Europe Hotel Deals Surge to €27B as US Construction Falls

European hotel real estate experienced an investment resurgence in 2025, with transaction volumes climbing between 23% and 30% to reach €22.6 billion or €27 billion depending on the reporting metric [[1], [2]]. Meanwhile, the United States hospitality market recorded a development pullback, with hotel construction contracting for 15 consecutive months amid elevated building costs and disciplined supply growth [1].

How do European transaction volumes compare to US development activity?

European markets are capturing substantial acquisition capital while the United States market faces a persistent development slowdown [[1], [2]]. As reported by HospitalityNet, the Market Beat Europe report showed total hotel investment volume rising 23% to €27 billion in 2025, representing the highest level since pre-pandemic highs [1]. In a separate report cited by HospitalityNet, European hotel transactions jumped 30% from 2024 to hit €22.6 billion [2].

Across the Atlantic, US operators are navigating constrained new supply [1]. CoStar data indicates that US hotel construction has fallen for 15 consecutive months, with 136,990 rooms currently under construction [1]. This marks the longest development pullback in the United States since the post-2008 downturn, keeping nationwide supply growth at 1.4% [1].

Which European countries are leading transaction growth?

The United Kingdom and Germany generated a major portion of European deal flow [2]. According to HospitalityNet reporting on regional transaction data, the UK led Europe by capturing 25% of total transaction volume [2]. Gateway locations such as London retained buyer appeal despite post-Brexit complications and regulatory hurdles [2].

Germany registered €2.5 billion in transactions during 2025, doubling its 2024 total [2]. This expansion reflected released pent-up demand as interest rate cuts improved financing access and sellers adjusted pricing expectations [2].

Where does underlying European operating performance stand?

Operational recovery across Europe trails the pace of dealmaking [1]. Market Beat Europe figures show that while European hotel investment reached €27 billion, RevPAR increased just 2% across 2025 [1]. Occupancy across the continent remained 1.5 percentage points below 2019 levels [1].

This performance spread creates underwriting risks for buyers who modeled aggressive yield profiles [1]. While interest rate reductions and cross-border platform acquisitions fueled the initial transaction wave, long-term returns will rely on bridging the gap between actual operating cash flows and acquisition pricing [[1], [2]].

How are brand chains adapting expansion models in each region?

Hotel chains are deploying conversion models in Europe to scale portfolios without financing ground-up construction [2]. Marriott signed 11 hotel deals across Italy and the UK to launch its Series by Marriott brand [2]. The conversion brand targets independent midscale properties seeking global reservation distribution and loyalty access without full-service operational overhead [2].

In the US, ground-up development remains muted outside of top-tier properties [1]. Luxury is the only US segment achieving percentage growth in construction, rising 4.5%, while midscale and lower tiers sit flat or contract [1]. Conversely, chains are building midscale properties aggressively in Asia Pacific, where Marriott opened its 100th Fairfield property in Greater China [1].

What operational levers are managers using to offset costs?

Hotels face rising labor and fixed property expenses across both markets, forcing operators to explore nontraditional revenue sources [[1], [2]]. Analysis highlighted by HospitalityNet shows that hotels regularly sit empty for four to six hours daily between checkout and check-in windows while bearing full operational and energy costs [1]. Selling daytime bookings for workspace or short-stay leisure produces 30% to 40% higher ancillary spend than standard overnight stays, as guests utilize food and beverage amenities while awake on-property [1].

Workforce dynamics are also altering operating structures [2]. Analysis indicates structural labor shortages are turning human touchpoints into a premium offering, where budget tiers automate fully and luxury properties leverage staffing levels to defend room rates [2]. To improve digital efficiency, properties are investing an average of $320,000 in artificial intelligence tools in 2026 [1].