European hotel markets enjoyed a positive first half in 2025, with demand increasing in all regions, led by eastern and southern European destinations.
Data gathered by agent Cushman & Wakefield notes that hotels in London and Barcelona led the way in improving operating margins. Profitability improved across 12 of the 15 key European urban markets studied, with GOP varying between 24% and 46%. Occupancy was up an average 0.5%, while room rates increased 2%, leading to an overall 3% rise in revpar.
Investors head for luxury assets
The solid performance has encouraged investors to be more active in the hotel space. During the first half of 2025, hotel deal volume reached EUR13.1 billion, up 14% on the previous year and similar to levels enjoyed in 2019, prior to the market shock delivered by the pandemic. Around 44% of transaction volume was in the luxury and upper upscale segments. Luxury deals averaged EUR648,000 per room, calculates Cushman & Wakefield.
Investment volume in the first half of 2025 was supported by several major portfolio deals, plus some transactions that saw landmark properties change hands. C&W counted 497 individual hotel properties bought and sold, adding up to 60,654 rooms.
Those landmark deals included a Greek investor buying a majority stake in the Four Seasons Astir Palace in Athens, from the Jermyn Street Real Estate Fund. In Prague, the Hilton hotel was sold to PPF Real Estate, after being held for many years by IBRC. And in Berlin, a mixed use complex including the Motel One Berlin Upper West was sold by Signa Prime Selection.
Major portfolio action included a Scandinavian deal that saw investor CapMan buy 28 hotels from Midstar. Queensgate Investments sold its 12 Generator hostels to Brookfield, while Tristan Capital Partners acquired the easyHotel business, and with it 24 economy hotels across key European markets.
The most active country market was Spain, ahead of the UK and Italy. Deal volume in Spain was up 29% year on year at EUR2.1 billion, with 61 hotels bought and sold. Of the markets covered by Cushman & Wakefield in the report, it was the Czech Republic that saw the most dramatic shift in activity. Deal volume there was EUR0.5 billion, up 936% year on year. Athens, London and Rome were the top markets for investors, ahead of Copenhagen and Paris.
Demand strong, supply weak
Looking ahead, the report say the outlook is positive. Consumer demand is expected to continue to grow, with Italy, Sweden, Poland and the Czech Republic tipped as the strongest growth markets. Business travel continues to recover, while the ETC forecasts tourism spending across Europe will grow by 12.9% in 2025.
Set against this, supply of new hotels is modest. The Top Hotels database lists just 21 new build hotel projects under construction in Spain, 13 in Italy and a total of just three live projects in the Czech Republic.
