Discover the latest investment sentiment, market dynamics, and trends shaping real estate and hospitality investments
Cushman & Wakefield’s fifth Hotel Investor Compass survey gathers insights from major investors active across Europe, who have collectively deployed nearly €18 billion in European hotels between 2020 and 2025.
The 2026 edition identifies Southern markets as top targets for investors. Healthy performance, balanced visitor mix, strong growth potential and high liquidity are set to place Italy, the Iberian Peninsula and France as Europe’s most in-demand hotel investment destinations this year.
The report also reveals that key European gateway cities are on investors’ radar, with Milan, Madrid, Rome, London, and Paris identified as the most attractive markets in 2026.
The survey highlights robust investor sentiment, with 86% of respondents planning to allocate the same or more capital to the sector than they did last year. A total of 54% of investors intend to be net buyers in 2026, while only 7% expect to be net sellers, up from 5% last year. Interestingly, the strongest intention to increase hotel investment is seen among Value Add (63%) and Opportunistic investors (64%).
Investors’ return-on-equity requirements have increased to an average of 15.6%, potentially reflecting heightened underwriting discipline notwithstanding compressed lending rates.
Hotels with strong ESG credentials continue to attract a “green premium”, with investors expecting to pay an average of 4.3% more for assets achieving toptier certifications such as BREEAM Outstanding or LEED Platinum.
Concerns around financing and yields have eased compared with previous years as debt markets improve. The top challenge identified by investors remains rising construction costs, while investors are also increasingly concerned about hotel performance uncertainty. Geopolitical and macroeconomic risks ranked as the second most significant challenge among investors. The recent escalation in the Middle East is likely to further amplify these risks on the investment agenda.
The report also found that AI is poised to have a major impact on the industry. A total of 81% of investors believe AI will significantly shape the sector by 2030, with 86% expecting a positive impact on Limited-Service hotels, closely followed by Full-Service properties (85%).
For more details, please contact Borivoj Vokrinek.
