HVS research suggests Southern Europe experienced the
strongest growth in values while Eastern Europe recovery picked up momentum.
EUROPEAN REPORT – Hotel values across Europe showed a steady
2.0% increase in 2024 helped by lower interest rates, modest gains in RevPAR
and consistent demand for European travel from international visitors,
according to this year’s Hotel Valuation Index (HVI) from HVS.
The annual HVI is a hotel valuation benchmark monitoring
annual percentage changes in the values of typically 4- and 5-star hotels in 31
key European cities.
Although cost pressures remain a point of concern for hoteliers, margins have felt more secure now that inflation has normalized. RevPAR growth, albeit more modest than in previous years, and lower interest rates have been positive for hotel values.
Tabitha Watkins
HVS said the rise in hotel values, with some markets
surpassing values of 2019, was helped by a return by many to pre-pandemic
occupancy levels, as well as improving F&B revenues and the slow recovery
of the MICE segment.
“Although cost pressures remain a point of concern for
hoteliers, margins have felt more secure now that inflation has normalized. RevPAR
growth, albeit more modest than in previous years, and lower interest rates
have been positive for hotel values,” said HVS London Consulting and Valuation Analyst
Tabitha Watkins, co-author of the HVI.
Southern Europe experienced the strongest growth in hotel
values with a close to full recovery to 2019 levels. Eastern Europe, while
behind the rest of the region, saw the second-strongest growth as its recovery
picked up momentum.
In top position in terms of value growth was Athens, where
hotels on a per key basis remain comparatively more affordable than other
European cities. Positive RevPAR growth and continued investor interest
prompted a rise in values of 11.8% in Athens. Hotels in Lisbon, Madrid and
Edinburgh benefitted from a strong influx of leisure visitors putting them next
in the rankings, with value rises of between 6% and 8% while German markets saw
the slow but steady return of corporate demand and trade fairs, helping values
grow 4.8% in Munich, 3.4% in Frankfurt, 2.8% in Berlin and by 0.9% in Hamburg.
Hotels in Paris remain the most expensive in Europe, topping
the HVI valuation table, followed by London, Zürich, Rome, Florence and Geneva.
HVI warned that while prospects for Europe’s hotels remain
relatively strong, the weakening of the dollar would be detrimental given the
significance of the United States as a source market, and trade tariffs might
cause inflation to resurface.
“In addition, geopolitical shifts such as the breakdown of
the transatlantic alliance could have a momentous impact on the hotel industry
going forward,” said HVS London Managing Director Sophie Perret. “The fraying
of long-standing Western alliances adds to a sense of uncertainty.”