Europe: Hotel consultancy HVS’s annual European Hotel Valuation Index (HVI) shows hotel valuation grew only 0.2 per cent across the continent in 2025.
HVS cited war, US leadership and global instability as reasons denting growth. However, European travel demand remained high, recording three billion overnights, half of which were international, making for a 2.4 per cent increase over 2024.
In addition, HVS said that modest rate growth and small increases in occupancy led to overall positive top lines, supported by leisure travel. Hotel growth was stimulated by rate cuts from the European Central Bank, which dropped from three to two per cent, and the Bank of England.
To conduct its research, HVS examined value changes in higher-end hotels (typically four and five star) across 31 European cities.
Copenhagen saw the greatest increase in HVI at 5.9 per cent. High demand with slowing supply pipelines along with stronger airport connections boosted the Danish capital to the top of the list.
Athens, Bucharest, Madrid and Zurich rounded out the top five. Athen’s institutional investor friendliness led it to 5.5 per cent growth. Bucharest saw a strong economy and RevPAR push it to 4.6 per cent. Tourism granted Madrid a four per cent increase and the Swiss franc’s appreciation gathered Zurich an increase of 3.7 per cent.
The worst performers were Istanbul, Amsterdam, Frankfurt, London and Manchester. Istanbul’s hotel market value fell 7.6 per cent as its luxury affordability label rings less true amid high inflation, political instability and the lira’s depreciation. Amsterdam’s hotel VAT jumped from nine to 21 per cent, resulting in a 5.9 per cent decrease. Poor RevPAR in Frankfurt gathered a five per cent decrease. London and Manchester both fell 3.4 per cent due to higher minimum wages, insurance and property taxes.
HVS said the Nordic countries were drivers of growth, led by Copenhagen’s strong performance. Western Europe lost a step while Eastern Europe gained one.
“While overall the HVI showed little movement in values across Europe as a whole, leisure demand continues to boost hotel performance, and therefore values, across Mediterranean markets and in Northern Europe,” HVI co-author Margherita Rivetti said. “In Eastern Europe a combination of leisure and corporate demand and more stable inflation have driven hotel values up while in Western Europe there are more mixed results.”
HVS predicts a number of factors to benefit hotel values in 2026. Relative AI disruption should be less, and Europe’s strength in tourism will continue to be an advantage through high demand and lower supply growth.
But the outlook for the coming year remains blurred. The report was completed just days into the US-Israeli war on Iran — and its impact on oil prices could have drastic effects on the global economy. While rates dropped in 2025, the firm said that could be wiped out by inflationary effects the longer the war on Iran continues. It notes some institutions already predict rate hikes. Alongside the war’s effects, over-tourism, owner-operator lease viability, and high debt costs were all noted as negatives.
“Europe’s appeal to tourists will remain strong, which coupled with its modest project pipeline bodes well for hotel performance,” HVI co-author Sophie Perret said. “However, the conflict in the Middle East and subsequent oil disruption could have a severe impact the longer it lasts, particularly on interest rates which will then impact the financing and refinancing of hotel transactions.”
Highlights:
- HVS’s annual European Hotel Valuation Index recorded 0.2 per cent growth in hotel values across the continent in 2025, citing war, US leadership and global instability as constraining factors despite strong travel demand.
- European tourism reached three billion overnight stays in 2025 – a 2.4 per cent increase over 2024, with international visitors accounting for half of all stays and leisure travel driving most growth.
- Copenhagen led valuation growth at 5.9 per cent, followed by Athens (5.5 per cent), Bucharest (4.6 per cent), Madrid (four per cent) and Zurich (3.7 per cent), with Nordic countries cited as growth drivers.
- Istanbul recorded the steepest decline at -7.6 per cent amid high inflation, political instability and currency depreciation, followed by Amsterdam (-5.9 per cent), Frankfurt (-five per cent), London (-3.4 per cent) and Manchester (-3.4 per cent).
- HVS noted Eastern Europe gained ground while Western Europe lagged, with leisure demand boosting Mediterranean and Northern European markets.
- The report warned the US-Israeli war on Iran could drive oil price increases and reverse 2025’s interest rate cuts, with potential severe impacts on financing and refinancing of hotel transactions if the conflict continues.
