Hotels

Following a market downturn in 2022, and a year characterised by uncertainty in 2023, European commercial real estate is now moving into a recovery phase. Central banks finally starting to cut interest rates signals that an easing cycle has begun, reducing pressure on pricing and debt financing, and enabling dealmaking to resume.

In the context of the wider commercial real estate market. the European hotel sector has clearly been the outperformer of the past two years in comparison with sectors such as care, retail, office and industrial, attracting significant attention from investors at all levels of the capital stack. European hotel transactional activity was significantly boosted in the past year, with transaction volume in 2024 up over 50% versus 2023, now on par with levels seen pre-pandemic. 

In particular, the UK has reclaimed its crown as the backbone of the European market with nearly £6.4bn worth of transactions completed in 2024, significantly exceeding 2019 pre-pandemic levels. Spain and France were the top markets after the UK. By contrast, Germany remains slow, with volumes aligned to previous year but stock levels are finally picking up. Italy is continuing to attract substantial interest and now accounts for almost 8% of overall volume.

Overall, the outlook for the sector remains positive for 2025 and we expect to see trading performance maintain an upwards trajectory but with greater variability based on individual markets.