Hotel income versus a bank deposit: what is left after all costs

The sales line is familiar: a hotel share pays more than the bank. Sometimes that is true and often it is not, and the answer depends on three things the brochure rarely shows together: the benchmark you compare with, the costs between revenue and your account, and the risk you take for any difference. This guide sets them out. It is general information, not financial advice, no yield is promised and the capital can be lost.

The benchmark as of November 2026

• Euro: the European Central Bank's deposit facility rate stood at 2.50% after the 29 October 2026 meeting, which left rates unchanged following increases in June and September (FRED data for 9 November 2026 and press reports). One bank economist expects a further 25 basis points in December, which is a forecast and not a decision. That rate is what the central bank pays banks, and not what a saver is paid. We did not find a euro-area average for retail term deposits in November 2026, so look at the actual offers in your bank and compare them for the same term.
• Dollar: the US 10-year Treasury yield closed at about 4.86% on 6 November 2026 and the 2-year at about 4.51% (market data summaries). For bank deposits, one survey put the national average one-year certificate of deposit at about 1.98% in June 2026, with the best offers up to about 4.10% (Bankrate). Averages and best offers are different things, and we found no November average.

Two points follow. A euro saver and a dollar saver face quite different benchmarks. And in dollars the risk-free government rate is high, so a hotel has to pay clearly more than it to justify the extra risk.

From revenue to what reaches you

A hotel's room revenue is not your income. In order, the main deductions are:

• Operating costs: staff, utilities, cleaning, food and beverage costs, maintenance. What is left is the gross operating profit.
• Distribution: platform commissions on bookings, and the cost of sales and marketing. The rate depends on the platform and the contract, and we do not give a figure here: ask for last year's actual.
• Management fees: for whole hotels, base fees of about 2% to 4% of total revenue and incentive fees of about 8% to 12% of gross operating profit (up to 15% in some deals) are reported (HVS and Hospitality Net). Some contracts defer the incentive fee until owners receive a minimum return, which is a clause worth asking for.
• The replacement reserve for furniture, fixtures and equipment: about 4% to 5% of revenue is the usual figure in the same sources.
• Owner-level costs: property tax, insurance, the owner's accounting and legal costs, and tax on the income, which depends on where you live and where the asset is.
• In a share scheme, the scheme's own layer: a pool manager, an SPV's costs, a platform fee.

See how to read a hotel profit and loss. The figure to compare with a deposit is the net cash you receive in a normal year, divided by the full amount you paid in including purchase costs, after tax.

What hotels have paid recently

For a whole hotel in Europe, the headline yield for prime assets was in the mid-4% range in the first half of 2026, according to one summary of Cushman & Wakefield's European hospitality report, which also describes yields as broadly stable and notes that higher financing costs may limit further compression. We could not confirm the exact figure from the report itself, so check it. A prime yield is the net income of a well-run institutional asset divided by its price, which is a better outcome than most small shares can show after another layer of fees. For markets and segments with higher yields, see hotel yields and cap rates by market.

When hotel income beats a deposit and when it does not

It can beat a deposit when:

• the property is in a market with a high net yield and a strong occupancy history, and you buy at a price that reflects it;
• the operator is experienced and the contract aligns its fee with the owner's result;
• the fee layers are low and disclosed, and the base of the income share is net, not revenue;
• you compare with a euro deposit of today and not a dollar yield of 4.86%.

It tends not to when:

• you compare a prime European hotel yield, which is near the top of the euro deposit range after tax, with the dollar risk-free rate, which is above it;
• the unit is bought off plan and pays nothing for the years of construction, while a deposit pays from day one;
• the quoted yield is a gross figure or a revenue share and the fees come after it;
• the first years are a ramp-up, with lower occupancy than the model assumes;
• costs rise faster than room rates, as with wages and energy.

What the spread pays for

Any extra return over a deposit or a Treasury is payment for risks you carry and a deposit does not:

• Operator risk: a weak or changed operator changes the result, and an operator contract can be hard to leave.
• Seasonality and demand: one bad season, an event or a local oversupply cuts income for the year.
• Capital costs: a renovation or a property-improvement plan can be charged to owners.
• Developer and completion risk for off-plan stock.
• Liquidity: you cannot withdraw a share on demand. See selling a hotel share or unit.
• Currency and tax: income in one currency and costs in another, and withholding or local tax on rental income.
• Legal form: what you own and who stands ahead of you. See how shares are structured.
• Insurance: a deposit is covered by a guarantee scheme up to a limit in many countries, and a hotel share is not.

If a scheme describes its income as guaranteed, ask who pays it, from what money and for how long. See rental pools and guaranteed yields and the risk matrix.

A simple test before you buy

• Ask for the audited or management accounts of the hotel for the last three years and the budget for the next one.
• Rebuild the net income yourself: revenue, minus operating costs, distribution, management fees, the reserve and owner costs, then your share.
• Divide by the whole amount you pay in and subtract tax.
• Set the result against a deposit in the same currency and term, and against a government bond.
• If the spread is small, the risks above are not worth it. If it is large, ask what the seller knows that the market does not.
• Read the checklist before you buy a share in a hotel.

How we help

We can help you set up this comparison for a specific offer, name the documents to request and connect you with a local lawyer and tax adviser. We do not quote or promise yields. Information only, not financial advice.