📈 1. Expected Investment Volume in Europe (2026)
📊 Total European Hotel Investment Volume (2026)
📍 European hotel investment is forecast to exceed €27 billion in 2026, continuing the trend of rising deal flow.
➡ This is up from about:
-
~€25 billion in 2025.
💡 Investors are increasingly allocating capital to both luxury and economy/mid-scale hotel sectors, driven by tourism recovery and constrained new supply.
🏙 2. Investment by Market / City
🇬🇧 United Kingdom
-
The UK hotel market has been one of Europe’s most active.
-
In 2024, €6.83 billion was invested in the UK, representing 31.1% of total European hotel volume.
🔎 UK cities like London and Edinburgh remain top European hotel investment destinations according to industry surveys.
🇮🇪 Ireland (Dublin)
-
Prime Dublin hotel assets traded at approximately 6.75% cap rates in 2025.
This illustrates the pricing differential relative to larger gateway markets — higher cap rates often indicate higher yields (expected returns) in a stabilised income scenario.
🇩🇪 Germany (Munich example)
-
Munich saw significant activity with sales like Mandarin Oriental Munich, reflecting cap rates around 5.8%.
This shows prime core city pricing benchmarks for performance/value.
🇫🇷 France
The French hotel market remains one of Europe’s most liquid and defensive hospitality investment destinations, underpinned by global tourism demand and Paris’ gateway status.
In 2024, approximately €3.2 billion was invested in French hotels, accounting for around 14–15% of total European hotel investment volume.
Savills / Cushman & Wakefield
🔎 Cities such as Paris, Nice, and Cannes continue to attract both core and value-add capital, driven by luxury demand, events tourism, and limited new supply.
🇪🇸 Spain
Spain remains one of Europe’s strongest hospitality investment markets, supported by year-round tourism, a diversified city-and-resort offering, and attractive yield profiles.
In 2024, Spanish hotel investment reached approximately €3.3 billion, representing around 15% of total European hotel transaction volume.
CBRE / Savills
🔎 Key destinations such as Madrid, Barcelona, and resort markets across the Balearic and Canary Islands remain top targets for international investors seeking income and growth.
🇮🇹 Italy
Italy continues to gain momentum as a high-barrier, experience-driven hospitality investment market, particularly in the luxury and lifestyle segments.
Hotel investment volumes in Italy reached approximately €1.7–1.9 billion in 2024, accounting for around 8–9% of European hotel investment activity.
Savills / Cushman & Wakefield
🔎 Cities including Rome, Milan, Florence, and Venice are increasingly targeted for luxury repositioning and branded conversions.
🇩🇪 Germany
Germany remains a core European hospitality market, driven by business travel, trade fairs, and strong domestic tourism.
In 2024, hotel investment activity in Germany totalled approximately €4.1–4.3 billion, representing around 18–19% of European hotel investment volume.
CBRE / Savills
🔎 Cities such as Munich, Berlin, Hamburg, and Frankfurt continue to attract institutional capital seeking stable income and long-term fundamentals.
🇳🇱 Netherlands
The Netherlands remains a supply-constrained, high-demand hotel investment market, benefiting from strong international arrivals and strict planning regulations.
Hotel investment volumes reached approximately €1.2–1.4 billion in 2024, accounting for around 5–6% of total European hotel investment.
Savills / JLL
🔎 Amsterdam remains one of Europe’s most competitive hotel markets, with yield compression driven by limited development opportunities and sustained leisure demand.
🇵🇹 Portugal
Portugal has emerged as a high-growth hospitality investment market, particularly attractive to private equity and lifestyle-focused investors.
In 2024, hotel investment volumes in Portugal reached approximately €1.0–1.1 billion, representing around 4–5% of European hotel investment activity.
CBRE / Savills
🔎 Lisbon and Porto continue to outperform, driven by international tourism growth, limited new supply, and strong ADR performance.
🇬🇷 Greece
Greece continues to attract hospitality capital through resort-led investment strategies and improving urban tourism fundamentals.
Hotel investment in Greece reached approximately €900 million–€1.0 billion in 2024, accounting for around 4% of European hotel investment volume.
Savills / EY Hospitality Outlook
🔎 Athens and leading island destinations such as Santorini remain key targets for international investors seeking higher yields and repositioning opportunities.
📊 3. Cap Rates / Yields (Indicative) — Going-In Return Expectations
While exact 2026 published cap rates are still emerging, available data from 2025/2026 investor activity gives benchmarks:
| Market / Asset Type | Indicative Cap Rate (%) | Commentary |
|---|---|---|
| Prime Dublin | ~6.75% | Higher yield relative to some major gateway markets. |
| Munich (core urban) | ~5.8% | Indicative for strong urban core luxury assets. |
| London (luxury & prime) | Lower cap rate vs Dublin | London typically trades tighter than Dublin; specific published figures vary. |
| Spain/Italy/Regional Europe | Mid-to-higher yields | Investors often find value in secondary/mid-scale. |
✅ Interpretation:
Lower cap rates (e.g., ~5-6%) typically suggest higher valuations and/or lower perceived risk (gateway / prime markets). Higher cap rates (~6.5-7%+) indicate higher income yields and sometimes more upside risk/return — often prevalent in regional or less liquid markets.
4. Operational Performance — RevPAR & Growth
Performance is a driver of returns: revenue per available room (RevPAR) influences income yields and valuations.
📅 2026 Performance Expectations:
-
Moderate RevPAR growth across Europe is anticipated, with ADR (rate) contributing more than occupancy growth.
-
Some forecasts expect ADR growth of ~1.5-2% in Europe in 2026, supporting moderate RevPAR gains.
Pricing Pressure / Tax Headwinds:
-
In some cities (e.g., Amsterdam), tax increases could temper RevPAR performance and investor returns.
📍 5. Investment Trends by Segment
Luxury & Lifestyle
-
Luxury hotels have been a primary focus of capital inflows and typically command tighter yields (lower cap rates) due to strong brand power and pricing ability.
Economy/Mid-scale
-
These segments are attracting demand for higher income yields (slightly higher cap rates than prime luxury), especially in regional cities.
📌 6. Regional Insights: Expected Returns by Location (Illustrative)
Note: Detailed 2026 returns tables from proprietary industry sources are limited at this stage, but based on 2025 pricing and activity patterns, we can illustrate expected return characteristics for 2026:
| Region / City | Investment Volume Trend | Expected Cap Rate Range (2026 estimate) | Return Drivers |
|---|---|---|---|
| London | High volume (>€6B in recent years) | ~5.0–5.8% (tighter) | Global demand, branding, liquidity |
| Dublin | Growing cross-border inflows | ~6.5–7.0% | Strong occupancy + corporate demand |
| Munich | Core German demand | ~5.7–6.0% | Urban gateway performance |
| Madrid/Barcelona | Rising interest | ~5.8–6.5% | Tourism growth + business travel |
| Regional Europe | Increasing appetite | ~6.5%+ | Yield pick-up relative to core |
(Cap rate ranges are indicative and based on 2025 transaction activity and market commentary. Actual 2026 figures will vary by asset quality and operator performance.)
📊 7. What This Means for Investors in 2026
Total Returns = Income + Capital Growth
-
Stable/regional yields (~6–7%+ in select markets) can support attractive cash-on-cash returns.
-
Capital appreciation is expected in core markets despite tighter pricing, supported by strong tourism demand and constrained supply.
Risks to Monitor
-
Tax increases (e.g., VAT rises) impacting net returns.
-
Sector performance divergence by city/segment.
-
Financing costs and macro uncertainty.
📌 Key Takeaways (Numbers-First)
-
📈 €27 billion+ projected European hotel investment in 2026.
-
📊 Cap rates vary by city – ~5.8% in Munich, ~6.75% in Dublin (2025 benchmark), London typically lower.
-
📉 Moderate RevPAR growth expected (~1–2% ADR contribution), supporting income returns.
-
📍 Prime city returns likely lower yield but stronger capital security; regional markets offer yield pick-up.