European hotel values fail to reach pre-pandemic levels in 2023

Elevated cost of debt in the first half of 2023 and the persisting macroeconomic challenges have resulted in a subdued market for hotel transactions

Hotel values across Europe remained steady in 2023 buoyed by the consolidation of the post-pandemic recovery and a steady desire to travel keeping average room rates strong, according to the annual European Hotel Valuation Index (HVI) published this week by global hotel consultancy HVS.

Key takeaways

• These influences combined to off-set the impact of a number of geopolitical challenges including the war in Ukraine, the war between Israel and Hamas and the shaky Chinese economy as well as increasing operating costs, and high interest rates;
• The result was a modest approximately 1% uplift in hotel values across Europe keeping them at around 97% of 2019 levels. This slowdown follows steady increases during 2021 and 2022 when the HVI reported value rises of 3.8% and 4.5% respectively;
• The year saw hotels in Paris, London, Zurich, Amsterdam and Rome remain the most highly valued across Europe with Geneva, Florence, Milan, Barcelona and Madrid completing the top 10.

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