Hotel values across Europe rose around 3% in 2022 with Paris, London, Zurich, Amsterdam and Rome remaining those with the highest valued hotels, according to the annual European Hotel Valuation Index (HVI) published this week by global hotel consultancy HVS.
During 2022 hotel values benefitted from a number of factors including strong improvement in RevPAR [Rooms Revenue Per Available Room] and the recovery of ancillary revenues. Despite this, high inflation, an increasing cost of debt and the looming threat of recession limited the recovery of values, leaving them below their 2019 peak.
“The pandemic year of 2020 saw hotel values plummet by around 15%, although they rallied by around 5% in 2021. Last year was a mixed year in terms of hotel performance across Europe, with some aspects of 2022 much better than expected, while other aspects were much worse,” commented report co-author Julia Dzerkach, analyst, HVS London.
By the end of last year many hotel markets were experiencing a strong post-pandemic recovery, the HVI reports, with a number of gateway cities achieving higher RevPAR levels by December 2022 than 2019 due to a significant uplift in leisure demand as well as corporate travel returning to around 75% of its pre-pandemic volumes. Corporate contracts have tended to move from fixed, volume-driven rates to more dynamic ones, offering positive trade-offs for a segment where remote working and Zoom meetings were likely to have a long-term impact.

However, significant challenges for Europe’s hotels including labour shortages meant many were forced to make cutbacks to opening times, f&b facilities or room inventories while high inflation impacted wages and the cost of goods, as did rising energy bills. At the same time increasing interest rates, the fear of an impact from the cost-of-living crisis on hotel demand and threats of a recession all led to the cooling of investors’ appetite for hotels. These fears are being compounded by the potential of a looming banking crisis at the time of publishing this report.
Markets that saw a stronger recovery in hotel values during 2022 include Athens, Dublin and Lisbon, all of which saw the largest percentage changes in hotel values (in Euro) during 2022 at 5.8%, 5.2% and 5.9% respectively.
Improved leisure demand and the return of travellers from core markets such as the US helped values recover in more established cities such as Amsterdam (up 3.8%), Milan (up 2.4%) and Rome (up 1.3%), although at a more modest pace.
“Those regions that experienced only marginal recovery are likely to be those with unfavourable exchange rates such as the Scandinavian markets, a slower return of corporate demand such as in Frankfurt or because of limited demand from key source countries due to the war in the Ukraine, typically seen in a number of Eastern European markets,” added report co-author Dannie Murphy, analyst, HVS London.
Looking forward, the HVI paints a more positive outlook although war in the Ukraine, the cost-of-living crisis and its impact on demand as well as the sustainability of ADRs and possible margin erosions, could continue to impact value recovery.

“We have moved into 2023 on a strong footing from a revenue perspective, with ADRs at record levels in many markets and good prospects for occupancy to fully recover over the months ahead,” commented report co-author Sophie Perret, senior director, HVS London.
“No doubt investors are hoping for better visibility in the short term, so they can move on from the prevalent ‘wait and see’ mantra of 2022. Substantial amounts of capital await being invested in hotels, provided the return levels can be attained.”