MADRID — European hotel owners hope to be net buyers in 2026, despite geopolitical headlines becoming noisier and potentially more unsettling.
Just in the last few days, European nations have banded together to oppose unwarranted U.S. pressure on its proposed acquisition of Greenland.
But hotel executives across Europe are focusing on what they can control, and chief among those disciplines is improving profitability.
David Kellett, Savills' head of hotel capital markets for Europe, Middle East and Africa, shared a list of challenges currently facing the region's hotel industry during a session at the Atlantic Ocean Hotel Investors’ Summit. These include group demand globally being down 20%; Amsterdam adding taxes on hotel rooms; U.S. outbound moving in different directions; and, CoStar's 2026 projections showing global hotel revenue per available forecast to grow only by 0.7%.
That RevPAR projection feels like one late in a cycle, Kellett added.
Operational costs are weightier, but the last half-decade has also seen the greatest jump in wealth of the luxury and ultra-luxury guest in history.
Andrew Katz, partner at Prospect Hotel Advisors, said his prediction for RevPAR growth is for between 1% and 2%.
“Our focus is on managing costs,” he said.
Gaël Le Lay, CEO and co-founder of Petra and Hova Hospitality, said he is focused on the medium term.
“We are cautious on growth, and there might be some limited decreases in some cities,” he said.
Consumer confidence will be among the biggest factors for how well the hotel industry does in 2026, said Cody Bradshaw, group CEO at London & Regional Hotels. There is cause for some optimism, with luxury hotel average daily rate and spend continuing to rise.
“The FTSE 100 recently broke its record high. … Luxury breaks record after record, but if this conference was in the U.S., it would be rough,” he said.
Bradshaw added that half of the top 25 markets in the U.S. aren't investable, with three years of negative RevPAR growth and no positivity in sight.
“Europe looks resilient. Yes, Germany has exposure of its [gross domestic product] to manufacturing. Spain is a shining star. I would say in my career, this is one of the hardest times in which to do underwriting,” Bradshaw said.
But Germany may have too much debt to make it a safe place to do hotel deals, said Tugdual Millet, CEO of Covivio Hotels.
“We forget that a lease is some form of debt. In Germany, [Covivio has] debt, but we are trying to rebalance the portfolio between north and south, and we are positive it will be a profitable year,” he said.
Bradshaw wondered if the prevalent German hotel business model of the lease has sufficient covenant strength behind it and whether hoteliers might soon see a redressing of such agreements.
German hotels might not see much international meetings, incentives, conventions and expositions business this year, Katz said.
“Last year saw some one-off events, for example, the National Football League coming to Berlin, but there are not as many such events in 2026,” he said.
Katz added that an analysis of costs can help offset poorer performance.
Bradshaw returned to signs of health within the stock exchanges, commenting that the best-performing stocks in Germany are in defense, “which is up 200%, so that might lead to some business.”
Hotel owners are also keeping an eye on interest rates, increased state regulation of tourism, business rates in the U.K. and city taxes such as those in Amsterdam and Edinburgh, Millet said.
Hotel occupancy in Edinburgh is very high, Bradshaw added.
"If [taxes] boost tourism, social conditions and housing occupancy and restricts Airbnb, then that is a pretty good trade,” he said.
AI in Madrid
Panelists said artificial intelligence technology is set to take on an even higher profile in Europe's hotel industry in 2026. The current landscape of AI and tech stocks led to discussion as to whether their pricing would see a correction, a concern due to their dominance on bourses.
Katz said owners and hoteliers are aware that consumers increasingly use AI to look where to visit and stay. Hotels have to compete, and traditionally hotels are slow off the market in such regard, he added.
“We are working closer with brands as to how to spend marketing dollars and attract people. Hotels need to improve their content,” he said.
Hotels still approach generative AI like search-engine optimization from 2000, Bradshaw said. He added up-to-date AI needs to extrapolate data from property- and customer-management systems and send data that is relevant to all hotel divisions.
"This is the big disruption coming to AI,” he said.
Panelists said hoteliers need to keep an eye on which tech firm is marrying AI and distribution, and that company will rise to the top.
The European hospitality industry’s owner-brand history over the past decade or so needs to be addressed, too, Bradshaw said. When hotel firms went asset-light, they then concentrated on select-service brands in the U.S. and China before focusing on credit cards and loyalty.
“The big brands are doing well, but owners are struggling and are saying, ‘Hey, you’re charging the same fees still,'” Bradshaw said.