Full recovery achieved in 2024; strong positive growth the base case for the medium term, with both downside and upside risks.
European hotel investment remains resilient, with Q1 2025 totals reaching close to €5 bn, surpassing the ten-year average.
The ‘Big Five’ markets – Italy, Spain, Germany, France, and the UK – continue to drive growth, accounting for 66% of total night stays. Meanwhile, smaller destinations are gaining momentum.
With a shortage of new supply and global travel trends shifting in Europe's favour, investor interest remains strong.
Key trends
- 2024 was the year when travel returned fully to its 2019 levels across all segments, including international business travel. Looking forward, RevPAR is finally projected to index higher than ADR (relative to 2019) due to the greater return of occupancy in 2025 – almost to pre-pandemic levels
- For 2025, forecast demand is up across all categories, with the highest growth projected on the inbound / international side
- Business travel is gaining momentum, with growth expected to narrow the gap with leisure travel in 2025, reaching more comparable levels
- The base case for the medium- to long-term remains strongly positive, with solid projected annual growth for the next five years in both domestic travel spend (4.4%) and international arrivals (5.0%)
- Downside risks relate to local and global business and consumer confidence being affected by recent disruptions to international trade relations and geopolitical balance
- On the other hand, (i) European investment in defence may kick-start a period of growth that feeds through to consumer confidence, (ii) Europe stands potentially to benefit from a diversion of global travel from other markets, and (iii) a resolution of the conflict in Ukraine, if perceived to be sustainable, may boost regional confidence yet further
- Chinese travel is still recovering, though a full recovery to 2019 seems delayed until 2026, rather than 2025 as previously anticipated
For a comprehensive analysis of the latest European hospitality trends, read our European Hotels Figures.
