Hotel values across Europe experienced a steady 2.0% growth in 2024, supported by lower interest rates, modest improvements in RevPAR, and consistent demand for European travel from international tourists, as revealed in this year’s Hotel Valuation Index (HVI) by global hotel consultancy HVS.

The value increase, with some markets exceeding 2019 levels, was driven by a return to pre-pandemic occupancy rates, improved food and beverage revenues, and the gradual recovery of the MICE sector.

While European hotel performance remained strong and operational costs largely returned to normal, 2024 also marked a year of significant geopolitical and climate-related challenges for operators. Despite payroll costs rising above inflation, utility expenses steadily declined, and other costs remained stable.

“Although cost pressures remain a point of concern for hoteliers, margins have felt more secure now inflation has normalised. RevPAR growth, albeit more modest than in previous years, and lower interest rates have been positive for hotel values,” commented HVS London consulting and valuation analyst Tabitha Watkins, co-author of the HVI.

Southern Europe led the way in hotel value growth, nearly fully recovering to 2019 levels. Eastern Europe, although trailing the rest of the region, showed the second-strongest growth as its recovery gained momentum.

Athens took the top spot for value growth, as hotel prices per key remain relatively more affordable compared to other European cities. Positive RevPAR growth and sustained investor interest contributed to a significant 11.8% increase in Athens’ hotel values. Lisbon, Madrid, and Edinburgh followed closely, with values rising between 6% and 8% due to a strong influx of leisure travelers. In contrast, the German market experienced a steady, albeit slower, recovery, with corporate demand and fairs gradually returning. This contributed to value growth in Munich (4.8%), Frankfurt (3.4%), Berlin (2.8%), and Hamburg (0.9%).

Paris continues to dominate as the most expensive hotel market in Europe, maintaining the top position in the HVI valuation table, followed by London, Zurich, Rome, Florence, and Geneva.

“The on-going desire for European travel puts the region firmly at the centre of the world in terms of tourism appeal, with more than 50 million additional overnight stays taken in 2024, compared with 2023, nearly half of which were international visitors,” said report co-author Margherita Rivetti, consulting and valuation analyst with HVS London.

The HVI cautions that although the outlook for hotels in Europe remains generally positive, a decline in the value of the dollar could negatively impact the sector, given the importance of the US as a key source market. Additionally, trade tariffs could potentially trigger a resurgence of inflation.

“In addition, geopolitical shifts such as the breakdown of the transatlantic alliance could have a momentous impact on the hotel industry going forward,” concluded HVS London managing director Sophie Perret. “The fraying of long-standing Western alliances adds to a sense of uncertainty.”

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