Smaller Firms Set To Be The Most Active In The European Hotel Market In 2024

By Robert McHugh
Smaller Firms Set To Be The Most Active In The European Hotel Market In 2024

The European hotel investment market is set to grow this year, with 70% of investors planning to increase capital allocation to the sector, according to CBRE’s 2024 European Hotel Investor Intentions Survey.

The report canvassed the views of over 60 investors made up of hotel owners and developers, private equity, institutional investors, private investors and real estate funds, with responsibility for AUM from below $5 billion (€4.69 billion) to above $50 billion (€46.9 billion) globally.

According to the report, a further 25% of respondents intend to maintain their asset allocation levels.

'Long-Term Projections'

“Hotels have always proven a great inflation hedge, but it’s been the related rising interest rates that have dimmed investment activity in 2023," said Kenneth Hatton, CBRE’s Head of Hotels for Europe.

"Following the year-end forecasts of rate cuts, investors have been eager to deploy into the sector. They see plenty of value-add opportunities and, fundamentally, the long-term projections for tourism numbers in Europe suggest that projected supply levels will be inadequate to satisfy this demand.”


Upper Upscale And Luxury

When asked which segment of the market was the most attractive for deploying capital, Upper Upscale and Luxury dominated at 51% and 45% respectively.

CBRE noted that both have rebounded quickly following the pandemic and have outperformed the wider hotel market, buoyed by pent-up demand.

Spain Takes Top Spot

At a country level, the report shows that Spain has surpassed the UK to achieve the top spot, deemed the most attractive destination in Europe for hotel investment.

The country saw total hotel investment volumes reach over €4 billion in 2023, accounting for the largest proportion of total commercial real estate volumes in Spain at 36%. Italy completed the top three countries and despite experiencing lower trading volumes, hotels accounted for over 20% of the total commercial real estate volume in Italy last year.

Global Capital

CBRE noted that Spanish cities also proved popular with respondents with Madrid overtaking Paris to become the second most favourable city for hotel investment, with Barcelona also featuring in the top ten.


Additionally, Madrid is proving increasingly attractive to global capital, with notable interest from Latin America said CBRE.

However, London ranked number one, CBRE said this is underpinned by the city’s long-term fundamentals and the highest anticipated levels of inbound travel spend.

Urban Product

The report also identified a renewed focus from investors towards urban product, notably in Europe’s gateway cities, with 57% of respondents selecting central business districts as their preferred location.

Resorts, a segment that CBRE said has proven historical resilience to inflation, followed in second place at 36%.

CBRE believes the continuation of a post-pandemic resurgence, the onward march of leisure demand and the scarcity of new supply suggest strong prospects for well-located resort properties.


'Incredibly Dynamic'

“The European hotel market is incredibly dynamic, and our survey findings show a bullish stance from investors in 2024 as they look to capitalise on the region’s growth," said Ronald Chan, associate director, Europe Hotels Research at CBRE.

“Over the past decade, Europe has consistently accounted for more than half of total global international travel and we don’t anticipate this slowing down anytime soon.”