Hotel values across Europe continued their upward trend in 2024, increasing by 2.0% despite economic uncertainty, geopolitical instability, and inflationary pressures.
According to the latest Hotel Valuation Index (HVI) by global hotel consultancy HVS, factors such as lower interest rates, strong tourism demand, and improving revenue per available room (RevPAR) have contributed to the resilience of Europe’s hotel market.
This steady recovery has seen several cities surpass their 2019 pre-pandemic valuation levels, particularly in Southern Europe, where growth has been the strongest. Meanwhile, Eastern Europe is also gaining momentum, although it still lags behind other regions in overall hotel value recovery.
Southern Europe Leads the Way in Hotel Growth
Among the cities with the fastest hotel value increases, Athens leads the pack with an 11.8% rise in hotel values. The Greek capital remains a highly attractive market for investors due to its relatively affordable hotel rates compared to other major European cities and its consistent RevPAR growth.
Other notable markets include:
- Lisbon, Madrid, and Edinburgh, which recorded hotel value increases between 6% and 8%, benefiting from a strong influx of leisure travelers.
- Germany’s hotel markets, which are seeing a gradual return of corporate travel and major fairs, with value growth recorded at 4.8% in Munich, 3.4% in Frankfurt, 2.8% in Berlin, and 0.9% in Hamburg.
While Paris, London, Zurich, Rome, Florence, and Geneva remain Europe’s most expensive hotel markets, Athens and Lisbon are emerging as investment hotspots, thanks to their continued strong performance.
Challenges and Risks for European Hotels
Despite these positive trends, the HVI report highlights several risks that could impact the European hotel industry’s future growth.
- Economic Pressures: While inflation has stabilized in many regions, payroll costs remain high, cutting into profit margins for hoteliers. However, decreasing utility costs have provided some relief.
- Geopolitical Uncertainty: Ongoing conflicts and shifting global alliances could have a long-term impact on international travel demand.
- Weaker U.S. Dollar: The potential weakening of the U.S. dollar could reduce travel demand from American tourists, one of Europe’s key visitor demographics.
- Trade Tariffs: Changes in international trade policies and tariff impositions could reignite inflation and affect hotel development costs and profitability.
European Travel Demand Remains Strong
Despite these uncertainties, European travel demand remains high, keeping the region at the heart of global tourism. The HVI report notes that over 50 million additional overnight stays were recorded in 2024 compared to 2023, with nearly half of them coming from international visitors.
According to Margherita Rivetti, consulting and valuation analyst at HVS London, this demand reinforces Europe’s appeal as a top global travel destination, helping to sustain hotel value growth even in challenging times.
However, Sophie Perret, managing director at HVS London, warns that geopolitical shifts, weakening transatlantic alliances, and economic uncertainties could significantly affect future growth in the European hospitality industry.
For now, investors and hoteliers remain optimistic, as Europe’s hotel sector continues to show resilience, with strong-performing markets in Southern and Eastern Europe leading the way.
Main Photo: A rooftop view of The Peninsula Paris
