Spain, UK, Germany, France, Switzerland, Italy, Czech Republic, Hungary, and Poland Propel Europe’s Thriving Hospitality Sector Growth in 2024

Wednesday, March 19, 2025

In 2024, Spain, the UK, Germany, France, Switzerland, Italy, Czech Republic, Hungary, and Poland played a pivotal role in driving Europe’s thriving hospitality sector, fueled by booming travel demand, rising investments, and a resurgence in business and leisure tourism. These key markets experienced surging occupancy rates, increased revenue streams, and growing investor confidence, reinforcing the region’s position as a global hospitality powerhouse. While Southern Europe led with record-breaking tourist influxes, Central and Eastern Europe gained momentum, benefiting from affordable travel options and expanding hospitality infrastructure. Despite challenges such as inflationary pressures and geopolitical uncertainties, the hospitality sector flourished, showcasing remarkable resilience and continued expansion across these dynamic European markets.

According to the HVS annual Hotel Valuation Index (HVI) 2024, hotel values across Europe saw a steady 2.0% increase, marking another year of consistent growth in the post-pandemic recovery phase. This positive trend was primarily fueled by lower interest rates, steady RevPAR (Revenue Per Available Room) growth, and increasing international travel demand. The European hospitality sector not only demonstrated resilience but also saw certain markets surpassing pre-pandemic 2019 levels in hotel valuations.

While Southern Europe led the charge, Eastern Europe also showcased robust performance, making a significant rebound despite initial post-pandemic sluggishness. Despite the sector’s overall positive trajectory, European hotel operators encountered hurdles such as geopolitical tensions, economic uncertainties, and climate-related disruptions.

Revival of European Hotel Values: The Key Drivers of Growth

Several factors contributed to the upward movement in hotel values across Europe in 2024:

1. International Travel Demand – The influx of leisure and business travelers from key markets, including North America, Asia, and the Middle East, reinforced growth.
2. Interest Rate Stability – The European Central Bank’s cautious approach to interest rates encouraged hotel investments and stabilized property values.
3. Recovery of the MICE Segment – The Meetings, Incentives, Conferences, and Exhibitions (MICE) industry began to recover, bringing business travel back to pre-pandemic levels.
4. Food & Beverage Revenue Boost – Hotels saw increased profitability from in-house restaurants, bars, and catering services, contributing to valuation improvements.
5. Occupancy Rates Approaching 2019 Levels – As tourism numbers rebounded, many markets witnessed higher occupancy rates, strengthening the overall performance of the hospitality sector.

Even though challenges such as rising payroll expenses and climate disruptions persisted, utility costs saw a decline, helping to offset inflationary pressures.

Southern Europe Leads Hotel Value Growth as Athens Emerges as the Star Performer

Southern Europe outpaced other regions in hotel value appreciation, with several markets nearly recovering to their 2019 benchmark levels. The Mediterranean region, known for its year-round appeal, leisure tourism, and robust demand from international visitors, remained a top performer.

Athens Takes the Lead in Value Growth

Athens saw the highest hotel value appreciation in Europe, registering a remarkable 11.8% increase. The Greek capital’s affordable property prices, strong RevPAR growth, and heightened investor interest fueled this surge. Athens’ tourism industry benefited from a strong influx of visitors, particularly from North America and Asia, as well as a resurgence in cultural and historical tourism.

Other major markets that experienced notable hotel value growth in Southern Europe included:

• Lisbon (+7.8%) – Boosted by its expanding tourism sector, strong leisure demand, and favorable investment climate.
• Madrid (+7.1%) – Supported by an increase in international visitors, bolstered by Spain’s cultural attractions and MICE sector recovery.
• Edinburgh (+6.5%) – Scotland’s capital witnessed a rise in hotel values, driven by strong leisure tourism and the return of major events.

Eastern Europe Rises as a Strong Contender in Hotel Market Recovery

While Eastern Europe initially lagged behind the rest of the continent, it emerged as the second-strongest region in hotel value growth. This uptick was attributed to a resurgence in regional travel, growing business investments, and increased demand for affordable destinations.

Some Eastern European cities saw an impressive rebound in their hospitality sectors as investors sought opportunities in lower-cost markets with high growth potential. Destinations such as Prague, Budapest, and Warsaw recorded positive performance, benefiting from affordable travel options and strengthening economic activity.

Germany’s Hospitality Market Shows Steady Recovery

Germany’s hotel sector displayed gradual yet solid growth, buoyed by corporate demand, trade fairs, and business travel returning to pre-pandemic levels. Major German cities that experienced an upward shift in hotel values included:

• Munich (+4.8%) – Benefiting from Oktoberfest tourism, corporate demand, and an expanding startup ecosystem.
• Frankfurt (+3.4%) – Driven by its strong financial sector and MICE market rebound.
• Berlin (+2.8%) – The capital city continued to attract both leisure and business travelers.
• Hamburg (+0.9%) – While hotel values saw slower growth, cruise tourism and cultural attractions sustained the market.

The German hospitality sector faced challenges due to higher labor costs and inflationary pressures, yet it remained a resilient player in the European hotel investment landscape.

Paris Retains Its Title as Europe’s Most Expensive Hotel Market

Despite fluctuating economic conditions, Paris continued to dominate as Europe’s most expensive hotel market. The city retained the top spot in the HVI rankings, surpassing other high-value markets, including:

• London
• Zurich
• Rome
• Florence
• Geneva

The 2024 Paris Olympics also provided a major boost to the French hospitality sector, leading to increased hotel occupancy and revenue.

Challenges Facing Europe’s Hotel Market in 2024

Although Europe’s hotel industry experienced significant growth, there were several key challenges that affected operators and investors:

1. Geopolitical Risks – Ongoing geopolitical instability in certain regions posed risks to traveler confidence and investor sentiment.
2. Climate Change and Natural Disruptions – Heatwaves, wildfires, and extreme weather events continued to disrupt tourism in key Mediterranean destinations.
3. Inflation and Payroll Costs – While utility costs stabilized, payroll expenses continued to rise above inflation, impacting profit margins.
4. Exchange Rate Fluctuations – A weaker dollar could negatively impact the European hotel sector, as the U.S. remains a key source market for European tourism.
5. Potential Trade Tariffs – Uncertainty surrounding global trade policies and tariffs could lead to inflationary pressure, impacting the travel and hospitality industry.

Despite these headwinds, the overall outlook for Europe’s hotel industry remains positive, with stable growth projections for 2025 and beyond.

In 2024, Spain, the UK, Germany, France, Switzerland, Italy, Czech Republic, Hungary, and Poland fueled Europe’s thriving hospitality sector, driven by surging travel demand, rising investments, and strong market resilience despite economic and geopolitical challenges.

Europe’s Hotel Market Poised for Continued Growth in 2025

The 2024 Hotel Valuation Index (HVI) highlights Europe’s continued growth, with hotel values increasing by 2.0% year-over-year. While Southern Europe led the recovery, Eastern Europe also demonstrated strong momentum, signaling a broad-based rebound across the continent.

The hospitality sector has successfully navigated economic uncertainties, geopolitical risks, and climate-related disruptions, proving its resilience in an evolving market. With continued demand from international visitors, increasing investor confidence, and a recovering MICE segment, the European hotel industry remains well-positioned for further expansion in 2025.