Savills has forecast a rise in creative deal making across Europe's hotel investment market, the London-headquartered real estate advisor announced this week.

The firm expects hotel owners, operators and investors to lean further on non-standard transaction structures through the coming investment cycle. Creative deal making, as defined by the firm, covers joint ventures, sale-and-leaseback arrangements, operating partnerships, forward funding and preferred-equity layers. The shift follows several years in which rising debt costs, tighter lending criteria and equity-market volatility have limited buyers' ability to complete conventional freehold acquisitions.

What is driving the shift?

Standard hotel acquisitions require both senior debt and equity at scale. With European financing markets still recalibrating after several years of volatility, fewer buyers can assemble that capital efficiently at conventional loan-to-value ratios. Structured deals lower the equity barrier for purchasers while letting vendors extract value without surrendering operational control.

The shift matters for hospitality businesses at every scale across the continent. Owners of stabilised portfolios gain a liquidity path without a full exit. Operators secure capital partners willing to back expansion in return for management contracts. Investors enter a sector where full freehold purchases have become harder to underwrite.

How will this affect European operators?

Operators can expect more joint-venture pitches from private equity sponsors, family offices and institutional investors seeking structured hospitality exposure. Brand owners will need to accommodate capital sources that arrive through structured rather than direct acquisitions, with implications for governance, exit timing and management-agreement terms.

Management agreements negotiated alongside structured transactions typically carry sharper performance hurdles, stricter brand-standard enforcement and more aggressive cure-and-terminate provisions. Operators should expect closer scrutiny of GOP margins, labour cost ratios, energy exposure and revenue management discipline from financial backers with quarterly reporting cycles.

Which deal structures are likely to dominate?

Sale-and-leaseback remains the most active template, particularly for owners of mature, stabilised portfolios who want liquidity without losing the operating platform. Joint ventures suit assets requiring repositioning, where operating expertise is the scarce input rather than capital. Forward funding agreements allow developers to secure pre-let investor capital before breaking ground, a useful tool where construction finance is constrained. Preferred-equity and mezzanine layers give investors yield uplift without the governance demands of common equity, and work well for sponsors pursuing value-add strategies.

What happens next?

Savills expects creative deal structures to take a larger share of completed European hotel transactions through 2025. The pace of that shift will track ECB rate decisions, regional bank appetite for hospitality lending, and the speed at which distressed portfolios clear in southern European markets.

The firm is set to publish further European hotel investment market commentary through the first half of 2025, with its full transaction outlook likely to precede the autumn trading window. Operators and investors should track Q1 transaction volumes and pipeline disclosures for confirmation of the trend.