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European hotels continue to record revenue growth, but profit outcomes remain uneven across regions. While overall GOP margins are holding steady at the continental level, performance varies materially by sub-region. A closer look at Spain shows continued growth in revenue and profit, alongside stabilising margins and rising pressure across labour and undistributed cost lines.
Figure 1
A Fragmented European Picture
As the year progresses, Europe’s hotel performance is moving in different directions depending on geography.
Eastern Europe continues to lead, with TRevPAR up 6.4% year-to-date and GOPPAR increasing by 9.8%. Southern Europe also maintains positive momentum, recording 4.6% TRevPAR growth and 5.5% GOPPAR growth.
Further west and north, the picture changes. Western Europe reports 1.9% growth in TRevPAR and 1.7% growth in GOPPAR, while Northern Europe shows 1.3% TRevPAR growth but only 0.1% growth in GOPPAR. Revenue remains positive across all regions, but the pace of profit growth is far more constrained in these markets.
Figure 2
Margins Hold at the Aggregate Level, but Diverge by Region
Despite the variation in revenue and profit growth, Europe’s overall GOP margin stands at 37.0% year-to-date, broadly in line with last year. This reflects revenue growth supported by cost controls, particularly during the summer period.
Beneath the headline number, however, regional margins diverge clearly. Southern Europe continues to lead with a GOP margin of 41.8%, remaining stable year-on-year. Eastern Europe has improved to 39.0%, an increase of 1.3 percentage points. Northern Europe reports a GOP margin of 37.0%, down 0.4 percentage points, while Western Europe records the lowest margin at 33.5%, down 0.3 percentage points and still below pre-pandemic levels.
Figure 3
Spain: Growth Continues, Margins Level Off
Against this European backdrop, Spain continues to deliver revenue and profit growth, though margin expansion has slowed.
Through November year-to-date, TRevPAR in Spain is up 3.0%, while GOPPAR has increased by 4.0%. GOP margin stands at 41.0%, unchanged from last year, following several years of steady improvement that peaked in 2024.
Margins in Spain remain above the European average, supported by departmental performance, with Rooms margins at 72.0%, F&B margins at 21.0%, and GOP margin at 37.0%.
Figure 4
Spend Beyond the Room
Looking beyond room revenue, ancillary spend in Spain shows a more nuanced picture.
Within Wellness, Spa treatments remain the most significant revenue item, though performance has softened slightly, with POR declining from €8.4 to €8.0. Membership fees and Health Club revenue show strong percentage growth, but from a relatively small base, increasing from €1.1 to €1.7 POR and €0.9 to €1.1 POR, respectively.
In Food & Beverage, Conference & Banqueting continues to grow faster than outlets, reinforcing its role in supporting ancillary revenue performance.
Figure 5
Labour Pressures Remain Evident
As revenue grows, labour costs continue to exert pressure across Europe and Spain.
Total labour costs are up almost 5.0% across Europe, while in Spain they have increased by 4.0%, directly affecting GOP performance.
In Rooms, labour increases are led by Front Office (+5.0%), Housekeeping (+7.0%), and Complimentary F&B (+16.0%). Within F&B, management salaries declined by 25.0%, while non-management labour costs increased by 7.0%, driven primarily by Kitchen costs (+12.0%). In A&G, Accounting labour costs rose by 11.0%, while Contracted, Leased and Outsourced labour costs declined by 5.0%.
Figure 6
Further Down the P&L
Cost pressures extend well beyond departmental payroll.
Credit card commissions now stand at €2.7 PAR, up from €1.5 PAR pre-pandemic. Sales & Marketing expenses have risen to €3.6 PAR, more than double pre-pandemic levels of €1.6 PAR, reflecting continued investment to support revenue generation.
Utilities costs have eased from their peak of €7.0 PAR in early 2023 to €5.0 PAR, though they remain above pre-pandemic levels of €4.0 PAR. At the same time, water costs continue to rise (+6.0% year-on-year), waste removal costs have nearly doubled compared to pre-pandemic, and loyalty programme costs continue to increase. Labour costs within Sales & Marketing are also 2.7% higher than last year.
A Closer Look at the Numbers
November year-to-date data across Europe and Spain shows continued revenue growth alongside stable margins at the aggregate level, with significant variation by region and cost category. From topline performance to departmental margins and undistributed expenses, the figures highlight the importance of examining the full P&L to understand how profitability is evolving across different markets.
Juan Gallardo, Director of Research at HotStats, commented:
“What we’re seeing across Europe — and very clearly in Spain — is that revenue performance alone is no longer enough to explain success,” said Juan Gallardo, Director for Hospitality Intelligence, EMEA at HotStats. “As markets stabilize, profitability is increasingly shaped by margin discipline, labour management, and cost control further down the P&L. Small movements in these areas can have a big impact on overall performance.”
To explore these trends in more detail, visit https://www.hotstats.com/ or get in touch with the HotStats team at [email protected]
About HotStats
HotStats, a Duetto company, is a global hotel profitability intelligence provider delivering detailed P&L benchmarking and performance analysis. By comparing over 12,000 properties worldwide, HotStats empowers hotel owners, operators, and investors to measure financial success beyond the top line.
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