Italy's hotel industry posted a record gross operating profit (GOP) margin of 42.8% in the 12 months to mid-2026, up 2.2 percentage points year-on-year and the highest in Europe, according to benchmarking data from HotStats, a Duetto company, presented by Juan Gallardo at the Italian Hospitality Investment Conference in Milan.

The result sits on top of a strong demand backdrop. Tourist arrivals across Italy rose 4.43% in the first half of 2026 against the prior-year period. Italian accommodation ran at 51.2% occupancy, ahead of Spain at 42.8% and France at 32.9%, even with average nightly rates still below both. Foreign traveller expenditure rose 4.8% year-on-year in June 2026 alone, with the full second quarter up 3.9%, according to Banca d'Italia balance-of-payments data.

How does Italy compare with the rest of Europe?

The Italian GOP margin of 42.8% is 9.2 percentage points above Western Europe's 33.6% and ahead of Southern Europe's 41.2%. Germany saw its margin slip from roughly 35% to 33% as flat domestic revenue collided with minimum-wage increases, while France stayed essentially flat.

Southern Europe is the only sub-region holding a stable GOP margin above 40%. Year-to-date to July 2026, the region's GOPPAR growth of 8.0% ran at roughly double the rest of the continent, against TRevPAR growth of 6.4%. The widening gap reflects resilient leisure demand compounded by 2026's geopolitical rerouting of Middle East travel flows toward Southern Europe, according to Gallardo's analysis.

The wider picture across the four sub-regions:

• Eastern Europe posted the largest margin gain, up 1.4 points to 39.4%.
• Western Europe remains the weakest at 33.6%, up only 0.2 points.
• Northern Europe shows thin revenue growth alongside rising labour costs.

What is driving Italy's margin?

Three levers worked together at country level. TRevPAR reached €475, with ADR up 8%, occupancy up one point and F&B revenue up 6% year-on-year. Rooms margin hit 77.8%, against a European average near 72%, and F&B margin reached 21.8% — roughly 2 points above 2019 levels on a recovering continental trend.

At the top of the market, Milan's luxury segment holds the highest GOPPAR among Milan, London, Paris and Madrid, rising from roughly €300 to €400 (+33%) over the comparable period. Paris followed at similar growth pace, Madrid trailed both, and London was essentially flat to slightly down. Milan is riding the Jubilee wave, the build-up to the Winter Olympics, and concurrent Fashion Week and MICE demand.

What is happening inside F&B?

Gallardo framed Italy's strength as a below-the-top-line story: the hospitality industry has long tracked revenue more closely than the operational drivers that convert it into profit. Within F&B, the mix is shifting away from the restaurant:

• Cover charges, function-room rental, banqueting and conference revenue carry the growth.
• Traditional restaurant covers and in-room dining lag; in-room dining is down.
• Wellness and spa revenue rose mid- to high-single digits.
• Cancellation fees jumped 24% as operators tightened enforcement.

Italian F&B margin has now risen for three consecutive years. Europe as a whole remains around 2 percentage points below 2019, with margins up only half a point year-on-year.

Where is labour biting?

Payroll remains the single biggest drag. Italian labour cost per available room rose 4.1%, slightly above the European average of 3.9% but well below Italy's own TRevPAR growth of 9.1% — that gap is what protects the margin. Rooms payroll led at +5.5%, followed by A&G (+4.5%), rooms overhead (+4.2%) and F&B (+2.9%); sales and marketing payroll fell 0.3%.

Housekeeping offers a quieter signal. In-house cost per occupied room rose 1.5% and outsourced housekeeping 1%, both well below wage growth — partly because more properties have dropped daily stayover cleaning.

What is rising against operators elsewhere on the P&L?

Credit card commissions climbed 8.1% and franchise and affiliation fees 7.6%, both running close to TRevPAR. Loyalty programme growth reached 7.2%. Utilities fell 1.7% year-on-year, one of the few cost lines working in operators' favour across Europe.

What happens next?

The protective gap between Italian TRevPAR growth (9.1%) and labour inflation (4.1%) is unlikely to hold if TRevPAR decelerates into 2027. Northern and Western Europe now form the steepest watch list: revenue growth is thin, labour costs keep climbing, and Southern Europe's lead keeps widening.