European hotel investment soared to €21.9bn in 2024, the highest annual volume since 2019, marking a 47.6% year-on-year increase, according to the latest Savills European Hotels Report. The sector not only outperformed most commercial real estate asset classes but also exceeded its 10-year annual average, highlighting hotels as a standout performer in Europe’s post-pandemic real estate recovery.
Driving this resurgence were increased portfolio deals, strong appetite for operational assets, and a more accommodative debt market. Cross-border investors dominated the field, accounting for 58.6% of all transactions, totalling €12.9bn. Activity by US private equity firms, including Blackstone, KKR, Baupost Group, Starwood Capital and Oaktree, contributed €5.9bn alone. Currency dynamics, particularly a stronger US Dollar, also made European hotel assets more appealing to American buyers.
The UK stood out with an exceptional rebound, attracting €6.83bn (£5.73bn) in hotel investment, up 157% year-on-year and accounting for 31.1% of total European volumes. Portfolio deals made up 57.9% of this activity, with headline transactions including KKR and Baupost’s €1.03bn (£900m) acquisition of a 33-property Marriott portfolio from ADIA, and Blackstone’s €915.8m (£800m) purchase of the Village Hotels portfolio.
“Rising debt costs and inflation resilience have driven investors toward higher-yielding assets like hotels, tightening the yield gap with offices,” said James Bradley, Director, Savills Hotels. “Since 2019, European leased hotel yields softened by 118bps, less than the 129bps outward shift in office yields across the same markets, reflecting shifting market dynamics and strong hotel demand, especially for leased core assets in prime markets like London and Paris.”
In Germany, the hotel investment market saw signs of recovery, totalling €1.32bn in transactions, a 7% year-on-year increase and the first annual rise since 2022. Despite volumes still sitting 61% below the 10-year average, debt softening and yield stabilisation in cities like Berlin, Munich and Frankfurt hint at a turning point. Smaller markets such as Italy and the Netherlands also recorded triple-digit percentage growth in investment, while Ireland bounced back with €1.24bn in 2024, up from just €150m the year before.
“Lenders have demonstrated a strong appetite for the hotel sector over the past 12 months,” said Adi Gokal, Director, Savills Debt Advisory. “The sector’s strong trading dynamics, underpinned by healthy occupancy rates and RevPAR growth, have further reinforced lender confidence. Given these dynamics, we expect continued lender support for the sector, providing a favourable backdrop for hotel owners and investors seeking financing solutions in 2025.”
James Bradley – Director, Savills Hotels
Adi Gokal – Director, Savills Debt Advisory
Marie Hickey - Director, Commercial Research
Savills – Real estate advisor
KKR – Private equity investor
Baupost Group – Private investment firm
Blackstone – Global private equity firm
Starwood Capital – Investment firm
Oaktree – Global asset manager
ADIA – Abu Dhabi Investment Authority
Marriott – Hotel operator
Village Hotels – UK hotel brand
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