The HVS report on 2025 European hotel transactions captures a decisive turning point for the sector: capital has returned to hospitality, but not indiscriminately.

In 2025, European hotel transaction volume reached €22.6 billion, up 30% on 2024. This was the highest level since 2019 and one of the strongest results ever recorded in Europe.

Yet the most relevant figure is not merely the overall volume. It is the composition of the market.

Single-asset transactions reached €15.6 billion, accounting for almost 70% of total volume, while portfolio transactions remained broadly stable at around €7 billion.

This means that the recovery was not driven solely by a handful of large extraordinary deals. Liquidity has returned to individual hotel assets.

For anyone involved in hotel investment, hotel valuation, asset management, hotel leases, management agreements and value-add strategies, this is the central point: capital is not simply buying “hospitality” as a broad theme. It is once again selecting, underwriting and pricing individual hotel assets.

2025 is not the year of recovery. It is the year of selection

The simplest reading of the HVS report would be this: the European hotel market has recovered.

The more accurate reading is more interesting: the European hotel market has recovered, but not for everyone.

Investors are buying hotels, but they are not buying every hotel. They are looking for assets with a clear economic rationale, resilient demand, defensible positioning, a transparent contractual structure and a credible ability to generate income.

Hotels are no longer being valued as mere real estate. They are being valued as operating platforms capable of converting travel demand into cash flow.

That is the real shift.

A hotel is not valuable simply because it sits in a good location. It is valuable because that location can generate ADR, occupancy, RevPAR, margins, sustainable rent, debt capacity and exit value.

Location remains essential, but it is no longer enough.

The real question is: how much income can that hotel generate, at what level of risk, and with how much capital required to make it competitive?

From hotel real estate to operating asset

In traditional real estate, yield is often assessed through rent, lease duration, tenant quality and vacancy risk.

In hospitality, that approach is insufficient.

A hotel is an operating asset. Its value depends on a wide range of variables:

  • room revenue;

  • ADR;

  • occupancy;

  • RevPAR;

  • ancillary revenue;

  • labour costs;

  • GOP;

  • EBITDA;

  • capex;

  • brand;

  • operating structure;

  • seasonality risk;

  • reputation;

  • management quality;

  • repositioning potential;

  • exit liquidity.

This is why hotel valuation requires a hybrid skill set: real estate, operations, finance and contracts.

The HVS report matters because it shows that European capital is returning to hospitality. But the real interpretation goes beyond transaction volume: the market is rewarding hotels that can demonstrate profitability, transformability and liquidity.

These are also central themes in the hotel guides published on RobertoNecci.it, in the technical insights of InvestHotel.it, and in the market analysis published on InvestimentiAlberghieri.it.

Hotel yields: the key to understanding the new cycle

For investors, the most important question is not only how much capital has entered the market. It is at what yield that capital is willing to buy.

The 2025 European hotel market reveals a clear trend: investors are accepting tighter yields for prime assets, while demanding higher risk premiums for secondary hotels, repositioning opportunities, less liquid markets and capex-heavy transactions.

In other words, the yield gap is widening.

The best hotels are becoming more expensive. Problematic hotels must offer higher returns, stronger upside, or both.

Indicative benchmarks for hotel yields in Italy

The following table provides an indicative reading of the Italian market and helps frame different hotel investment categories.

These ranges are not official valuations, nor should they be applied automatically to individual transactions. They should be considered directional benchmarks, to be tested case by case according to location, contract structure, brand, capex, asset condition, management quality, cost of capital and exit liquidity.

Hotel asset category Indicative expected yield Risk interpretation
Trophy luxury in Rome, Venice, Milan, Lake Como, Costa Smeralda, Capri 3.75% - 4.75% Scarcity, capital preservation, strong exit liquidity
Core assets in primary cities 4.75% - 6.00% Stable income, deep demand, moderate risk
Core-plus / light value-add 6.00% - 7.50% Operational upside, controlled capex, improved positioning
Seasonal resort / strong secondary market 7.00% - 9.00% Premium for seasonality, operational complexity and lower liquidity
Opportunistic / turnaround 9.00%+ High risk, value creation required, bankability to be proven

This framework clarifies an often-overlooked point: there is no single hotel yield.

A trophy hotel in Rome or Venice cannot be valued at the same yield as a seasonal hotel in a secondary destination. A branded, stabilised hotel with a solid operating structure cannot be compared with an undercapitalised family-run property with limited reporting and significant refurbishment needs.

Yield is the price of risk. And in hospitality, risk is never purely real estate risk.

In Italy in particular, yield does not simply reward risk. It rewards the ability to resolve operational, contractual, ownership and commercial inefficiencies that have already been largely priced out in other European markets.

Apparent yield can be misleading

Many hotel investment mistakes begin with a misreading of yield.

A hotel may appear attractive because it offers a high yield, but that yield may be purely apparent if:

  • revenues are not stabilised;

  • GOP is weak;

  • labour is either under-resourced or inefficiently structured;

  • capex has been deferred;

  • rent is unsustainable;

  • the contract does not protect the investor;

  • demand depends on too few segments;

  • the destination is illiquid;

  • the hotel is not financeable.

Conversely, a hotel with a lower initial yield can be an excellent investment if it is located in a primary destination, has margin improvement potential, allows for repositioning, can attract an international brand and retains strong exit liquidity.

Initial yield is not enough. What matters is the risk-adjusted yield.

In hospitality, investors must always distinguish between:

  • current yield;

  • normalised yield;

  • stabilised post-intervention yield;

  • effective equity return.

That distinction separates professional underwriting from superficial valuation.

The four forms of hotel return

To assess a hotel investment correctly, four levels of return must be distinguished.

The first is the real estate yield. This is the relationship between rent and property value. It is typical of leased hotels or lease-based structures. In this case, the investor focuses on rent sustainability, lease duration, tenant strength and guarantees.

The second is the operating return. This depends on the hotel’s ability to generate income through rooms, F&B, meetings, spa, ancillary services and cost control. Here the issue is not only real estate, but operations.

The third is the transformation return. This is the value created through refurbishment, rebranding, category upgrade, concept revision, new operator selection, ADR growth and margin improvement.

The fourth is the overall equity return. This depends on acquisition price, debt leverage, cost of debt, capex, stabilisation period and exit value.

A serious hotel investment must bring all four levels together.

Those who look only at the bricks risk overpaying. Those who look only at the income statement risk underestimating the real estate component. Those who focus only on potential risk forgetting timing, works, debt and execution risk.

Europe: mature markets, tighter yields

The HVS report confirms that the United Kingdom, France and Spain remain among the most liquid hotel investment markets in Europe.

London and Paris continue to attract capital because they offer market depth, international demand, liquidity, comparables and exit visibility. In these markets, investors accept tighter yields because they are buying safety and transparency.

Spain remains highly attractive thanks to a more industrialised hotel market, with structured operators, resort platforms, strong domestic hotel groups and consolidated leisure destinations. Madrid, Barcelona, the Balearic Islands, the Canary Islands and the Costa del Sol are highly readable markets for investors.

Germany, after a more difficult phase, is showing signs of recovery, particularly in cities with solid fundamentals and assets with repositioning potential.

In these markets, competition for prime product is high. As a result, yields compress where perceived risk is low.

Italy: more complexity, more room for value creation

Italy is different.

It is one of the strongest tourism countries in the world, yet its hotel market has historically been more fragmented than the UK, France or Spain.

Many Italian hotels remain family-owned. Many operations are not fully professionalised. Financial reporting is not always transparent. Capex is often deferred. Contracts are not always structured to institutional standards. The distinction between property ownership and hotel operations is sometimes blurred.

All of this makes the Italian market more complex.

But that very complexity creates opportunity.

A fully efficient market leaves less room for value creation. A fragmented market, by contrast, allows skilled investors and specialist operators to generate returns through:

  • refurbishment;

  • rebranding;

  • revenue management improvement;

  • revision of the operating model;

  • brand affiliation;

  • cost optimisation;

  • new commercial strategy;

  • contractual restructuring;

  • asset aggregation;

  • sale to institutional investors after stabilisation.

Italy is not simply a market to acquire. It is a market where value must be actively created.

Why Italy can offer superior risk-adjusted returns

Compared with more mature European markets, Italy can offer superior risk-adjusted returns for at least five reasons.

The first is ownership fragmentation. Where the market is less institutionalised, inefficiencies exist. And where inefficiencies exist, value can be created.

The second is the quality of tourism demand. Rome, Venice, Milan, Florence, Naples, the Amalfi Coast, Capri, Lake Como, Sardinia, Sicily, Puglia and thermal or resort destinations all benefit from deep international demand that is often not fully monetised.

The third is ADR potential. Many Italian hotels occupy excellent locations but charge below their true potential because they lack brand affiliation, product quality, design, distribution, revenue management or positioning.

The fourth is deferred investment. Many properties require capex, but capex can become a value-creation lever when embedded in a sound business plan.

The fifth is scarcity of institutional product. Well-located hotels of adequate size, with transparent operations and income potential, remain scarce relative to investor demand. Scarcity supports value.

The result is that Italy offers an attractive combination: higher complexity than core European markets, but also greater upside potential for investors able to underwrite and execute properly.

Italy vs Europe: a comparative view

The difference between Italy and core Europe can be summarised as follows.

Theme Core Europe Italy
Liquidity High in primary markets Growing, but selective
Transparency Greater availability of benchmarks Data often fragmented
Institutional product More widely available Scarce and highly sought after
Ownership More financialised Still largely family-owned
Operations More industrialised Strong presence of independent operators
Prime yields More compressed Compressing for trophy assets
Value-add opportunity More competitive Still significant
Operational risk Easier to underwrite Higher, but manageable
Repositioning potential Present but increasingly priced in Highly relevant

This comparison explains why Italy is so attractive to international capital.

It is not the easiest market. But it is one of the markets where expertise can make the greatest difference.

Rome, Venice and Milan: Italy’s prime hotel markets

Rome, Venice and Milan are currently the most readable Italian markets for institutional capital.

Rome benefits from deep international demand, a diversified mix of leisure, business, corporate and institutional travel, and significant luxury potential. Scarcity of quality product and the ability to grow ADR make the market particularly attractive.

Venice remains a unique market, with physical constraints on supply, global appeal and exceptional recognition. Operational and regulatory risks exist, but the best assets retain strong liquidity.

Milan is Italy’s most corporate and international hotel market, driven by business demand, events, trade fairs, lifestyle and luxury. It is probably the Italian city closest to the underwriting standards of European investors.

In these markets, yields for the best assets tend to compress. But that compression is not irrational: it reflects product scarcity, demand depth and exit visibility.

Resorts and leisure: major opportunity, higher risk

The Italian resort market is one of the most attractive in Europe, but also one of the most complex.

Lake Como, the Amalfi Coast, Capri, Sardinia, Tuscany, Sicily and Puglia have enormous tourism appeal. However, yield must reflect specific risks:

  • seasonality;

  • labour costs;

  • operational complexity;

  • high capex;

  • planning constraints;

  • permitting complexity;

  • lower exit liquidity;

  • strong dependence on positioning;

  • need for specialised management.

In resort hospitality, yield cannot be measured only on the historical income statement. It must be measured on stabilised potential after investment, branding, concept repositioning and distribution optimisation.

An underperforming resort in an exceptional destination can be a major opportunity. But only if the investor has expertise, capital and time.

Contracts matter: lease, management agreement and vacant possession

In the Italian market, contractual structure is often decisive.

A leased hotel is valued based on rent sustainability, lease duration, guarantees and tenant strength.

A hotel under a management agreement exposes the investor more directly to operating performance, but also allows participation in upside.

A hotel sold with vacant possession offers maximum strategic flexibility, but requires a clear industrial plan: who will operate it, under which brand, with what capex, at what positioning and with what expected profitability?

Many Italian hotels fail to reach their expected value because the contract is not aligned with the market.

An excessive rent can destroy operator value and weaken the investment. An unbalanced management agreement can discourage capital. An undocumented family-run operation can make financing difficult.

In the new cycle, the contract is not merely a legal detail. It is an essential component of value.

Bankability is the real test

A hotel may be attractive in theory and still not be bankable.

Bankability depends on:

  • location quality;

  • stability of cash flows;

  • documentation clarity;

  • debt service capacity;

  • real estate value;

  • capex requirements;

  • operator track record;

  • business plan quality;

  • reliable contracts;

  • exit strategy.

Improved financial conditions have supported the return of hotel investment. But debt remains selective.

Banks and lenders do not look only at real estate value. They look at the hotel’s ability to generate sufficient cash flow to service debt.

This is a fundamental issue for the Italian market. Many assets have potential, but they must be prepared in order to become financeable.

Not every hotel is investable

One of the most common mistakes is to assume that, because the European hotel market is growing, any hotel can easily be sold.

That is not the case.

Capital looks for hotels with specific characteristics:

  • strong location;

  • adequate scale;

  • readable accounts;

  • deep tourism demand;

  • ADR potential;

  • quantifiable capex;

  • clear planning and urban status;

  • orderly contractual structure;

  • professional management;

  • branding potential;

  • credible exit strategy.

Many Italian hotels are not yet ready for this market.

The issue is not simply selling a hotel. The issue is making it investable.

This means preparing proper documentation, reconstructing normalised income, estimating capex, analysing the competitive set, testing rent sustainability, defining the operating model and presenting the asset in a language that investors and lenders can understand.

The hotel guides on RobertoNecci.it, the technical blog on InvestHotel.it, and the market insights on InvestimentiAlberghieri.it were created precisely to promote this technical culture within the Italian hotel market.

What this means for owners and investors

For hotel owners, the new cycle opens an important window.

Owners of hotels in strong locations, with growth potential and an orderly ownership and financial structure, may find a more liquid market than in previous years.

But value is not maximised through improvisation.

Preparation is essential.

Before going to market, owners need to understand:

  • the real estate value;

  • the operating value;

  • the normalised income;

  • the capex required;

  • the most suitable contractual structure;

  • the operator that could enhance the asset;

  • the return the investment can offer;

  • the price an acquirer can sustain.

For investors, the message is different: Italy offers opportunity, but requires deep due diligence.

It is not enough to buy tourism. Investors must buy income, potential and risk control.

Final view on the HVS report

The HVS report deserves a very high assessment because it confirms the return of liquidity to the European hotel market. But its real value emerges when it is read through the lens of yields.

2025 was not simply the year in which transaction volumes increased. It was the year in which the market confirmed that hotels are once again a central asset class for real estate capital, but only if they are understood as operating assets.

Capital does not buy walls. It buys cash flow, growth potential, scarcity, management and exit value.

For Italy, this is a major opportunity.

The Italian market has exceptionally strong destinations, international demand, scarcity of institutional product and significant repositioning potential. But it also has fragmentation, operational complexity, hidden capex and contractual structures that are often not aligned with investor standards.

The conclusion is clear: Italy can deliver superior risk-adjusted returns compared with other European markets, but only where there is a professional value-creation strategy.

In the new cycle, value will not belong to those who simply own a hotel. It will belong to those who can transform that hotel into an asset that capital can understand.

Looking to assess a hotel investment opportunity?

Hotel Management Group supports owners, investors and operators in the analysis, valuation and value enhancement of hotels, resorts and hospitality assets.

Its work includes advisory, business planning, feasibility analysis, hotel valuation, asset management, repositioning, development and strategic support in defining the most appropriate operating model.

To assess a hotel investment, analyse a hotel asset, structure a transaction or test the economic sustainability of a project, visit HotelManagementGroup.it.

Further insights are available through:


Roberto Necci - r.necci@robertonecci.it




Topics
investimenti alberghieri 2025
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