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More than a third of real estate investors want more hotel investments in Europe

Ralph van Polanen Petel • 11/08/2021
More than a third of investors want more European hotels in the property portfolio. This is according to the latest research by international advisor Cushman & Wakefield. Despite the disruption in the travel and tourism industry caused by the COVID pandemic, only 21% of investors plan to scale down hotel investments and only 10% have suspended acquisition plans.

Highlights from the survey among more than 50 investors who have invested more than EUR 26 billion – a quarter of all hotel transactions in Europe – in hotels over the past five years:

  • resorts and serviced apartments have come into the picture and are gaining in popularity;
  • most investors expect minimal discounts on 2019 prices as industry fundamentals remain favorable despite the COVID-19 impact on the travel and hotel industry;
  • United Kingdom, Germany and the Iberian Peninsula most popular European regions for investors;
  • Barcelona most attractive city for investors.

The Cushman & Wakefield survey was conducted among more than 50 representatives of large private equity firms, funds, REITs and other institutional investors active in the European hotel real estate market. The companies for which the respondents are active invested a total of more than EUR 26 billion – about a quarter of the total hotel transaction volume in Europe – over the past five years (2016-2021) with the acquisition of 664 hotels with a total of 127,642 rooms.

Ralph van Polanen Petel, Associate Hotel Real Estate at Cushman & Wakefield: "Amsterdam ranks fourth among cities where investors are looking for investment opportunities in hotel real estate. Despite COVID and its impact on the tourism sector, almost 65% of investors still have a huge eagerness for hotels in our capital, they expect the hotel sector to fully recover by 2023, which is a fundamentally different sentiment than after the global financial crisis when the sector turned out to take more than 5 years to fully recover.”

Traveling for work or leisure?

Resorts in particular have attracted attention and are still gaining in popularity. Despite the complexity in operation and seasonality of these types of hotels, the majority of respondents (70%) find them more attractive now than in the pre-COVID era. This is probably due to the expected faster recovery and the long-term growth prospects of the leisure sector. 60% of the respondents also find independent apartments more attractive than before the pandemic. Cushman & Wakefield explains this because of the resilience of these assets during the pandemic, the high profitability, low cost structure and the flexibility of the product to switch to the rental sector in the medium and long term.

Business hotels, focused on meetings, incentives, conferences and events (MICE hotels), and airport hotels have actually become less attractive for most investors due to the greater impact of the pandemic on this segment due to online conferencing and the continuing limited opportunities for large-scale events.

Cushman & Wakefield forecasts continued recovery of business travel and large-scale events in the medium and long term. The lack of face-to-face interaction due to remote working has increased the need for collaboration, meeting and face2face consultations. Some of the investors (21%) acknowledge this and indicate that their interest in MICE hotels has not changed as a result of the COVID-19 pandemic.

Impact of COVID-19 on the attractiveness of accommodation types


Location, location, location

The United Kingdom and Ireland top the list of target regions for investors, followed by Germany, the Iberian Peninsula, France and the Benelux. For urban hotel investments, the top five is dominated by Barcelona (1), closely followed by London, Paris, Amsterdam and Munich. These European geographic regions and cities are seen as safe investment markets with strong domestic demand combined with the relatively strong German and British economies. Barcelona in particular is an important European location that benefits from its popularity among tourists, and the current moratorium on hotel developments in this city is pushing the top position in the rankings.

Operatorbeat Regionale rankingOperatorbeat City-level-ranking

Market recovery

Tourist destinations such as Barcelona in particular will recover faster than major European top cities, according to 85% of the respondents. The respondents expect the performance of tourism-oriented cities to be fully back to the pre-COVID level of 2019 (RevPAR) by 2023. Regional cities are expected to follow from 77% of respondents, with a recovery to pre-COVID levels expected between 2023 and 2024. Europe's top cities - which tend to rely more on international travel - are expected to recover more slowly. Yet 75% of respondents expect a recovery between 2023 and 2024 and 21% in 2025. This is a more optimistic picture of the recovery than in 2008/2009 after the global financial crisis when it took an average of more than 5.5 years for the RevPAR of hotels in major European cities had recovered to pre-crisis levels.

Moderate discount expectations

Disposition of discounted hotels as a direct result of the pandemic is an often given reason for real estate investors to raise capital for hotel investments. However, the Cushman & Wakefield research shows that the majority of investors (59%) are interested in hotel properties with a slight discount of 15% or less from 2019 price levels, while only 12% of investors are looking for options with a discount of at least 25%.

Download the full report here.

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