act.

Foreign financers are not subject to any licence requirement if they provide hotel financing without a presence in Denmark and they do not hold a licence in any EEA member state. This is assuming, of course, that no other financial activity in Denmark that – on a standalone basis or coupled with lending activity – requires a licence is carried out (eg, taking deposits from the general public).

Issuance of covered mortgage bonds through a presence in Denmark is also subject to a licence requirement pursuant to the Danish Act on Mortgage Loans and Mortgage Bonds.

Hotel real estate transactions will have different tax implications depending on the legal structure of the transaction (asset or share deal), the corporate set-up of the target company, and the parties involved. Some of the main considerations for each structure are listed here.

• Asset deals ‒ the main tax implications for asset deals are as follows.
1. Registration fee ‒ the buyer is generally required to a pay a fixed registration fee of DKK1,850 plus a variable registration fee of 0.6% of the purchase price (see 2.1 Common Sale and Purchase Structures).
2. Capital gains ‒ the seller may be subject to capital gains tax on any profit realised from the sale of the hotel property. For limited liability companies (which are independent tax entities such as a Danish A/S and ApS), capital gains are taxed as ordinary corporate income at the standard corporate tax rate (currently 22%).
3. VAT ‒ the sale of existing hotel buildings is generally exempt from VAT. However, the sale of new hotel buildings (less than five years old) and building sites for hotel projects is subject to VAT at 25%. If the transaction is structured as a transfer of a going concern (eg, with a lease agreement), VAT may not apply, provided certain conditions are met.
4. Depreciation recapture ‒ if the seller has claimed depreciation on the property, any recaptured depreciation may be subject to tax.
• Share deals ‒ the main tax implications for share deals are as follows.
1. Registration fee ‒ no registration duty applies to the transfer of shares (see 2.1 Common Sale and Purchase Structures).
2. Capital gains ‒ the seller may be subject to capital gains tax on the sale of shares. For Danish companies, capital gains on the sale of shares in subsidiaries are generally tax-exempt if the subsidiary qualifies as a “subsidiary shareholding” (at least 10% ownership), depending on the holding period. For non-qualifying shareholdings, capital gains are taxed at the corporate tax rate, depending on the legal framework of the seller.
3. VAT ‒ no VAT will be triggered in connection with the sale of shares.
4. Indirect taxations ‒ the buyer acquires the company with all its assets and liabilities, including any latent tax assets or liabilities (deferred tax on property appreciation or recaptured depreciation). When commercial real estate (including hotels) is transferred as part of a share deal, the parties often negotiate the pricing of deferred tax liabilities. Often, the parties agree on a 50/50 spilt of the deferred tax liability in the closing balance.

Tax Incentives, Abatements, or Grants for Hotel Projects/Transactions in Denmark

Denmark does not have hotel-specific tax incentives at national level. However, certain general incentives may be available, as follows.

• Accelerated depreciation ‒ buildings used for business purposes (including hotels) may be depreciated for tax purposes, which can reduce taxable income.
• Energy efficiency incentives ‒ investments in energy-saving measures or sustainable building practices may qualify for grants or subsidies, particularly from local or EU sources.
• Regional development grants ‒ in some cases, local municipalities or regional authorities may offer grants or subsidies to encourage tourism or economic development, which can include hotel projects.

Denmark has a comprehensive system of zoning classifications and regulations designed to manage the actual use and development of areas and buildings. The primary source of law is the Danish Planning Act.

The overall regulatory framework is as follows.

• Local plans are detailed plans created by municipalities to guide development within specific areas. These plans outline permitted use, building regulations, and infrastructure requirements. Hotel use can be mentioned expressly in the local plan but, in some cases, hotel use can also be covered by the general classification “business services” (commercial zones). The latter will always depend on the specific wording, purpose and context of the local plan in question.
• Municipality plans are broader plans that set the overall vision and strategy for development within a municipality. They include zoning maps and policies for land use, transportation, and environmental protection. A local plan must always be in line with the municipality plan.
• National planning directives are guidelines issued by the national government to ensure coherent development across the country. These directives address issues such as environmental conservation, urban growth, and infrastructure development.

Adoption of Local Plan

If hotel use is not permitted in an existing local plan or no local plan applies to the area in question, the property owner must apply for a new local plan.

The process can be quite time-consuming and requires the property owner to co-operate and drive the process with the local municipality, including providing environmental assessments, infrastructure evaluations, and consultations with relevant stakeholders. The draft plan is made available for public consultation. This typically involves publishing the draft plan and inviting comments from residents, businesses, and other interested parties.

Public meetings may also be held to discuss the plan. The local municipality reviews the feedback received during the public consultation period and adjustments to the draft plan may be made based on the comments and suggestions from the public. Once the feedback has been reviewed and any necessary adjustments have been made, the municipality formally approves the local plan. This approval process may involve several stages, including committee reviews and final voting by the council. The approved local plan becomes legally binding upon publication.

Exemption From Local Plan

Instead of undertaking the lengthy process of applying for a new local plan, the municipal council may grant an exemption from the provisions set out in a local plan if the exemption is not contrary to the principles of the plan. It is important to note that the exemption options are limited and that a new local plan or local plan amendment will be necessary for major deviations from the current local plan.

In Denmark, hotel constructions and refurbishments are subject to numerous building regulations related to height, density and floor ratio, parking requirements, fire protection, disability, and accessibility. Where most regulations apply to all types of buildings and are provided in the Danish Building Regulations 2018 (“BR18”), there are also a few specific requirements that pertain particularly to hotels.

Generally, the applicable local plan (and, ultimately, the building permit) will set out the specific requirements for the hotel development project in question in terms of the allowed height, number of floors, building materials, density, floor ratio, parking ratio, etc. If the municipality in the local plan has deviated from BR18’s provisions, the provisions of the local plan will prevail. Furthermore, easements and unregistered rights may impose limitations on the specific construction project.

Height Restrictions

Height restrictions for buildings, including hotels (no specific rules apply for hotels), are primarily regulated by the Danish Building Act and BR18. BR18 contain general guidelines for the allowed height and number of floors, which must be assessed on a case-by-case basis when planning for the project in collaboration with the municipality.

Although high-rise buildings have traditionally not been that common in Denmark, a notable increase in the construction of such buildings ‒ especially in urban areas such as Copenhagen and Aarhus ‒ has been seen in recent years to meet urban planning goals, including a better and more effective utilisation of the land.

Restrictions with regard to building heights are often imposed on buildings (registered as an easement) close to the airport in Copenhagen.

Density and Floor Ratio

BR18 contains several provisions regarding the building coverage ratio, which regulate the relationship between the floor area and the plot area. These provisions are central to building rights and the municipal council’s assessment of construction projects, including hotels. The municipal council cannot under BR18 refuse to approve a building’s floor area when the building coverage ratio does not exceed 45% for commercial real estate such as hotels and offices. However, often a significantly higher building coverage ratio will be established in the municipality plan, which forms the basis for the preparation of the local plan at a later stage. The 45% is far from densely built-up areas such as Copenhagen, where in several places ‒ in relation to the actual development ‒ the building coverage ratio is 300‒400%.

Parking Requirements

According to BR18, a “sufficient” area must be allocated on the property for parking cars, motorcycles, bicycles, etc, in relation to the building’s use. The provisions state that the parking areas must be accessible to the employees, visitors, customers, suppliers, etc. The municipal council determines how much of the property’s area must be allocated or constructed for parking areas. Also, BR18 require that an appropriate number of parking spaces must be designed so they can be used by persons with disabilities.

BR18 contains no specific provisions regarding parking requirements for hotels. The decision on how large parking areas should be constructed in connection with a hotel development is, therefore, referred to a case-by-case assessment by the building authority. The municipality can set the requirements based on a comprehensive assessment that considers the building’s use, extent and location.

Fire Safety

Fire safety in hotels (and other buildings) is regulated by extensive legislation that includes both general and specific requirements. The municipal council plays a key role in ensuring that hotels meet these requirements, including through the approval of buildings, ordering of operational measures, and conducting of fire inspections. In addition, hotels must follow the operational regulations set by the Danish Emergency Management Agency and ensure that the building is properly registered with the municipal council.

Hotels must adhere to stringent fire safety regulations, including the installation of fire alarms, sprinkler systems, and fire-resistant materials. Emergency exits must be clearly marked and easily accessible, and regular fire drills and safety inspections are mandatory.

Requirements for Sanitary Facilities, Accessibility, and Disability

BR18 contains specific requirements for sanitary facilities and accessibility in hotels. Generally, hotels must be designed in such a way that users can independently utilise all functions of the building. As for the number of required sanitary facilities, the following applies:

• for hotels with ten to 20 bedrooms, a minimum of two bedrooms must have their own bath and toilet facilities;
• for hotels with 21‒40 bedrooms, a minimum of four bedrooms must have their own bath and toilet facilities; and
• for hotels with more than 40 bedrooms, for every additional 20 bedrooms, at least one bedroom must have its own bath and toilet facilities.

Further, BR18 sets out very specific requirements for the bath and toilet facilities.

Additionally, hotels must be designed to be accessible to all guests, including those with disabilities. This includes the establishment of ramps and elevators, as well as accessible rooms and bathrooms.

Application and Pre-Application Dialogue

The application for a building permit must be submitted to the municipal council and it is mandatory to use the digital solution provided by the municipality. The application must contain the necessary information and documentation required by the municipal council to assess the application. This will usually include technical information about the building data, drawings, a description of the construction work, and any permits under other legislation.

Before the application is filed and processed, the municipal council can initiate a pre-application dialogue with the developer or its advisers. The purpose of the pre-application dialogue is to clarify the framework of the construction project, including timelines and documentation requirements. The pre-application dialogue is not a mandatory part of the process but can be useful to ensure that the application meets all requirements prior to filing and processing.

Granting of Building Permit

The municipal council is obliged to exercise discretion in each individual building case and may require additional information if it is necessary for the assessment of the application. The municipal council must also ensure that the application meets the requirements of other legislation before a building permit can be granted.

When the municipal council has assessed the application and found that all requirements have been met, the building permit is granted. The building permit may contain specific technical requirements and provisions for the municipality’s ongoing supervision of the construction work. The permit can also be divided into partial permits if the construction work applied for can begin without all aspects of the building case being finally clarified.

Processing Time

The time it takes to obtain a building permit can vary depending on several factors, including the complexity of the project, the municipality’s internal processing times, whether a hearing process is required, and whether permits are required under other legislation.

Municipalities have the option to set service targets for processing times, which must be published so that applicants can take expected timeframes into consideration when planning for a refurbishment or construction project. According to the latest information from the Municipality of Copenhagen (May 2025), the average present processing time is between three and five months.

When processing the building permit, the municipal council may be obliged to initiate a hearing process of neighbours if the hotel construction project is expected to cause any neighbour specific and significant nuisances (noise, shadow effects, etc). Such hearings may result in alterations to the construction project before a building permit can be granted.

In addition, neighbours and other stakeholders who have an individual, significant and legally relevant interest in a granted building permit may also be entitled to appeal the municipal council’s decision even though they are not the addressees of the decision.

Preparation is essential to minimise the risk of objections to a building permit. A proactive approach to communication with neighbours and other stakeholders during the processing and planning process can thus reduce the risk of objections significantly. Such communication can include information meetings where the project is presented and neighbours can ask questions and raise concerns.

Conversion of hotels to other uses (and vice versa) is subject to several legal requirements, primarily regulated by the Danish Planning Act. The requirements may vary depending on the location of the property and the applicable local plan.

The use of a property must always comply with the applicable municipality plans and local plans. When a local plan has been published, no conditions may be established that are contrary to the provisions of the plan, unless an exemption is granted. This means that a conversion of a hotel for other purposes (or vice versa) may be illegal if it conflicts with the allowed use set out in the local plan. If the intended use is not allowed for in the specific area (eg, hotel or other uses), it will be necessary to initiate a new planning process.

In addition, the Danish Building Act stipulates that significant changes in the use of a building require a building permit. This also applies to the conversion of a property from a hotel to an office (or other uses and vice visa).

A significant change in use can trigger requirements for the building to meet specific technical standards, such as fire safety, accessibility, and energy standards. It is crucial whether the change entails significant requirements for the building’s layout or function. By way of example, a conversion from a hotel to an office may require changes in ventilation, lighting and accessibility.

Buildings and landscape architectural works that have significant architectural or cultural historical value and are more than 50 years old can be listed under the Danish Preservation of Buildings Act. However, buildings can be preserved regardless of age if they have outstanding value or special circumstances justify it. The preservation can also include the building’s surroundings (eg, courtyards, gardens, and park areas) if these are part of the overall protected entity. Listings are decided by the Danish Minister of Culture, who informs relevant parties and publishes the decision. The preservation is registered on the property and must be respected by all rights-holders, regardless of when the right was established.

Development of a property with listed buildings must be carried out with due respect for the historical value of the buildings, as both small and large alterations require permissions from the Danish Agency for Culture and Palaces. Any construction work cannot be commenced until sufficient permits have been obtained, whereas ordinary maintenance is generally allowed without obtaining any approvals.

Building preservation is not directly regulated by the Danish Planning Act – although it plays a significant role in protecting buildings and environments of historical value and serves as a tool to implement the objectives of the Danish Preservation of Buildings Act at local level. This occurs through municipality plans and local plans that identify and protect buildings of historical value. Legal practice and administrative regulations emphasise that the Danish Planning Act is an integral part of the process for protecting buildings of historical value, especially in connection with demolition.

To operate a hotel in Denmark, several permits and licences are typically required, depending on the hotel’s activities and location. Some of the most important permits that may be necessary are as follows.

• Business registration ‒ the hotel must be registered as a business with the Danish Business Authority. This includes registering a Central Business Register (Centralt Virksomhedsregister, or CVR) number.
• Building permits ‒ if refurbishments or changes to the property are needed, a building permit from the local municipality is required.
• Fire approval ‒ hotels must meet specific fire safety requirements and there may be a need for fire approval from the fire authorities.
• Food registration ‒ if the hotel serves food or drinks, it must be registered with the Danish Veterinary and Food Administration and meet food handling requirements.
• Alcohol licence ‒ if the hotel wishes to serve alcohol, an alcohol licence from the local municipality is required.
• Environmental approvals ‒ depending on the hotel’s activities, there may be requirements for environmental approvals, such as waste management or noise limits.
• Data protection ‒ as the hotel collects and stores personal information about guests, it must comply with GDPR (General Data Protection Regulation) rules.
• Tax and duty registration ‒ the hotel must be registered for VAT and any other relevant taxes.

It is important to contact the relevant municipality and other authorities to get an accurate list of permits and licences required, as these can vary depending on the hotel’s location and size. It is also recommended to consult a lawyer or adviser with experience in the hotel industry to ensure all legal requirements are met.

Most of the licences and permits necessary will directly or indirectly be public; however, there are certain limitations. Information that is exempt from public disclosure may include sensitive information or information protected by privacy or trade secrets.

In general, the topic of ESG and sustainability is becoming increasingly important, at the same time as consumers are becoming increasingly aware of their environmental impact and the EU adopts new and comprehensive regulations within this area. As a result, hotels with a green profile can gain a competitive advantage when consumers select their preferred accommodation. Furthermore, investors and operators may be mandated to adopt ESG measures to comply with EU regulation, local legislation, and their own guidelines, policies and procedures.

There are various relevant certification schemes and ESG regulations applicable to hotels in Denmark. However, most of these are based on international systems and regulations and therefore are not unique to the Danish hotel sector.

Green Key

Hotels can be labelled as “Green Key”, which is an international eco-label awarded to organisations within the tourism industry. Green Key is a Danish invention that has been awarded to more than 7,500 businesses in more than 85 countries. In Denmark, most of the larger hotels in big cities are Green Key-labelled. Internationally, Green Key has agreements with various hotel chains such as ACCOR, Best Western Hotels, Four Seasons, IHG Hotels, and Radisson.

To achieve Green Key certification, a company must meet a series of both mandatory criteria and point-based criteria. All mandatory criteria and at least 40% of the relevant point-based criteria must be met to obtain the certification. The criteria encompass environmental requirements such as waste reduction and minimisation of water and electricity consumption, as well as requirements regarding policies, action plans, education, and communication. Additionally, it is a requirement to obtain certification that the company adheres to all applicable legislation.

Building Certifications

When constructing a new hotel or renovating an existing one, property owners are increasingly opting to have the property certified as a green building – for example, with a LEED (Leadership in Energy and Environmental Design), BREEAM (Building Research Establishment Environmental Assessment Methodology), GRESB (Global Real Estate Sustainability Benchmark), or DGNB (Deutsche Gesellschaft für Nachhaltiges Bauen (German Sustainable Building Council)) certification (or other green certification chosen by the property owner). This increased focus on sustainability within construction reflects the broader emphasis on ESG in recent years.

In Denmark, DGNB certification is often the preferred certification system in development projects, including within the hotel sector. Depending on the type of use and the status of the project, there are different variants of the DGNB certification. For buildings and hotels, the system distinguishes between renovations, buildings in use, and new construction. Additionally, the DGNB system operates as a tiered certification system where a project can achieve silver, gold, or platinum certification based on its performance, with platinum being the highest award. For new constructions and renovations, the project can also achieve one of the distinctions “DGNB Heart”, “DGNB Diamond” or “DGNB Planet” if it meets a series of additional criteria.

ESG Regulation in Lease Agreements

ESG clauses in Danish hotel lease agreements are also becoming increasingly common, reflecting the general focus on ESG within the hospitality sector. These clauses can vary significantly, as highlighted in the Denmark Trends and Development chapter. For more detailed information on these clauses, please refer to this chapter.

Transaction Structure

In Danish employment law, it is crucial to distinguish between share deals and asset deals when determining the relevant employment law requirements and legal framework. This distinction is not specific to hotel transactions but applies to Danish transactions more broadly.

Share Deals

A share deal generally has limited impact on employment relationships, as the employees are not directly affected by the sale.

Asset Deals

An asset deal can, on the contrary, impact employment relationships. When undertaking an asset deal, it is firstly necessary to assess whether the Danish Act on Transfer of Undertakings (Protection of Employment) (“TUPE”) applies. TUPE applies in all instances where a business (or part thereof) is transferred, resulting in a change of the physical or legal person responsible for the operation of the business. In defining the concept of a business, emphasis is placed on whether the business constitutes an economic entity that has retained its identity following the transfer.

Under TUPE, all employment relationships automatically transfer to the buyer with the business, who thereby assumes all rights and obligations towards the affected employees. Redundancies and changes to employment terms (including those constituting constructive dismissals) are permitted under TUPE ‒ provided, however, that they are justified by economic, technical or organisational reasons.

Information and Consultation Requirements

Information and consultation requirements must be observed when transferring employees in an asset deal. Under TUPE, it is required that the seller – within a reasonable period prior to the transfer ‒ informs the employees’ representatives or, if no such representatives have been elected, the affected employees directly of:

• the date of the transfer;
• the reason for the transfer;
• the legal, economic and social implications of the transfer for the employees; and
• any measures envisaged in relation to the employees.

Additionally, the seller is obliged to initiate negotiations if the seller is considering implementing measures affecting the employees with a view to reaching an agreement. There is, however, no requirement to conclude an agreement.

Similar obligations may arise under the Danish Information and Consultation Act or from collective agreements. Further, redundancies and material changes affecting at least ten employees may trigger special information and consultation procedures under the Danish Mass Dismissal Act, regardless of the transaction structure.

Collective Agreements

In Denmark, collective agreements comprise a pivotal part of the labour market, owing to the limited employment legislation. These agreements are generally negotiated between employer organisations and trade unions, resulting in terms that set wages, working hours, holidays, pensions and other working conditions for employees within a specific sector or industry.

In a hotel transaction, the buyer has the option to opt out of any applicable collective agreements during the sale, provided that certain procedural requirements and deadlines are met. The entitlements awarded to employees under the collective agreements remain in effect until the expiry of the collective agreement term as individual employment terms. After the expiry date, these terms may be modified under the general rules for changing employment terms.

Individual Employment Terms

In Denmark, individual employment terms generally include restrictive covenants, confidentiality clauses, termination notices, and employee benefits such as bonuses.

It is possible to offer employees a retention bonus if there is a need for retention, such as during a transaction. For hotels, this will especially be relevant for the general manager of the hotel and other staff members in important management positions. To avoid the risk of pro rata payment upon termination, retention bonuses can only be offered in accordance with “good leaver” requirements and cannot be subject to performance requirements.

Consultants

If there are any consultants at the hotel being transferred, it is important to assess whether there is a risk of the consultants being reclassified as employees under Danish law. This assessment should consider factors such as weekly working hours and who instructs the consultants. If consultants are reclassified, the buyer will be liable for claims such as tax payments and social security, as well as claims subject to employee protective legislation.