The European hotel industry comprises businesses that provide short-term accommodation to business and leisure travellers. In this research, we focused on players with multiple establishments, segmenting the market into (i) hotel chains, (ii) hotel groups, (iii) hotel management services and (iv) serviced apartments.

Following the lows of COVID-19, the European hotel industry experienced a strong rebound with average daily rates (“ADR”) and revenue per available room (“RevPAR”) surpassing pre-pandemic levels. The pace of recovery can be attributed to the release of pent-up travel demand, the pass-through effect of inflation and limited supply growth.

The European hotel landscape is moderately consolidated, as hotel chains represent >40% of the total room supply in the market, while the five largest hotel groups control ~50% of the new hotel development pipeline, consolidation will naturally increase.

Sponsor-led interest has been limited with ~30% of identified assets backed by financial sponsors (May 2023). The serviced apartments segment has the highest proportion of external capital. Investors bet on the underlying demand growth from “bleisure” and experiential travel, as well as strong fundamentals enabled by longer stays and lower level of service required. 

ESG topics in the hotel industry primarily relate to environmental and social issues. Hotels surpass most commercial real estate in terms of CO2 emitted per square metre with executives focusing on energy efficiency, carbon emissions, water conservation and waste reduction. On the social side, improving wages, training and working conditions for lower-wage employees are the most important considerations.