Skip to main content

European Hotel Industry and Investment Survey 2024

With the post-pandemic boom easing off, the hotel industry is returning to more normal patterns of growth. According to our survey of top industry executives, their top priorities for the year ahead include managing cash flow and improving performance, while maintaining profitability and dealing with inflationary pressures. However, consumers have continued to favour spending on travel over other discretionary expenditures and demand for hotels remains healthy. Investors are hoping to capitalise on the current environment as the findings show that growth by acquisitions is expected to accelerate in 2025. 

Read on to find out more about hotel industry executives’ priorities and their expectations of the market’s performance in 2025.

Key business priorities for the year ahead

For most hotel industry executives, managing cashflow and improving performance are expected to be the top two priorities in 2025. Maintaining profitability and managing inflationary pressures remain key priorities but have dropped down the rankings from their top positions a year ago. Growth through acquisitions is gaining traction, and hiring and attracting more staff, despite dropping in the rankings, remains a key focus area for the year ahead.

Our findings point to a rise in strategic alliances, with 39% of executives expecting to partner with other organisations both in and outside the hospitality sector in 2025 compared to 19% a year ago. This reflects the need for hotels to pool resources, share expertise, and tap into new markets at a time of heightened uncertainty. By joining forces, hotels can enhance their offerings and streamline operations, making them more resilient in a competitive landscape.

 

Risks to the hotel industry

Rising costs, labour challenges and high interest rates remain the key immediate risks threatening growth in the hotel industry in 2025. Risks associated with political tension, cyberattacks and over-tourism have risen significantly this year. Executives expect growing risks for the hotel industry in the next one to three years to come from an inability to raise prices and Gen AI disruptions.

Meanwhile, non-compliance with the sustainability agenda and climate change disruptions are identified as high risks to the industry over the longer term.

 

Overview of key growth strategies

The hotel industry is embracing a multi-pronged approach to growth, driven by the need to improve resilience and efficiency and bring innovations to market. Some of the key strategies shaping the future of the sector include:

  • Sustainability and climate: 65% of respondents cite regulatory compliance as the main external driver of their organisation’s sustainability strategy. Other influences on strategy include socio-economic benefits, such as becoming a circular business or adopting technologies to report on sustainability across the entire value chain of the organisation, consumer demand, and stakeholder pressure. Over three in four respondents (84%) agree that collaboration and leadership commitment are the key enablers of their organisation’s sustainability strategy in 2025. However, measuring environmental impact and translating strategies into action remain a challenge. Many respondents (40%) disagree that transitioning to net zero will be a top priority for their organisation in the next 12 months.
  • Mergers and acquisitions (M&A): A surge in M&A activity is expected in the year ahead with one in two businesses (54%) saying they plan more acquisitions. The focus is on strategic partnerships or joint ventures (JVs) and acquisitions in high-growth markets and key destinations. While companies are actively managing their portfolios, transforming and reviewing assets, only one in three (33%) are expecting to make divestitures.
  • Technology: Most organisations are investing in digital transformation across their business to gain efficiencies and reduce costs, including investing in data analytics (75%), digital services and products (70%), and enabling the future of work capabilities (67%). Two-thirds of respondents report that their organisation is either exploring or not yet considering AI solutions. Only one in ten organisations are currently implementing AI solutions and one in five are at the piloting stage. Our findings indicate the size of the opportunity, but also the need for a better understanding of how to implement AI at scale.

The Dutch lodging industry has endured a challenging period in recent years due to the impact of COVID-19. We have seen the market recovering since 2023, with the expectation that the sector will continue to grow in the upcoming years. The Netherlands remains attractive both as a tourist destination and for business travellers. Over the past year, this has led to growing interest from various parties in both the development and acquisition of hotels in the Netherlands. As an example, Leonardo Hotels acquired the entire portfolio of Zien Group in the summer of 2024, adding 1,522 hotel rooms to its portfolio. This transaction reflects the growing demand for investment opportunities that we have observed in recent years.

However, the Dutch hotel investment market also faces challenges. According to the European Hotel Industry and Investment Survey 2024, a more negative investment sentiment is expected in the Netherlands for 2025, compared to 2024. Whilst respondents indicate that the United Kingdom and Ireland show signs of improvement, they expect Western European countries such as Germany, France and the Netherlands to face a downturn. In 2022, Amsterdam was still considered the most attractive investment city in Europe, but this position has changed since last year. In 2023, Amsterdam dropped from first to third position, whilst London became the most attractive city for hotel investments. London is expected to remain the most attractive European city for hotel investment in 2025, according to respondents, whilst Amsterdam dropped from third to fourth position.

Policy in the Netherlands

The Dutch lodging industry has experienced remarkable growth in recent years, particularly in Amsterdam. This trend looks set to continue in the coming years, driven by an increase in tourism. However, this growth has caused effects on the liveability and infrastructure in popular Dutch cities, leading to several policy interventions.

The municipality of Amsterdam has implemented several measures in recent years to limit mass tourism and to find a balance between tourism and well-being of local residents. One such measure was the hotel stop introduced in 2017, significantly limiting the development of new hotels in the capital city. Since 2024, developing or expanding a hotel is only possible under the "new-for-old" arrangement. This means that a new hotel can only be realized if an old hotel closes. In such a case, the accommodation capacity cannot increase, the new hotel must be of high quality, and it should be an asset to the neighbourhood. We have seen that other municipalities, such as Haarlem, The Hague, Utrecht, and Maastricht, have also taken measures to limit new hotel developments. In addition, Amsterdam further raised its tourist tax. Since 2024, the rate has increased from 7% to 12.5% on the overnight rate, on top of a fixed rate of €3 per night. According to the Koninklijke Horeca Nederland (KHN), Amsterdam has the second highest tourist tax rate in the world. 

On a national level, policy changes are also being implemented that impact the sector. The outline agreement of the Dutch coalition has proposed to increase the VAT rate on short-stay accommodation from 9% to 21% by 2026. This increase puts pressure on hotels, holiday homes, Bed & Breakfasts and other accommodation providers, and may affect the price competitiveness of the Netherlands as a tourist destination.

These measures have an impact on the investment climate within the Dutch lodging sector. Although they have been introduced to promote responsible tourism and ensure viability, they may also bring challenges.

Retrospective and Vision 2025

Respondents of the European Hotel Industry and Investment Survey 2024 predict that political tensions, hotel supply and over-tourism will pose greater risks threatening the growth in the hotel industry in 2025. Despite these challenges, the Dutch lodging sector remains attractive, with a clear recovery movement since the second half of 2023. According to various sources, transaction volumes in the Netherlands are expected to increase in the coming years. A recent public transaction within the Dutch hotel sector is the portfolio expansion of French private equity group Extendam. Earlier this year, they strengthened their presence with the purchase of their fourth hotel in the Netherlands, the Mercure Den Haag Central. In addition, Ramphastos Investments, through a consortium with other parties, acquired Hotels van Oranje in Noordwijk in summer 2024. This consortium will pursue the redevelopment of the hotel in the coming period. These two examples highlight the growing interest of private equity parties in the Dutch lodging sector. According to respondents to the European Hotel Industry and Investment Survey 2024, private equity is expected to remain the largest group of equity financing for European hotel acquisitions in 2025.

Conclusion

Despite the challenges, investment in the Dutch lodging sector remains attractive, due to the ongoing demand for accommodation. This demand is driven by domestic and foreign tourism, including both business and leisure travellers. This demand is not only prevalent in Amsterdam, but also in other cities and regions across the Netherlands. Respondents of the European Hotel Industry and Investment Survey 2024 emphasise the importance of sustainability, digital transformation and AI adoption. By strategically responding to these trends, investors can optimally benefit from the growing Dutch lodging sector.

European outlook and investment cycle 

With the exception of the UK and Ireland, where the investment cycle seems on the upturn, sentiment towards key western European countries is more negative, with Germany, France and the Netherlands experiencing a downturn, according to our survey respondents.Investment trends across southern Europe appear mostly positive this year, with Spain and Portugal remaining on the up and Italy turning more positive. Greece, however, is showing signs of entering a trough.

Top 10 European cities for investment

London remains the most attractive European city for hotel investment in 2025. Paris and Madrid have moved up two places to secure the second and third positions respectively, while Amsterdam has dropped to fourth position. Other cities attracting investment this year include Berlin, Copenhagen and Prague. Porto is a new entry in the 2025 rankings, in 12th position.

 

European investment opportunities

In Europe, hotels remain the most attractive asset class for investment in 2025 followed by branded residences. The attractiveness of hostels as an investment asset has increased by six percentage points compared to last year.

 

Financing the European hotel market

Private equity remains the main source of equity finance for European hotel acquisitions, with 36% of respondents expecting it to be the largest source of equity capital in 2025. Real estate funds and REITs are also expected to play a role, cited by 15% of respondents as the likely primary source of equity. However, financing from both sovereign wealth funds and hotel funds are expected to lose momentum in the coming year, reflecting a potential shift in investment strategies.

Traditional debt financing is regaining prominence in the European hotel market, with 54% of respondents expecting it to be the most common source of financing in 2025. Senior bank loans are also expected to gain traction, with 37% of respondents predicting their widespread use. Alternative lenders, which previously held the top spot, have lost momentum, now expected to be the primary source of debt finance by just 43% of respondents, compared to 55% in the previous year.

More than half our respondents (59%) expect finance for hotel investment to be sourced from Europe, closely followed by North America (41%) and the Middle East and North Africa (36%). The UK's contribution to European hotel investment is on the rise, with 30% of executives anticipating the UK to be a major source of funding, reflecting a recovery in economic activity. Only 4% of respondents see China as a major source of investment, and a mere 3% expect significant capital flows from India. This suggests a shift in investment patterns, with traditional western sources of investment continuing to dominate the European hotel landscape.

 

Methodology


These are the key findings from the 2024 European Hotel Industry and Investment survey, Deloitte’s annual survey of executives in the hospitality industry, for their views on the industry’s performance in the year ahead. The survey took place between 7 August and 17 September 2024 and was conducted online with nearly 100 executives including owners, operators, lenders, developers and investors.

Did you find this useful?

Thanks for your feedback