What Are Europe's Top Cities for Hotel Investment?

Europe's hotels are attracting some notable investors (why, hello, Donald Trump!), and it's all part of a growing trend for the region's market: Hotel consultancy group HVS London has published its 2014 European Hotel Valuation Index, and found that hotel values for the majority of the key European cities grew during 2013. 

Even better: Hotel values are expected to continue to increase as the lending environment becomes more favorable and the economic recovery improves demand. 

Most hotel markets had a slow start into 2013, but saw improvements in the second quarter with strong third and fourth quarters. Consequently, during 2013 two-thirds of the hotels in the cities surveyed experienced a growth in value, compared with only about half in 2012. 

(It's worth noting, of course, that not all businesses are pouring money into Europe's hotels. Just this week, fashion house Missoni ended its five-year-old partnership with the Rezidor Hotel Group, ending the Hotel Missoni brand.)

Europe's Top Hotel Cities

The five cities with the most expensive hotel rooms in Europe remain unchanged: Paris (€671,000), London (€625,000), Zürich (€501,000), Geneva (€427,000) and Rome (€362,000). 

Dublin (€179,000, up 6.6 percent) continued its strong growth from 2012 with investors showing renewed interest following its economic recovery. In January 2014 alone, three hotels in the city (just over 600 rooms) changed hands for about €175 million. Another success was seen by Barcelona (€243,000, up 5 percent) and Lisbon with 6 percent growth in room value (€131,000).

Geneva (€427,000), normally a relatively stable market, saw a decline in value of 5.4 percent, although the city remains the fourth most valuable city in terms of room value. 

“We expect 2014 to be the year for secondary, regional markets and for countries that are emerging from acute recessions and offer increased upside opportunities, albeit at a somewhat higher risk,” said report co-author Christof Bertschi, associate, HVS London, adding that while only eight countries were at above pre-crisis peak levels in 2013, HVS expects this number to increase to about 10 in 2014, and to just over a dozen by 2018.

Other cities this year’s HVI earmarks for growth are Tallinn, owing to its continued strong performance, and Dublin, a current darling of investors, as well as more subdued growth for the main Eastern European markets including Prague, Bratislava, Bucharest and Sofia.

“Key gateway cities such as London, Paris and Barcelona are expected to remain attractive for developers and investors, whilst German cities such as Munich and Frankfurt will continue to be considered a haven owing to Germany’s economic stability,” added Bertschi.

The 2014 European Hotel Valuation Index by Christof Bertschi and Sophie Perret can be downloaded here.