- The Iberian Peninsula, Italy, and France are emerging as the most attractive destinations for hotel investment in Europe in 2025, according to the latest Hotel Investor Compass survey by Cushman & Wakefield.
According to the fourth edition of the survey, investors are turning their attention to the major cities of Southern Europe, with Madrid, Barcelona, and Rome recorded as the most attractive destinations. At the same time, the cities with the highest annual increase in investment interest are Prague (+14%), Munich (+8%), Milan (+4%), and Edinburgh (+4%).
The survey, which is based on the views of leading investors who have allocated a total of over 16 billion EUR since 2019, reveals that 70% of respondents expect hotel prices to increase as the cost of capital decreases and investment interest increases. The largest price increases are expected to occur in Italy and the Iberian Peninsula, followed by the United Kingdom, Ireland and France.
94% of respondents plan to allocate the same or more capital for hotel investments in Europe in 2025 compared to the previous year, reinforcing optimism for the market. The proportion of investors who intend to maintain or increase their investments increased by 15 percentage points compared to 2024.
At the same time, investors appear willing to pay a significant premium for hotels with high ESG performance, with properties with BREEAM Outstanding or LEED Platinum certifications enjoying a price increase of up to 5%.
Concerns about financing and returns have eased compared to 2024, partly due to a more favorable interest rate environment. However, the biggest challenge for investors is rising construction costs, with 65% of respondents considering this to be extremely difficult, followed by geopolitical and macroeconomic risks (44%).
Investment activity in the European hotel sector is expected to accelerate in 2025, with the majority of investors planning to maintain or increase capital allocation. The improved investment sentiment is partly attributed to interest rate cuts by the European Central Bank in 2024, with further cuts expected this year. At the same time, strong hotel performance and increased demand create expectations for further price increases across all markets.
Despite the backlash against net zero in many parts of Europe, investors remain willing to pay higher premiums for sustainable hotel properties, making ESG practices a critical success factor in the hotel investment industry.
About the survey
Cushman & Wakefield’s Hotel Investor Compass 2025 provides guidance to investors in the hotel real estate sector in Europe. This is the fourth edition of the survey, conducted between January and February 2025, with the participation of 62 leading investors, including private equity executives, funds, REITs, and other institutional investors who have invested more than €16 billion. euros from 2019 to 2024.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm, with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenues of $9.5 billion and has received numerous accolades for its corporate culture, commitment to diversity, equity and sustainability.
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