Southern Europe and luxury properties attract most hotel investors

A new survey by Savills reveals that most major European hotel investors (73%) plan to buy more hotels than they sell in 2026 and beyond. 

Thomas Emanuel

This confidence stems from the hotel sector's strong performance, increasing demand, and reliable returns.
Investors are particularly interested in luxury/upper upscale hotels (60%) and resort properties (53%). They favor a "value-add" investment approach, with opportunistic capital focusing on specific assets rather than broad regions, with the ability to execute these strategies seen as crucial.
Return expectations have been stable, with most investors aiming for 6-8% annual returns during ownership and an Internal Rate of Return (IRR) above 15% upon sale. 
Southern Europe, especially Spain, Italy, and Portugal, are the most attractive locations due to strong demand, good seasonal appeal, and limited new hotel construction.
Savills European hotel investor survey polled 40 leading hotel sector investment operators across Europe who collectively have over €1.0 trillion of assets under management (AuM).
Thomas Emanuel, head of Hospitality Thought Leadership EMEA at Savills, said: “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, added: “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.”