Despite significant geopolitical and climate change challenges, hotel values across Europe rose by a steady 2.0% in 2024, aided by lower interest rates, modest gains in RevPAR and consistent international visitor demand for travel in Europe.
According to the HVS 2025 European Hotel Valuation Index, the hospitality industry in Europe has successfully weathered the geopolitical and climate-related storms of 2024, achieving a steady 2.0% increase in hotel values. This rise was underpinned by lower interest rates, modest gains in Revenue Per Available Room (RevPAR), and a persistent demand for European travel from international tourists.
A return to pre-pandemic occupancy levels, the gradual recovery of the Meetings, Incentives, Conferences, and Exhibitions (MICE) segment, and improving food and beverage revenues contributed to the increase in hotel valuations. Notably, some markets have even surpassed their 2019 values.
Despite a challenging year marked by significant geopolitical events and climate change-related issues, European hotel performance remained robust, and costs were generally normalized. Although payroll expenses have risen above inflationary levels, utility costs have gradually decreased, and other costs have stabilized.
While cost pressures concern hotel operators, margins have become more secure as inflation has normalized. Although more modest than in previous years, RevPAR growth and lower interest rates have boosted hotel values, stated Tabitha Watkins, HVS London consulting and valuation analyst and co-author of the HVI.
Southern Europe saw the most robust growth in hotel values, almost fully recovering to 2019 levels. Although trailing the rest of the region, Eastern Europe experienced the second-strongest growth as its recovery gathered pace.
Athens led in value growth, with hotel values increasing by 11.8% due to positive RevPAR growth and continued investor interest. Lisbon, Madrid, and Edinburgh also saw significant value increases between 6% and 8%, primarily due to a strong influx of leisure visitors. The return of corporate demand and fairs in German markets contributed to a 4.8% growth in Munich, 3.4% in Frankfurt, 2.8% in Berlin, and 0.9% in Hamburg.
However, the most expensive hotels in Europe continue to be in Paris, as per the HVI valuation table, followed by London, Zurich, Rome, Florence, and Geneva.
European travel, with more than 50 million additional overnight stays recorded in 2024 compared to 2023, remains an attractive prospect for international tourists. However, the weakening of the US dollar could negatively impact the hotel industry, considering the US’s importance as a source market. Additionally, potential trade tariffs could cause inflation to resurface, warns the HVI.
Sophie Perret, HVS London managing director, warned that geopolitical shifts, such as the breakdown of the transatlantic alliance, could significantly impact the hotel industry going forward. Such shifts could increase uncertainty in an already challenging market.
Download the HVS 2025 European Hotel Valuation Index.
