London, Europe's top hotel investment market – CBRE

London is Europe’s top hotel investment market, scoring 25% higher than any other city, driven by its immense size, robust demand, and high liquidity. 

Hotel - CBRE

Paris followed closely, benefiting from strong visitor volumes and impressive revenue per available room (RevPAR). 
The figures come from CBRE’s first European Hotels Destination Index, a comprehensive data-driven analysis of 66 European hotel investment markets. The index evaluates destinations based on structural market pillars, macroeconomic fundamentals, and qualitative appeal.
Southern Europe accounts for nearly half of the top 30 destinations, with Spain, Portugal, and Italy leading the way. Cities like Madrid, Barcelona, Lisbon, and Mallorca significantly surpass the continental average in visitor volumes (20-30% higher). Rome, Milan, Venice, and Florence demonstrate strong demand and pricing power despite moderate liquidity. Notably, Mallorca even outranked Paris in terms of market size, while other leisure islands like Tenerife and Gran Canaria also scored high due to sustained rate growth and limited new supply.
Smaller lifestyle cities such as Florence, Venice, and Athens consistently outperformed expectations for their size, combining high visitor density, premium RevPAR, and constrained development pipelines, making them highly appealing to investors. The index revealed that inbound arrivals and total overnight stays account for 70-80% of a destination's performance.
While macroeconomic factors may not directly correlate with investment liquidity, they are crucial for shaping a city's hotel demand and operational resilience, influencing local economic health, spending power, labour market dynamics, and travel affordability.
London leads in economic factors due to its population scale and favourable tourism-weighted exchange rates.
Athens, Naples, and Tenerife show high Hospitality Workforce Elasticity, indicating their ability to integrate labour into the tourism sector.
Dublin, Oslo, Copenhagen, and Amsterdam perform strongly on GDP per capita, compensating for smaller populations with high spending power.
Spanish leisure destinations like Malaga, Gran Canaria, and Mallorca achieve high scores through strong tourism-weighted exchange rate positioning and high workforce flexibility.
Major continental capitals such as Berlin, Vienna, Stockholm, and Paris maintain balanced positions with solid economic fundamentals, despite relatively lower workforce elasticity.
Overall, the index reveals a divide where wealthier northern cities benefit from GDP and exchange rates, while southern, leisure-driven markets gain from workforce flexibility and tourism dependence. The overall outlook for the European hotel sector remains strong, supported by sustained tourism, returning business travel, and disciplined new supply growth.