Investor demand for European hotels remains firmly positive heading into 2026, according to the latest European Hotel Investor Intentions Survey published by CBRE.
The survey shows that more than 90% of investors and executives intend to maintain or increase their allocation to European hotel assets over the next year.
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This signals continued confidence in the sector despite persistent geopolitical tensions, higher interest rates and uneven economic growth across Europe.
The findings point to a clear shift in how hotels are perceived within institutional portfolios. Rather than being treated as a purely cyclical or opportunistic segment, European hotels are increasingly regarded as a core income-generating real estate asset class with long-term structural demand support.
Hotels consolidate their role in institutional portfolios
The European hotel investment outlook for 2026 is characterised less by recovery and more by consolidation.
While broader commercial real estate markets continue to adjust to higher financing costs, hotels have maintained relatively strong investor interest compared with more structurally challenged sectors such as office. This divergence has helped reinforce the sector’s position within diversified real estate allocations.
However, sentiment is not uniform. The CBRE survey highlights clear differences in investor strategy and risk appetite. Core investors continue to prioritise stable income in established gateway cities, while value-add and opportunistic capital is increasingly focused on repositioning, redevelopment and operational turnaround opportunities.
Where capital is focusing
Investor interest remains concentrated in major European gateway cities, including London, Paris, Madrid and Rome, where liquidity, tourism demand and brand strength remain most established.
At the same time, capital is gradually expanding into secondary cities and leisure-driven destinations, particularly where pricing dislocations or refurbishment potential offer attractive entry points.
Across strategies, investors are showing increased preference for:
- assets with clear repositioning potential
- hotels with operational upside through improved management
- branded or platform-led operating models
- properties offering scale and efficiency advantages
This reflects a broader shift towards operationally driven value creation rather than purely asset-based returns.
Key drivers supporting investment demand
Several structural factors continue to underpin investor interest in European hotels.
1. Resilient travel demand
European tourism has recovered strongly, supported by both international arrivals and sustained intra-European travel. Business travel has also stabilised, albeit at more selective levels, with higher-value trips supporting rate performance.
2. Income and pricing flexibility
Hotels offer a relatively dynamic income profile compared with other real estate sectors. The ability to adjust room rates in response to demand has strengthened their appeal in an environment where inflationary pressures and slower rent growth are affecting other asset classes.
3. Supply constraints in key markets
Higher construction costs, tighter planning regulation and financing constraints continue to limit new development across many core European cities. This constrained pipeline is supporting occupancy levels and revenue per available room performance in established markets.
4. Operational evolution
Technology adoption and operational efficiency improvements are reshaping the sector. Data-led pricing, digital guest journeys and more efficient labour models are helping to improve margins across well-managed hotel platforms.
Risks and constraints remain
Despite positive sentiment, the outlook is not without challenges.
Higher financing costs remain a key constraint on transaction volumes, even as interest rate volatility has stabilised compared with recent years. This continues to enforce a disciplined investment environment focused on underwriting quality and cash flow resilience.
Other risks include:
- uneven economic growth across European markets
- geopolitical uncertainty affecting travel patterns
- persistent labour cost inflation in hospitality operations
- performance divergence between prime and secondary assets
As a result, investor selectivity is increasing, particularly around location quality, brand strength and operator capability.
Outlook for 2026: disciplined deployment, not expansion
Looking ahead, European hotel investment is expected to remain a priority allocation for global real estate capital, supported by long-term structural demand for travel and accommodation.
However, the nature of investment activity is likely to remain disciplined rather than expansionary. Capital is expected to be deployed selectively, with greater emphasis on operational performance, asset repositioning and income durability.
Prime assets in established gateway cities are likely to remain highly competitive, while value-add opportunities will continue to attract investors seeking enhanced returns through active asset management.
Overall, the CBRE survey indicates that investor conviction in European hotels is not driven by short-term momentum, but by a longer-term reassessment of the sector’s role within institutional portfolios.
For 2026, the defining theme is not retreat or overexpansion, but targeted allocation into a sector that continues to demonstrate structural resilience, income potential and strategic importance within European real estate investment.
