Luxury the biggest play, accounting for 34 deals and €3.66 billion
in volume as it attracts institutional capital.
EUROPE – Europe’s hotel market recorded €14.65 billion in
deals in 2025, driven by interest in the upscale and luxury sectors, according
to Global Asset Solutions.
The European Hotel Transaction Report 2025 found that
investors were taking a cautious yet strategic approach to the market, as
geopolitical volatility was offset by an environment of increased liquidity and
falling inflation.
The continent saw 267 transactions (45,052 keys) with an
average transaction size of €54.9 million and assets trading at €325,000 per
key. Luxury accounted for 34 transactions totaling €3.66 billion, with an
average transaction size of €107.6 million.
Investors are drawn to the resilience of the high end of the market, illustrated by upper-tier hotels retaining stronger pricing power, supported by sustained ADR gains in key gateways.
Alex Sogno
The strength of the upscale and luxury markets was reflected
by the development pipeline, with Upscale leading by number of projects (367
projects/57,028 rooms at Q4 2025), while Upper-Upscale has reached record
levels (307 projects/48,969 rooms). Together, the two segments represent
approximately 39% of total projects and 42% of rooms in Europe's active
pipeline (total: 1,717 projects/252,600 rooms).
France, the U.K., Spain, and Germany remained the core of
European hotel investment. Together, they accounted for €9.61 billion out of
the total invested across Europe in 2025, representing approximately 66% of
total transaction volume.
Ultra-luxury remained attractive to investors with the Four
Seasons Astir Palace in Vouliagmeni, Greece, the second-largest deal of
the year. Greek shipping magnate George Prokopiou completed his acquisition of
full ownership of this landmark coastal resort, which includes two 5-star
hotels on the Athens Riviera. Prokopiou initially acquired a 33.75% stake in
October 2024 for €150 million, valuing the complex at €450 million. In February
2025, he agreed to purchase the remaining 67% from AGC Equity Partners, the
National Bank of Greece, and the Hellenic Fund for a reported €413 million.
The biggest deal of 2025 was the 1,037-room Mare Nostrum
Resort complex in Tenerife. It was sold in an off-market transaction by Selenta
Group, backed by Brookfield, to Spring Hotels for €432 million.
During 2025, travel demand continued to provide a strong
foundation for the sector. European flight activity exceeded 2019 levels, with
passenger volumes reaching record highs. Business travel also continued its
gradual global recovery, contributing to stronger weekday demand in key gateway
cities.
“Investors are drawn to the resilience of the high end of
the market, illustrated by upper-tier hotels retaining stronger pricing power,
supported by sustained ADR gains in key gateways,” said Global Asset Solutions
CEO Alex Sogno. “In contrast, parts of the midscale urban market face margin
pressure from elevated operating costs, labor shortages, and price-sensitive
guests.
“Upper-Upscale stands out: it delivers higher ADR potential
than midscale while offering broader scalability and deeper liquidity than pure
luxury, making it attractive for institutional and value-add strategies.
“Although the luxury hotel segment continues to attract
interest due to its high profitability, it faces challenges such as elevated
operational costs and a more niche market focus, increasing the overall risks.”
Sogno concluded: “Even in the current geopolitical climate,
Europe’s structural maturity positions it to not simply to withstand
volatility, but to continue attracting long-term institutional capital as the
sector moves further into 2026.”