Europe hotel investment reached €11.7 billion in the first half of 2026, 19.5% above the 10-year average, even as transaction volumes declined 9.5% year-on-year. The market drew strength from landmark single-asset sales, portfolio deals in the UK and Spain, and cross-border capital from APAC and MEA buyers targeting gateway cities.

What did the H1 2026 transaction market look like?

Single-asset deals anchored the half. Headline transactions included:

• Pullman Paris Tour Eiffel
• The Westminster Curio Collection, London
• Park Hyatt Vienna

Portfolio activity persisted in the UK and Spain, two of Europe's deepest liquidity pools.

Large-ticket activity concentrated at the top of the market. Transactions above €100 million rose 30% year-on-year, signalling persistent demand for prime hotel product. The deal count shrank while the average deal size grew, and capital rotated toward core trophy assets rather than secondary product.

Cross-border capital did the heavy lifting. APAC investors increased their European deployment by 86% year-on-year, and MEA investors by 31%. Both groups targeted Paris, London and Madrid, where trophy assets remain scarce and pricing power is strongest for sellers.

Private investors led deal flow on both sides of the table, accounting for 54% of acquisitions and 46% of disposals. Their selling share rose 8.4 percentage points versus H1 2025, indicating a wave of family offices and high-net-worth sellers recycling capital out of mature positions. Institutional investors represented 37% of buy-side volume and 38% of sell-side volume, with their share down 8.8 percentage points year-on-year as pension funds and insurers stepped back from the market.

How did hotel pricing move?

Hotel yields held broadly stable in H1 2026, extending the compression recorded across 2025. The average price per room climbed 9% year-on-year to €228,416. That figure sits well above pre-2020 norms and reflects competition for limited stock in core markets.

A first-half inflation rebound pushed financing costs higher across the eurozone and the UK. That pressure may cap further yield compression through the remainder of 2026, particularly for secondary assets where lenders are recalibrating loan-to-value ratios and tightening covenants.

What is supply doing?

European hotel supply expanded 2.9% versus H1 2025. Southern Europe led the build-out, with room inventory up more than 5% as resort markets converted residential and office stock into branded rooms. Poland, Italy and Austria posted notable gains, driven by franchising activity in regional cities and conversion deals in secondary urban locations.

The pipeline is highly uneven across European capitals. Markets with the tightest forward supply include:

• Amsterdam
• Barcelona
• Prague
• Paris

Paris's constrained pipeline pairs with active deal flow to keep pricing tight for new entrants and supports RevPAR growth into 2027.

How did performance fare?

Europe-wide RevPAR reached €101 in H1 2026, up 3% year-on-year. Average daily rate rose 2.2%, and occupancy added 0.7 percentage points. Rate led occupancy, a pattern consistent with operators pushing average pricing rather than chasing last-minute volume, and one that signals confidence in corporate and leisure demand.

Eastern Europe led regional growth at 6% RevPAR, with Southern Europe next. Milan posted the standout gain at +24%, driven by the 2026 Winter Olympics and tight Olympic-period supply in Lombardy. Budapest followed at +15%, capitalising on low-base pricing, a weaker forint against the euro, and rising airline capacity into Liszt Ferenc.

What happens next?

Three flows will define the second half. Italy's H2 2026 trading will test whether Milan's 24% RevPAR gain holds once Olympic demand rolls off and corporate calendars reset. France's H2 transaction prints will reveal whether private sellers continue to widen their share, and whether APAC capital keeps its 86% growth pace after a slow summer. ECB and Bank of England rate decisions in September and November will determine if H1's 9% price-per-room growth extends into H2, or if rising financing costs stall yield compression and slow deal velocity for the rest of the year.