Heading toward 2026, investor trust in Europe's hotel market stays strong - 86 percent intend to hold steady or boost spending. Although expectations differ slightly among regions, overall sentiment leans upward. The data comes from the latest version of a report by Cushman & Wakefield, now in its fifth release.
Instead of broad claims, it draws from answers given by 74 large-scale backers like private equity groups and investment vehicles. While some adjusted strategies during economic shifts, combined activity shows sustained engagement. From 2020 through 2025, those involved directed nearly €18 billion into lodging assets across the continent.
Despite rising confidence, many investors remain cautious about their next moves. During the three-month review period spanning late 2025 into early 2026, nearly six in ten signaled plans to increase hospitality investment volume this year. More than half project themselves as net buyers - purchasing assets at a higher rate than disposals. In contrast, just a small fraction foresees exiting positions overall. Ambition shows up clearly, yet restraint still shapes decisions.
Rising Returns Needed as Lending Gets Riskier
Now comes a shift in investor expectations. Return demands have risen sharply, reaching 15.6% compared to last year’s 13.6%. Behind this climb lies uncertainty around credit markets. Such conditions push buyers toward tighter decision rules. Discipline shapes how capital moves today. Experts point to these trends as key contributors.
Experts point out that these results show that, similar to office properties, there is a growing trend towards managing-to-core strategies for hotel properties in order to reposition them in a targeted manner.
Southern Europe Advances While DACH Remains Unchanged
Looking ahead, Southern Europe stands out in regional choices. Leading the pack are Italy and the Iberian Peninsula - 78% of investors show strong or very strong enthusiasm. Close behind comes France, drawing interest from 60%. Meanwhile, growing attention turns to Great Britain along with Ireland.
Fifth on the list of favored spots, the DACH area (Germany, Austria, Switzerland) draws interest from 37 percent who intend to invest, down from 45 last time around. Still seen as steady ground for lasting ventures, it holds sway even after the drop.
Despite the current selectivity, the DACH region remains a foundation for European hospitality investments. So, Germany, Austria and Switzerland continue to be perceived as reliable, long-term viable hotel market.
Gateway Cities in Focus
Across Europe, big cities draw the strongest investor attention. Leading spots include Milan, Madrid, Rome, London, and Paris - each seen as a top-tier choice. Some places saw clear jumps: Budapest rose eleven percentage points. Gains of nine points marked both Nice and Cannes. Berlin reached up by nine, while Munich added eight. These shifts point to widening appeal beyond traditional hubs.
Costs Performance Risks ESG Concerns
One out of every three builders now sees shaky returns on hospitality investment as a growing headache. Still, tighter loan conditions from last year are showing signs of loosening. What stands front and center today? Cost hikes in building - named by nearly seven in ten industry players as their top pressure point.
Still shaping price trends, sustainability plays a role in valuations. Properties showing clear ESG efforts often sell higher - buyers on record offering around 4.3% extra for certified buildings. Though not universal, the pattern appears across recent deals.
AI Becoming a Key Factor in Value Creation
Eighty-one percent of investors believe artificial intelligence will strongly influence the hotel market by 2030. Technology plays a central role in the findings, especially AI. Jon Hubbard, who leads Hospitality EMEA at Cushman & Wakefield, noted the change - what once seemed distant now drives hospitality investment decisions. Instead of waiting, firms are acting because advancements move faster than expected
Hubbard summarized the overall sentiment entering 2026: “European hotel investors are entering 2026 with renewed confidence and clear priorities: deploying more capital, but with greater selectivity.”
Preference for Upper-Mid and Luxury Segments
Focusing on hotel types, upper-mid and upper-tier properties draw the most investor attention - 81 percent signal strong or very strong interest. Luxury comes next, marked by 69 percent engagement.
Despite a growing willingness to invest in premium properties across established areas - especially southern Europe and major urban hubs - the outlook remains measured. With eyes set on stronger returns, buyers now emphasize upgrades in management practices rather than quick gains. Expectations have shifted toward long-term resilience through greener operations and digital integration. A steady flow of deals seems probable by mid-decade thanks to this grounded strategy. Caution blends with opportunity beneath the surface.
