The European hotel investment market saw a significant shift last year, with transaction volumes soaring by 62% compared to the previous year, reaching their highest level since 2019. This surge is detailed in the latest HVS European Hotel Transaction Report from the global hotel consultancy HVS London and its brokerage division, HVS Hodges Ward Elliott.

The uptick in transactions was driven by decreasing interest rates and strong funding from private equity investors, particularly for large portfolio deals. As a result, total transaction volume for the year reached €17.4 billion, marking a €6.7 billion increase over 2023.

European hotels sold for an average of €29 million, representing a 5% rise from the previous year. The average price per room climbed to €215,300, a 9% increase over 2023 and roughly 5% higher than in 2019.

The UK led the market in asset activity, accounting for 36% of deals, followed by Spain at 15%, France at 12%, and both Italy and Germany at 6%. In terms of city-specific transactions, London, Paris, and Madrid were the top performers.

“London retained its position as Europe’s most transacted city, with €3 billion in deals—matching the combined total of the next five most active cities. This was largely driven by major portfolio transactions, reinforcing London’s status as a key global investment hub,” commented report co-author Gauthier Champlong, an associate at HVS Hodges Ward Elliott.

In 2024, Private Equity investors emerged as the most active players in the market, engaging in transactions worth nearly €8.6 billion – a staggering 300% increase from 2023. This was closely followed by owner-operators, who dealt with €7.8 billion in assets, reflecting a 90% rise compared to the previous year.

The total volume of single asset transactions reached €10.5 billion, driven by interest rate reductions from European central banks and strong hotel market performance, which heightened investor interest. Paris led the way as the most active city for single asset transactions, with the Olympics playing a significant role in its €1.4 billion transaction volume. Major deals in the French capital included the Mandarin Oriental, Pullman Tour Eiffel, and Hilton Opera.

London secured the second position in single asset transaction volume, with deals amounting to €1 billion, followed by Madrid, Venice, and Athens. Noteworthy transactions in London included the Six Senses in Bayswater and The Standard in Kings Cross.

Portfolio transaction volume saw a notable surge, reaching €6.8 billion in 2024, a significant increase from 2023. Approximately half of these portfolio deals took place in secondary cities, especially in Spain, France, Germany, and Belgium. London led the portfolio transaction volume with €1.9 billion, trailed by Amsterdam at €240 million.

“As we move further into 2025, the availability and cost of financing will remain a focal point for hotel investors. With interest rates expected to decline further, capital markets should see a resurgence in liquidity, further boosting transaction volumes across key European markets,” concluded report co-author Matthias Hecht, associate director with HVS Hodges Ward Elliott.

“While refinancing challenges persist, banks and alternative lenders have demonstrated greater flexibility in restructuring debt, and hotel assets continue to outperform other real estate classes in investor preference.”

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