Over 24 billion euros invested in Europe in 2025 and Italy growing 27%: hospitality is cementing its role among real estate asset classes.
The hotel real estate market has closed one phase and opened another. That is the core reading of the 2026 hospitality real estate report by Scenari Immobiliari and Castello Sgr, presented at this year's Hospitality Forum. The numbers back it up: European hotel investment reached 24.4 billion euros in 2025, up 8% year-on-year and the best result in five years, though still below pre-pandemic levels. Between January 2025 and May 2026, nearly 430 deals closed, covering over 84,000 rooms.
Capital flows remain UK-led, with over 5.6 billion euros invested making it Europe's most liquid market, ahead of Spain (3.7 billion) and France (3.5 billion). Italy ranks fourth with over 2.35 billion euros invested in 2025 — notable less for its absolute size than for its growth rate: +27% versus 2024, the best performance among major European markets. H1 2026 confirms the trajectory, with roughly 1.25 billion already invested.
Behind the aggregate figures lies a clear qualitative polarisation. Of the roughly 70 Italian properties transacted in 2025, most sit in the four- and five-star bracket, as institutional investors and private equity funds increasingly target the upscale and luxury segment. Italy's total hotel real estate value exceeded 173 billion euros, up 7.2% annually, while sector turnover rose to 3.8 billion, driven by private equity, owner-operators and institutional investors pursuing asset repositioning.
Occupancy data confirm solid underlying tourism demand: mid-to-upscale properties held occupancy above 65% in most Italian cities, exceeding 75% in top destinations. Alongside Rome, Milan, Venice and Florence, interest is growing in secondary cities and leisure destinations such as Verona, Bologna, Genoa, Lake Garda and the Amalfi Coast — a sign that investment demand is broadening beyond traditional hotspots.
A further structural element concerns conversions: JLL's Q1 2026 data show roughly 200 million euros of Italian hotel investment came from change-of-use operations, mostly office-to-hospitality conversions concentrated in central and semi-central areas of Rome and Milan — a trend linking two forces in the Italian market: obsolete office stock struggling to find competitive tenants, and hotel demand as a reliable repositioning outlet.
The overall picture is of a sector that, in the words of the report's authors, has moved past post-pandemic recovery into a more mature cycle — no longer just tied to tourism flows, but an asset class attracting long-term capital seeking stable returns and lower exposure to traditional economic-cycle volatility.
Another notable element concerns the composition of investment demand. The luxury segment in particular no longer responds purely to tourism dynamics but taps into a broader trend of global wealth growth: individuals with liquid net worth above one million dollars grew roughly 9% between 2025 and early 2026, approaching 25 million people worldwide. For this investor base, upscale hospitality is not just a yield opportunity but a wealth vehicle on par with other core real estate asset classes, and Italy already ranks third among preferred destinations for this type of capital, behind only the UAE and the United States.
One structural challenge remains: training and skills. With roughly 33,000 properties and over 1.1 million rooms, Italy's hospitality industry is among Europe's largest, yet dedicated training remains fragmented and not always aligned with the needs of an increasingly institutionalised sector. It rarely makes headlines built around investment volumes, but over the medium term it could shape the sector's ability to sustain growth with operational management matching the capital it continues to attract.