The heads of HVS, the leading hospitality consulting organization worldwide, have reviewed the performance of the hotel market and provided their forecasts for 2026. From this extremely useful analysis for hotel operators, Tornos News has chosen to feature the text of Charles Human, President of HVS Europe.
Here is the outlook for the European hotel sector in 2025 and the prospects for the coming year, as recorded in Charles Humans article:
The European hotel industry continued to operate on positive ground in 2025, although with clear signs of slowing compared to the strong momentum of 2024. Across Europe, RevPAR (Revenue per Available Room) increased by an average of around 3%, confirming a more mature phase of the recovery cycle.
Southern Europe Dominates
For yet another year, Southern Europe stood out. Spain, Greece, and Portugal recorded the strongest performance, benefiting from steady leisure demand and international travel mobility. Positive results were also seen in Eastern European markets and the Scandinavian countries. In contrast, Germany continues to face challenges, with its hotel markets underperforming compared to the European average.
Supply remained restrained throughout 2024, with an increase of less than 1% at the European level, reflecting ongoing challenges in new construction, from higher costs to financing difficulties.
On the transaction front, the market remains active, though slightly subdued compared to last year. Total investment volume reached approximately 20 billion, marking a decrease of around 10%. The highest activity was observed in Spain, France, and the United Kingdom, although the UK market recorded a significantly lower transaction volume than in 2024. In contrast, Germany saw a notable recovery in transactions, indicating that investors believe the market has now bottomed out.
Increasing Luxury Hotels Impact on Performance
Prospects for 2026 indicate moderate but steady growth in RevPAR in most markets. Travel demand remains resilient, particularly in the leisure sector, although ongoing economic and geopolitical uncertainty may limit the pace of growth. At the same time, supply is expected to increase in 2026, primarily in the upper segment of the market, which may lead to a normalization of luxury hotel performance, as these properties have been outperforming in recent years.
Hotel values are expected to be supported by improved financing conditions and sustained strong investment demand. Transaction activity is anticipated to remain high, with private equity playing a central role as mature funds exit and new capital enters the market. Properties with potential for added value will remain the focus of investor interest, while the attractiveness of Southern Europe shows no signs of fatigue. Additionally, institutional core funds are expected to return more actively, enhancing liquidity and valuations of leased hotel assets.
