BERLIN — During periods of uncertainty, data can provide hoteliers with some sense of footing as they try to make their way forward.
During the “Data insights: Capitalize on market knowledge” presentations at the International Hospitality Investment Forum EMEA conference, European hotel industry experts shared the latest information available on hotel performance, investor activity and travel trends.
Performance update
Data from STR shows signs of bifurcation in Europe’s hotel industry from both regional and class perspectives, said Aoife Roche, regional vice president of sales for EMEA at STR, CoStar’s hospitality analytics firm. At the same time, performance data is showing an emerging balance of occupancy levels and average daily rates.
Global hotel demand has outpaced 2019 levels for the past consecutive 24 months, she said. The past three months have seen demand grow by 9% over 2019, strengthening European occupancy by 2% to 60%. Average rates grew by 3% thanks to the strong demand and occupancy levels.
“This combination of strong occupancy growth and demand growth has shown and has delivered [revenue per available room] growth at double-digit levels across many key cities across the world,” Roche said.
The United Kingdom and Ireland have long since recovered hotel occupancy while Southern Europe is on the verge of full recovery, she said. The rest of Europe still has plenty of rooms to sell, as Central and Eastern Europe have seen occupancy grow by 5% over the past 12 months.
But occupancy growth at these levels of recovery compared to 2019 is leaving little room for occupancy growth in many European markets, Roche said. In Central and Eastern Europe, availability is enabling occupancy growth, a possible testament to the fact that the delta between pre-pandemic rates and current rates aren’t as great as the rest of Europe. In Western and Northern Europe, there’s lower occupancy growth.
It's a similar picture with rates, as Southern Europe shows high performance compared to 2019, growing anywhere between 50% to 60% of 2019 levels, she said. The rest of Europe is sitting at about 20% to 30% ADR growth compared to 2019. In Southern Europe, despite it having full rooms and less availability, demand is helping drive the region’s ADR, she said.
Countries that are achieving high rates and high total RevPAR are also delivering good gross operating profit per available room performance, 30% to 40% for most countries, she said. However, there are many countries with GOPPAR below €60 ($65.52).
ADR growth is strong in Southern and Eastern Europe, she said. Rate growth has been muted for the past four quarters in Western and Northern Europe, which are starting to show indications of decline in 2025.
In terms of hotel classes, 2023 was the year economy hotels sat in the driver’s seat, Roche said. Economy and midscale hotels outperformed the other chain-scale segments in terms of RevPAR growth. In 2024, that class divide shifted and then widened. Luxury hotels grew RevPAR at faster pace than the other classes.
Supply will always follow the money, and there’s been a 1.5% growth in luxury supply while economy and midscale are at 0.3%, she said.
“So, what about that balance?” Roche asked. “Pre-pandemic, 2015 to 2019, ADR was the driver of growth. Post-pandemic, it doesn’t look very different. 2024 again, ADR is driving that growth.”
In the U.S., that bifurcation present until 2024 shifted, and there’s flatter growth across all classes, she said. The balance between occupancy and ADR delivery into RevPAR growth is much more balanced in the U.S. than it is in Europe currently as sporting and music events, conferences and wealthy Americans delayed that rebalancing in Europe. Paris, for one, had the Summer Olympics, while Germany had the UEFA European Football Championships and Taylor Swift arrived on the continent.
“Taylor Swift singlehandedly grew ADR for many markets, 52% growth ADR on the Eras Tour nights,” she said, adding Europe would see declines in rate similar to the U.S. now that the tour is over.
Hotel occupancy should outpace ADR growth slightly to drive RevPAR growth in the short term while the longer-term forecast calls for normalcy resuming with ADR being the key driver in RevPAR growth, though they will be more balanced than seen recently.
Deals environment
Commercial real estate had a challenging time in 2023, said Carine Bonnejean, managing director of hotels at Christie & Co. There were rising interest rates, liquidity issues and high inflation, and that led to significant declines in deals volume across all segments of commercial real estate.
Hotels, however, had a smaller drop in deals volume, and since the recovery, hotels have led the way, she said.
“Hotels have clearly now proven the ability to edge inflation and have very strong underlying fundamentals,” she said. “I think it's been a seismic change in the way hotels have been perceived by real estate investors, and we can see a lot of funds now dedicated to hotels, which is very good news for all of us, and particularly because we can find more buyers for hotels.”
Hotels have transitioned from an alternative investment to a mainstream one, Bonnejean said. In 2024, Europe saw €22 billion worth of hotels transacted, an amount last seen nearly 10 years ago. Portfolio deals accounted for 40% of the deals last year, sitting atop a base of single-property deals.
Preliminary figures suggest about €4 billion worth of hotels have traded in 2025 so far, she said.
Cross-border investment plays a crucial role in the European hotel market, and mergers-and-acquisition activity has reshaped the way capital source markets are structured, Bonnejean said. North American capital accounted for 44% of investment last year, ahead of European money, which came in at 42%. There’s more capital coming back from the East, but at the moment it’s marginal.
The lion’s share came from private capital and high-net-worth individuals, she said.
Distress is a popular topic, but there’s not much actually happening in hotels, especially compared to other real estate segments, Bonnejean said. Last year some pressure built up across the segments, and there were some well-publicized collapses of property groups, such as Signa in Germany. All of that can actually benefit the hotel industry as it opens up conversion opportunities of office buildings.
There are some pockets of distress in the hotel industry, such as Lindner Hotels in Germany filing for insolvency in December and a few liquidation processes underway in France, she said.
Economic outlook
Currently, there’s a gloomier big-picture growth outlook, said David Goodger, managing director of EMEA at Tourism Economics. The outlook for gross-domestic-product growth is less than hoped for as Tourism Economics has downgraded its forecast for the year. The firm is still projecting growth for advanced economies like the U.S., U.K., the Eurozone, Japan, China, India and emerging economies, but outlooks for all areas are down for 2025 compared to 2024.
Despite all this, consumers continue to prioritize travel, according to Tourism Economics’ surveys, he said. Travel’s share of total spending is back to long-run averages for advanced markets. Travel as a share of consumer spending is also coming back in developing markets as well.
Pre-pandemic, travelers’ length of stay was decreasing, but now they’re taking fewer but longer trips, he said. That may be linked to the cost of a trip — the highest-ranked deterrence to travel. While bifurcation in travel preferences has been a big topic, as economy hotels lost demand and luxury hotels continued to be increasingly popular, Goodger said overall economic worries might smooth that out. As consumers seek more value for their money amid other rising costs and worries, they may move back to midscale and economy hotels in the coming year.
Much travel in Europe is domestic, and a lot of the cross-border travel originates in short-haul markets, Goodger said.
“It is very much the intra-EU markets that are going to be driving that international segment,” he said.
While it will still be growing, the pace of travelers from the U.S. is slowing, he said.
“There is still the dollar — the strength is really supporting travel to Europe, but we are seeing some slowdowns from the U.S., which then does bring us on to the elephant in the room: What is actually going to be happening with the U.S. and with U.S. policy?” he said.
These forecasts are built on a current policy basis and announced policy basis, so they are the best estimates of what will actually happen, he said. There are some significant risks out there, and trade wars and tariffs could have big impacts on the global economy.
If there’s a ramp-up in tariffs and the trade war overall, that could potentially lead to taking 2% off the U.S. GDP and similar amounts off the Eurozone, Japan and China.
Travel sentiment plays a major role for different destinations, Goodger said. It’s already in play between the U.S. and Canada. Tourism Economics expects Canadian travel to the U.S. to decrease about 20% this year. Other countries may follow suit.
During the first Trump administration, when there was a trade war between China and the U.S., the number of Chinese travelers visiting to the U.S. dropped, he said. Many chose to travel to Europe instead, and the expectation is they’ll do the same during Trump’s second term.
Even so, the latest data indicates most major destinations across Europe should see on average a 5% increase in overnight stays in 2025, he said. Some will see increases well over that thanks to different events, conferences and overall leisure demand.