Hotel deals worth €20 billion are programmed to be completed in Europe in 2025

Hotel deals are expected to be dynamic in 2025, following a strong 2024 when total transactions in Europe amounted to around €20 billion.

With deals worth over $100 million accounting for 60% of total liquidity in 2024, it is clear that the rise in high-value investments reflects growing confidence in the hospitality sector as an attractive real estate investment category, as noted by Christopher Exler, Vice President of Hospitality at JLL in the EMEA region.

Stand-alone hotel deals drive deal volume

According to a report by Hospitality Investor, experts predict that deal volume in Europe in 2025 will be high. It is estimated that both single property sales and large portfolio restructurings will take place. This will create opportunities for smaller investors to enter the market.

“Last year, there were around 130 different transactions, and I think we’ll see more in 2025, with a lot of reshuffling in some of the larger portfolios,” says Steven Fyfe, Savills’ director of capital markets, adding that the volume of transactions expected to be carried over from Q4 2024 to Q1 2025 means the year is set to start very strongly.

Ed Fitch, head of hospitality in the UK and Ireland at Cushman & Wakefield, agrees, noting: “We’re going to see some of the larger, longer-standing portfolios being dismantled, which will give more new players the opportunity to become more significant in the market. There will be more smaller-scale sales, which means more opportunities to enter the sector or start developing a portfolio in a way that has been limited until now.”

Ronald Chan, research director at CBRE, predicts that total deal volume in Europe in 2025 will be around €18-€20 billion, but to surpass €20 billion and approach the 2019 high of €27 billion, it will require “a continuation of large portfolio deals as well as an increased pace of larger, individual transactions than we saw in 2024.”

The most important players

Looking at sources of capital, experts say private equity, family offices, and international investors will be key.

Chan notes that the attractiveness of European hotels to buyers from more distant markets is growing. “Cross-border capital exceeded 60% in 2024 – a milestone not reached since 2018. This resurgence in global investment highlights Europe’s renewed appeal as a leading destination for hotel assets, surpassing regions such as Asia-Pacific and the Americas,” he says.

Dirk Bakker, Head of Hotels EMEA at Colliers, adds that investors from the Middle East and Asia are also emerging as significant players, with North American and European institutional investors adjusting their strategies to take advantage of stabilizing valuations.

Investment strategies

Investor interest in hotel deals continues to be driven by key cities in the UK, Spain, Italy, and France. But rising operating costs are starting to shift investment to more resilient segments such as hostels, long-sta,y and luxury. “Investors will be very wary of anything that requires excessive staffing. And so I think the strong focus on lean operations is returning to select services, with long-stay remaining popular, even if it is difficult to enter this market,” notes Cushman & Wakefield’s Fitch.

Meanwhile, aparthotels and serviced apartments are attracting significant interest, and there is an appetite for more such projects.

Finally, another investment trend is starting to emerge in Europe, and that is a change in the use of buildings. James Greenslade, of Savills, sees continued opportunities in change-of-use projects, as well as in the low-cost sector. However, Fitch notes that the reluctance of some municipalities to support redevelopment could hinder progress. “There are a limited number of places where these investments can pay off and for which authorities are giving approvals. So I think what is available in the next 6 to 12 months will attract really strong interest,” he adds.

Consumer Preferences and ESG

Changing consumer preferences are also shaping investment strategies, with demand for unique experiences, wellness, and sustainable travel continuing to influence the sector.

Boutique hotels and experiential accommodation are key areas for growth. Also, the focus on wellness, and not just the luxury sector, is driving investment decisions in assets that can offer better gyms and spas.

ESG and sustainability also remain critical factors, particularly as new regulations requiring sustainability reporting come into force. It is notable that investors are increasingly looking for assets with strong ESG characteristics.

The outlook

The long-term outlook for hotel deals is optimistic, with Europe remaining an attractive destination due to increasing global prosperity, the return of business travel and people prioritizing travel within their family budgets.

However, the need for creative and flexible investment strategies that break away from the beaten track will be critical to success.

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