Hotel Valuations Stall Across Europe, Impacted by War, Instability and US Leadership

Key Takeaways

• Valuations rose 0.2% continent‑wide in 2025
• Copenhagen led with 5.9% valuation increase
• Istanbul fell 7.6% amid inflation, instability
• Eastern Europe outperformed Western Europe
• Travel demand grew 2.4% despite geopolitical risks

Summary

Hotel consultancy HVS reported that Europe’s hotel valuation index barely rose, expanding just 0.2% in 2025 despite robust travel demand. The continent logged three billion overnight stays, a 2.4% increase, driven largely by leisure tourists. Growth was uneven: Copenhagen posted the strongest 5.9% gain, while Istanbul saw the steepest decline at –7.6% amid inflation and political turmoil. HVS warns that the ongoing US‑Israeli‑Iran conflict could reverse rate cuts and pressure financing for hotel deals.

Pulse Analysis

Europe’s hotel market showed surprising inertia in 2025, with HVS’s European Hotel Valuation Index edging up only 0.2 percent. The modest gain masks a sector buoyed by strong leisure demand—three billion overnight stays, half from abroad—yet constrained by macro‑headwinds such as the US‑Israeli‑Iran conflict, higher oil prices, and lingering inflation. Investors are watching how these external shocks could erode the rate cuts that helped stabilize revenues, making financing and refinancing decisions more cautious.

City‑level data reveal a clear north‑south divide. Copenhagen topped the chart with a 5.9 percent valuation rise, benefitting from limited new supply and improved airport connectivity. Athens, Bucharest, Madrid and Zurich also posted solid gains, reflecting favorable investor climates and currency dynamics. Conversely, markets like Istanbul, Amsterdam, Frankfurt, London and Manchester suffered declines ranging from 3.4 to 7.6 percent, driven by tax hikes, wage pressures, and currency depreciation. The Nordic region emerged as a growth engine, while Western Europe lagged and Eastern Europe gained modest ground.

Looking ahead to 2026, HVS anticipates that reduced AI disruption and Europe’s enduring tourism appeal could support hotel values, provided the geopolitical situation stabilizes. However, prolonged conflict in the Middle East could trigger oil price spikes, reigniting inflation and prompting central banks to reverse rate cuts. Such a scenario would tighten capital markets, increase debt costs, and potentially dampen acquisition activity. Stakeholders must therefore balance the region’s strong demand fundamentals against the volatility of external political and economic forces.