According to Savills inaugural European hotel investor survey*, with institutions who collectively have over €1.0 trillion of assets under management (AuM), the majority of respondents (73%) are committed to net buying positions for hotels in 2026 and beyond.
This strategy is underpinned by the sector’s stable operational performance, improving demand fundamentals and the expectation of measured but reliable returns.
Luxury/Upper Upscale (60%) and resorts / leisure focused properties (53%) are the most in-demand. Value-add remains the dominant investment approach, with opportunistic capital targeting specific assets rather than broad geographies. Execution capability, rather than strategy alone, is increasingly seen as the key differentiator.
Return expectations have remained remarkably consistent over the past 12 months. Most investors target annual returns of 6–8% during the hold period, viewing steady income as a core component of their approach, while realising value at exit with an Internal Rate of Return (IRR) above 15%.
In terms of geography, Southern Europe, and in particular Spain, Italy and Portugal, stand out as the most favoured destinations, supported by multiple demand drivers, favourable seasonality and limited new supply pipelines.
Thomas Emanuel, Head of Hospitality Thought Leadership EMEA at Savills, says: “Across the survey base, investors consistently highlighted disciplined deployment and long-term positioning. A minority are planning to be net sellers, reflecting a majority belief that holding through the cycle will yield more attractive exit pricing. Operational expectations are similarly stable: most foresee modest growth in revenues and profits, with performance increasingly reliant on rigorous cost control, targeted capex and resilient leisure demand.”
David Kellett, Head of Hotel Capital Markets EMEA at Savills, adds: “Taken together, these factors shape a clear set of investment themes for 2026. Quality will remain paramount, both in terms of the underlying real estate and the strength of the operating platform, while investors will increasingly look to be selective and, often, contrarian in their market and asset selection. Running yield is likely to take precedence over medium-term capital appreciation in driving IRRs in a late-cycle environment.”
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*the survey ran between 20 November 2025 and 19 December 2025 and drew responses from 40 leading hotel sector investors across Europe
Read the full Hotel Sector Outlook: https://www.savills.co.uk/research_articles/229130/386301-0