European Hotel Prices Rise as Deal Activity Slows
Europe's hotel property market entered the second half of 2026 with fewer transactions but higher average values for the assets that changed hands. Investment remains above its long-term norm, capital is heavily concentrated in the UK, Spain and France, and expensive hotels are capturing a disproportionate share of spending. Different advisory firms, however, produce materially different estimates of total market size, making it important not to interpret rising average prices as evidence of uniform appreciation across European hotels.
European hotel investment declines while average pricing rises
European hotel transaction volume reached €9.4 billion in the first half of 2026, down 10% from the same period of 2025 but still 11% above the ten-year first-half average. The number of transactions fell 5% to 183, while the number of hotels sold declined 19% and the number of rooms involved dropped 23%. Average value per hotel increased 12% to €36.7 million and average value per room rose 18% to a decade high of €268,000, according to an HVS report.
The researchers caution against interpreting the increase as a broad rise in European hotel valuations. The change largely reflects the higher quality and value of properties sold during the period. Transaction statistics therefore show a shift in the composition of assets reaching the market rather than uniform appreciation of the region's entire hotel stock.
Single-asset transactions increased their share of total investment to 74%, from 68% a year earlier. Their value was almost unchanged at €7 billion, down only 1.5%. Portfolio transaction volume dropped 27% to €2.4 billion even though the number of portfolio deals remained broadly stable at 23, compared with 24 in the first half of 2025.
The average portfolio shrank from 6.1 hotels to 4.1 and from 807 rooms to 523. Average portfolio value declined 24% to €104.7 million, while the average value of an individual hotel within portfolio deals increased 12% to €25.4 million.
Major single-asset transactions included the 435-room Pullman Paris Tour Eiffel sale to a consortium led by Batipart, Riu's €334 million purchase of The Westminster Curio Collection in London and Pictet's acquisition of the Zürich Marriott. Large portfolio transactions included Aroundtown's €275 million disposal of 11 Pentahotels and Covivio's €217 million acquisition of four hotels in Milan.
London generates more than a fifth of European hotel transactions
The market remains highly concentrated geographically. The UK accounted for 32% of investment volume, Spain for 16% and France for 14%, giving the three countries a combined share of 62%. Deals were recorded in 21 countries, but the ten largest markets represented 92% of total volume.
London remained Europe's largest individual hotel investment market. Transactions worth about €2 billion represented 22% of the European total and roughly two-thirds of UK activity. Paris ranked second with €707 million and Vienna third with €563 million.
Austria more than doubled its volume from a year earlier and Portugal more than tripled it. Germany declined 62% in the main European dataset, Greece 73% and Denmark 70%, although all three were comparing against strong first-half results in 2025.
National research illustrates how strongly percentages can depend on methodology. CBRE estimates German hotel investment at €720.9 million, a 23.8% annual decline rather than 62%. The consultancy also recorded a higher number of transactions and attributed lower investment value mainly to the absence of large-ticket deals. Different transaction databases and inclusion rules account for part of the gap between the estimates.
Spain moves against the broader European decline
Spain performed considerably better than much of the European market. Hotel investment reached €2.46 billion between January and June, rising 26.5% year on year and setting a record for a first half. A total of 88 assets and more than 12,000 rooms changed hands, while the average value per room reached €213,300, according to Colliers research.
The Balearic Islands attracted €577 million, or 23% of the Spanish total, followed by the Costa del Sol with €435 million and Madrid with €397 million. The Canary Islands recorded €363 million and Barcelona €165 million.
Premium properties dominated Spanish investment as well. Five-star hotels accounted for 51% of total capital, or €1.25 billion, with four-star properties adding another 35%. Together the two categories captured 86% of investment volume.
Higher-end hotels capture almost half of European capital
Upscale hotels were Europe's largest segment by value, accounting for €4.3 billion, or 46% of transaction volume, across 87 properties. Luxury hotels generated another €2.4 billion from only 34 assets.
Average value per room in luxury properties reached €514,000, almost twice the overall market average of €268,000. Midscale properties were the largest group by number of hotels sold, with 97 transactions, but an average price of €159,000 per room limited their share of total euro volume to 21%. Economy hotels accounted for 7% at an average €134,000 per room.
This distribution helps explain why average pricing can rise while overall activity declines. A larger proportion of expensive hotels in a smaller pool of completed transactions pushes up average values without requiring prices to increase across the entire market.
European market estimates differ substantially
Another major consultancy produces a higher estimate of total activity. Cushman & Wakefield puts European hotel investment at €11.7 billion in the first half of 2026, 9.5% lower year on year but 19.5% above the ten-year average.
Its dataset shows average price per room rising 9% to €228,416. The number of transactions above €100 million increased 30% despite fewer assets being sold overall. European hotel room supply grew 2.9%, with growth exceeding 5% in Southern Europe.
The €9.4 billion and €11.7 billion figures should not be combined directly. Advisory firms use different transaction databases, geographic boundaries and inclusion criteria. The direction of the principal indicators is nevertheless similar: investment value fell from a strong first half of 2025, fewer properties traded and demand for larger and higher-quality assets remained resilient.
Operating performance continued to improve as well. Average European revenue per available room, a measure combining occupancy and room rates, reached €101, up 3% year on year. The faster increase in transaction price per room than in operating revenue again shows how strongly the type of assets sold is influencing investment statistics.
European investors account for 91% of acquisitions
One of the clearest changes during the first half was the composition of capital. Real estate investment companies acquired €4.1 billion of hotels, representing 43% of transaction volume, and ended the period as net buyers of approximately €2.1 billion.
They were particularly dominant in the portfolio market, accounting for 72% of acquisition volume. Hotel owner-operators also ended the period as net buyers, with a positive balance of about €768 million.
Private equity moved in the opposite direction. Its acquisition volume was 88% lower than in the first half of 2025. The sector disposed of about €1.5 billion of hotels and became the largest net seller category, with a negative balance of around €1.3 billion.
High-net-worth individuals, the largest net buyers a year earlier, became net sellers of approximately €377 million. Their average acquisition price per room fell from €581,000 to €200,000, and they made no portfolio acquisitions in the underlying dataset.
European investors accounted for 91% of acquisition volume, up from 80% a year earlier. North American investors were net sellers of about €1.9 billion and acquired no European hotel portfolios during the period covered.
Tourism growth continues to support hotel demand
The investment slowdown has not been accompanied by a comparable fall in travel demand. Tourist accommodation establishments across the European Union recorded 471.1 million overnight stays in the first quarter of 2026, 3.4% more than a year earlier, according to Eurostat data.
Nights by international visitors rose 5.5%, compared with a 1.7% increase among domestic guests. Foreign visitors accounted for about 46.6% of all nights. Ireland recorded the strongest overall increase at 35.3%, followed by Malta at 11.1% and Denmark at 9.3%.
The detail also shows why international and total demand should not be treated as interchangeable. Lithuania's total overnight stays fell 12.9%, even as nights by foreign visitors increased 24.1%.
Short-term rentals add another competitive element. Guests spent 144.3 million nights in EU short-term accommodation booked through major online platforms in the first quarter, 9.7% more than in the same period a year earlier. The rapid increase is particularly relevant for hotels in large tourism cities and resort markets.
Higher financing costs constrain hotel valuations
European financial conditions became tighter again in 2026. The European Central Bank raised all three key interest rates by 25 basis points in June and left them unchanged on July 23. The deposit facility rate stands at 2.25%, the main refinancing rate at 2.40% and the marginal lending facility rate at 2.65%. Baseline projections put euro-area inflation at 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028, according to the ECB's latest rate decision.
Higher debt costs increase the returns buyers require from hotel acquisitions. The effect is particularly important for an operating real-estate asset whose value depends heavily on future cash flow, occupancy, average room rates and debt-service costs.
Industry expectations at the start of the year already pointed toward greater geographic selectivity. JLL identified the UK and Southern Europe as major destinations for hotel capital in Europe, the Middle East and Africa and argued that a uniform recovery was giving way to sharper differentiation between assets with strong investment cases and the rest of the market.
First-half results broadly support that view. The UK retained the leading position, Spain recorded a historically strong national market and liquidity concentrated heavily in expensive individual assets and major tourism destinations.
As experts at International Investment report, the record average price per room in completed transactions is not yet evidence of comparable appreciation across Europe's hotel property market. The number of hotels and rooms sold declined much faster than total transaction value, while capital remained heavily concentrated in a small number of countries and premium assets. With financing still relatively expensive, that structure could widen valuation gaps: prime hotels in London, Spain and other liquid destinations may retain substantial premiums, while lower-quality assets, highly leveraged properties and hotels in markets with rapidly expanding supply may face materially weaker investor demand.
FAQ: European hotel investment in 2026
How much was invested in European hotels in the first half of 2026?
One major industry dataset puts transaction volume at €9.4 billion, down 10% year on year. Another estimates €11.7 billion and a 9.5% decline. The difference primarily reflects methodology and deal-coverage criteria.
Why did hotel prices rise while transaction activity fell?
The number of hotels and rooms sold declined more rapidly than total transaction value. Completed deals also contained a greater share of expensive, high-quality properties.
Which countries lead European hotel investment?
The UK holds the largest share of the European market, followed by Spain and France. London remains the largest individual city market, while Spain recorded a record first-half result.
How much was invested in Spanish hotels?
Spanish hotel investment reached €2.46 billion in the first half of 2026, up 26.5% from a year earlier. The Balearic Islands were the country's largest regional market.
Which hotel categories attract the most investment?
Upscale and luxury properties receive the largest share of capital. Upscale hotels alone represented 46% of European transaction value in the main dataset.
Who is buying European hotels?
Real estate investment companies were the strongest buyer group in the main transaction dataset. European capital increased its share of acquisitions to 91%.
Why is private equity selling European hotels?
Private equity substantially reduced acquisitions and became the largest net seller group during the first half. Financing costs, opportunities to realise value from previously purchased properties and strong liquidity for prime assets all influence disposal decisions.
Will European hotel prices continue to rise?
A uniform trend is unlikely. Tourism growth supports hotel earnings, while financing costs, new supply and differences in asset quality are increasing the gap between the strongest and weakest properties.