European Hotel Market in 2025 – Growth in the South, Surge in the East

European Hotel Market 2025: Why the South & East Are Leading Growth

➤  Regional Performance Breakdown

➤  Southern Europe – Strong demand in Spain, Portugal, and Greece is driving higher ADR & RevPAR. Coastal destinations are benefiting from continued travel demand, with luxury hotels outperforming midscale properties.

➤  Eastern Europe – Cities in Poland, Hungary, and the Balkans are seeing a surge in hotel development, as international brands expand into previously overlooked markets.

Western Europe – Major cities like London, Paris, and Berlin are experiencing slower demand growth, impacted by economic uncertainty and high operating costs.

Luxury & Lifestyle Brands Are Thriving – Upscale hotel chains continue expanding, focusing on premium experiences rather than budget segments.

Why These Trends Matter

Investment is Flowing to Secondary Markets

• Rising costs in Western Europe are making investors shift focus to Southern and Eastern European cities.

Tourism Demand Remains Strong

• Southern European destinations are benefiting from longer vacation stays, while Eastern Europe is seeing increased business and leisure travel.

Luxury & Upscale Hotels Are Outpacing Budget Segments

• Major hotel groups are focusing on high-margin properties, leading to higher ADR and RevPAR growth.

Challenges & Risks to Watch

Economic Uncertainty in Western Europe

• Rising inflation and high operational costs are slowing growth in established markets like France and Germany.

Hotel Labor Shortages

• Many European hotels are still struggling with staffing shortages, leading to higher wage costs and service disruptions.

New Hotel Supply in Emerging Markets

• With more hotel chains entering Eastern Europe, overdevelopment could become a risk if demand slows.

What This Means for Hoteliers & Investors

➤  Emerging Markets Offer Strong Growth Potential

• Poland, Hungary, and Greece are among the fastest-growing hotel markets in 2025.

➤  Luxury & Lifestyle Hotels Will Continue Expanding

• Upscale boutique and lifestyle brands are outperforming budget segments.

➤  Western Europe Remains Stable but Competitive

• Established cities will continue attracting travelers, but rate growth may slow as competition increases.

Final Thoughts: Is This the Future of Europe’s Hotel Market?

As investors and hotel brands expand into new regions, Southern and Eastern Europe are becoming major hospitality players. But with economic pressures in Western Europe, will this trend last?

Is this the start of long-term growth, or could a slowdown hit the market in 2026? Let’s discuss!