Greece, Portugal, Spain, UK, and Germany See Strong Europe Hospitality Sector Recovery Amid Rising Travel Demand

Thursday, March 13, 2025

Greece, Portugal, Spain, UK, and Germany experienced a robust recovery in the European hospitality sector in 2024, driven by rising travel demand and strong investor confidence. With international tourism rebounding to pre-pandemic levels, hotel values in these key markets saw steady growth, supported by increased occupancy rates, higher RevPAR, and expanding hospitality investments. Southern Europe, particularly Athens, Lisbon, and Madrid, led the resurgence, while the UK and Germany benefited from the return of business travel and large-scale events. Despite economic challenges, the sector remains resilient, positioning these countries as top-performing hospitality markets in Europe.

The European hotel market experienced steady value growth in 2024, driven by favorable interest rates, steady demand from international travelers, and modest gains in revenue per available room (RevPAR), according to the latest Hotel Valuation Index (HVI) from global hotel consultancy HVS. The data indicates a 2% rise in hotel values, with some markets exceeding pre-pandemic levels as the industry adapts to new economic conditions.

Hotel Value Growth Supported by Recovery in Occupancy and Revenue Streams

The resurgence of hotel values across Europe was primarily fueled by the return of many markets to pre-pandemic occupancy levels. Key factors contributing to this rebound include:

Increased international arrivals as global travel demand remained resilient.Improving food and beverage (F&B) revenues, reflecting a rise in on-site spending by guests.Gradual recovery of the MICE (Meetings, Incentives, Conferences, and Exhibitions) sector, boosting corporate bookings.

While European hotel performance remained solid in 2024, operators had to navigate geopolitical uncertainties and inflationary pressures. Payroll costs rose at above-inflation rates, yet many operational expenses showed signs of stabilization, easing financial strain on the sector.

Regional Performance: Southern and Eastern Europe Lead Value Growth

Hotel values varied across European regions, with Southern Europe leading the way. Markets in this region saw hotel values nearly fully recover to 2019 levels. Eastern Europe also demonstrated strong growth momentum, ranking as the second-fastest-growing region.

In terms of individual markets, Athens recorded the highest value growth at 11.8%, driven by sustained investor interest and a surge in tourism. Other cities benefiting from strong leisure travel demand included:

Lisbon, Madrid, and Edinburgh, which posted 6% to 8% value increases due to strong international arrivals and domestic tourism demand.Munich, Frankfurt, and Berlin, where the return of corporate travel and industry fairs helped hotel values rise 4.8%, 3.4%, and 2.8%, respectively.Hamburg, which saw a more modest 0.9% increase as business travel gradually recovered.Paris Remains Europe’s Most Expensive Hotel Market

Despite shifts in value growth across various markets, Paris continues to hold the top position as the most expensive hotel market in Europe, followed by London, Zurich, Rome, Florence, and Geneva. These cities maintain high valuation levels due to strong investor confidence, high occupancy rates, and steady luxury segment performance.

Greece, Portugal, Spain, the UK, and Germany saw strong hospitality sector recovery in 2024, driven by rising travel demand, higher hotel values, and strong investor confidence. With tourism rebounding, these markets experienced steady growth in occupancy, RevPAR, and business travel.

Future Outlook: Challenges and Opportunities for the European Hotel Sector

Looking ahead, Europe’s hotel industry remains on a positive trajectory, though some macroeconomic concerns could impact future growth. The weakening of the US dollar poses a risk, as the United States remains a major source market for European travel. Additionally, potential trade tariffs could lead to a resurgence of inflation, affecting operational costs and consumer spending power.

Nevertheless, investor confidence in the European hotel sector remains strong, with markets continuing to stabilize and adapt to evolving travel patterns. As international tourism demand holds firm, hotels in key European destinations are well-positioned for sustained value growth in the coming years.