European hotel investment reached €11.7 billion in the first half of 2026, running 19.5% above the 10-year average even as volumes slipped 9.5% year-on-year, according to Cushman & Wakefield's Market Beat Europe H1 2026 report. Average RevPAR rose 3% to €101, and Milan posted a 24% RevPAR jump on demand tied to the 2026 Winter Olympics.

The deal mix tells the story of where capital wants to sit. Fewer assets traded overall, but transactions above €100 million increased 30% year-on-year — clear evidence, the report suggests, that investors still chase prime hotel assets even in a tighter market.

Landmark single-asset deals anchored the half, including the Pullman Paris Tour Eiffel, The Westminster Curio Collection in London and the Park Hyatt Vienna. Continued portfolio activity in the UK and Spain supported volumes alongside these trophy transactions.

Who is buying?

Private investors dominated both sides of the market, representing 54% of acquisitions and 46% of disposals. Their share of selling activity grew by 8.4 percentage points compared with the previous year.

Institutional investors accounted for 37% of investment volume on the buy side and 38% of disposals, though their share declined by 8.4 percentage points — 8.8 points on the sell side — year-on-year. Cross-border capital strengthened: APAC investors lifted their European hotel volumes by 86%, and Middle East and Africa investors by 31%, driving activity across Europe's gateway markets.

What happened to pricing?

Yields stayed broadly stable in H1 2026 after the strong momentum of 2025, supported by sustained investor appetite for the sector. The average price per room rose 9% year-on-year to €228,416.

The report flags a constraint for the second half: inflation resurged during the first six months, pushing financing costs higher, which may limit further yield compression through the remainder of 2026.

How fast is supply growing?

European hotel supply expanded 2.9% versus H1 2025, with Southern Europe adding more than 5% to its room inventory. Poland, Italy and Austria recorded the most notable country-level increases.

Growth remained uneven. Several major markets — Amsterdam, Barcelona, Prague and Paris — carry very limited development pipelines, reflecting local development constraints that could keep pricing power in operators' hands in those cities.

Which markets performed best?

Eastern Europe led performance growth with RevPAR up 6% year-on-year, followed by Southern Europe. Europe-wide, the 3% RevPAR gain to €101 came from a 2.2% rise in average daily rate and a 0.7% increase in occupancy — rate-led growth that favors operator margins over volume-driven gains.

Milan's 24% RevPAR surge made it the region's standout on Olympics-related demand, with Budapest second at 15%.

With financing costs rising and supply constrained in several gateway markets, the second half of 2026 will test whether investor appetite for prime assets can keep transaction volumes above their long-run average.