European Hotel Transactions Were Improving. That's in Jeopardy

Europe's upscale and luxury hotel market demonstrated significant investment activity and resilience in 2024, but the sector now faces a complex and rapidly evolving economic landscape. 

While 2024 saw strong growth, buoyed by post-pandemic recovery, the market is currently being tested by new pressures, most notably the implementation of new tariffs and increased stock market volatility. 

A recent report by Global Asset Solutions, independent advisors with a current portfolio of over $20 billion of assets managed in Europe, Asia and the Middle East, highlighted the sector's strong 2024 performance.

Total transaction volume in the upscale and luxury segment of the European hotel market reached €10.95 billion ($12 billion) across 137 deals. The average deal size stood at €79.9 million ($87.5 million), with the average price per key exceeding €465,000 ($509,000).

"It took a few years...to actually recover. And in 2024 we have already seen the metrics and the performance of hotels picking up and achieving pre-pandemic levels,” Juan Manuel Gea, corporate business manager at Global Asset Solutions, told Hospitality career profile.

"Also, during 2024, inflation started to slow down. So, we saw a decrease in the interest rates. This allowed investors to be more interested in employment, money, and investment. We saw this trend picking up in Q4 of 2024, which was the most active quarter in the year, and in January of 2025, it was quite impressive."

Major transactions included the Park Hyatt Zurich acquisition and the sale of the Pullman Paris Tour Eiffel.

Shifting Sentiment Amidst Uncertainty?

The European hotel market is now navigating a landscape marked by new tariffs and stock market volatility.

"The European hotel transaction market will be in the same period of uncertainty as the rest of the world,” said Alan Woinski, editor of Daily Lodging Report.

“The uncertainty and fear around recessions and reduced travel will have an offset in lower interest rates and, most likely, lower valuations. A lower transaction valuation will be weighed against the higher cost of development due to the tariffs."

Gea also emphasized the potential impact of tariffs on hotel markets: "It will be mostly upscale and luxury because the American traveler tends to be a high-spending traveler, and mostly in Europe."

"Countries that rely more on American visitors are also affected. And investors are not going to be so interested in this."

Key concerns for the sector include:

• Economic Slowdown: Fears of recession and reduced travel demand cast a shadow. "The hospitality industry relies a lot on travel behavior and spending behavior...it's not a primary need," said Gea.
• Tariffs: Tariffs can inflate development costs and disrupt travel, impacting segments relying on international travelers.
• Valuation Fluctuations: The market faces potential downward pressure on asset valuations.

"I think initially, the strategies are going to be more related to operational discussions. Current transactions that are being discussed at the moment will be on hold," said Gea.