Hotel investment over €10 million: single assets, portfolios and the institutional route

Above 10 million euro, hotel real estate stops being a lifestyle purchase and becomes an institutional asset class. The assets are larger, the sellers and lenders are professional, and the competition for good hotels comes from companies with cheaper capital than most private investors. This article explains how that end of the market looked in the first half of 2026, which deal types exist, how large hotels are underwritten and what team you need before you sign. It is the top of a ladder that starts with hotel investment under 500,000 euro and boutique hotels between 1 and 5 million euro. The basics are in our hotel real estate guide for private investors.

The market in the first half of 2026

The figures below come from published summaries of HVS and Cushman and Wakefield reports; we could not open the full reports, and the two sources use different scopes.

• HVS counted about 9.4 billion euro of European hotel transactions in the first half of 2026, 10 percent below the first half of 2025 and 11 percent above the ten-year first-half average. The number of deals fell 5 percent to 183, while the number of hotels and rooms sold fell by 19 and 23 percent.
• The average price per hotel rose 12 percent to 36.7 million euro and the average price per room rose 18 percent to about 268,000 euro, a decade high. HVS notes that this reflects the higher quality of the hotels sold, not a market-wide rise in values.
• A Cushman and Wakefield summary reports a higher volume, above 11.5 billion euro and 22 percent above the ten-year average, with deals above 100 million euro up 30 percent. The difference between the two totals comes from scope and method.
• European hotel performance was solid: RevPAR rose about 3.0 percent to about 101 euro, driven mainly by a 2.2 percent rise in average rate with a small gain in occupancy, according to the STR and Cushman and Wakefield Hotel Barometer. Operating profit margins ranged from 26 to 47 percent across 15 urban markets. That is urban data; resort hotels behave differently.
• The same reports say yields were stable and that renewed inflation and higher financing costs may limit further compression.

Who you compete with

In the first half of 2026, real estate investment companies were the dominant buyers, while private equity and high-net-worth individuals were net sellers across European hotel deals. For a private buyer that has two consequences. For prime, stabilised hotels you compete with buyers who borrow cheaply and accept low yields. And the more attractive niches for a private or family-office buyer are usually the ones institutions pass on: assets that need repositioning, hotels with an expiring operator contract, secondary cities and resort assets that need capital.

Deal types

• Single asset. One hotel, usually bought as a building with the operating business or with an operator in place. Simple to understand, concentrated risk.
• Portfolio. Several hotels in one transaction. Better diversification and economies in management and financing, but you buy the weak assets along with the strong ones and the due diligence multiplies.
• Share deal. You buy the company that owns the hotel, not the building itself. It can be tax-efficient and keeps contracts and licences in place, but you also inherit the company's liabilities. See holding structures and taxes for hotel owners.
• Joint venture or club deal. A sponsor and several investors buy together. Check control, fees, reporting, capital calls and exit rights.
• Platform. A sponsor builds a portfolio over several years with a stated strategy. The commitment is to the sponsor's judgement as much as to any single hotel.

Underwriting a large hotel

Value rests on net operating income and a yield. Net operating income is revenue less operating costs, less the reserve for replacing furniture and equipment, usually about 4 percent of revenue, and less management fees. In the larger-hotel contracts described by market sources, the base fee is about 2 to 4 percent of revenue (3 percent most common) and the incentive fee about 8 to 12 percent of gross operating profit; these are negotiable and differ by operator and market.

Reported prime yields in the first half of 2026 were about 4.75 percent across Europe, about 5 percent in Madrid and Barcelona, about 6 percent on the Spanish islands and 4.5 to 5 percent for leased hotels in Italy, according to summaries of consultancy reports. Portugal and Greece figures were not available to us.

Here is a rough illustration, our own arithmetic and not a forecast. A 150-room hotel bought at the average 268,000 euro per room costs about 40.2 million euro. At a 5 percent yield that implies net operating income of about 2.0 million, or about 13,400 euro per room per year. At the European average RevPAR of about 101 euro, a room earns roughly 36,900 euro a year from rooms, perhaps 46,000 with other revenue. So the price implies that after reserve and fees about 29 percent of total revenue reaches the owner, which needs an operating margin near the top of the 26 to 47 percent range. The average price per room is therefore the price of better-than-average hotels, not of the average one.

Operator, brand and contract

A large hotel is usually run by an operator under one of three contracts: a management agreement, a lease or a franchise. They allocate risk differently. In a management agreement the owner carries the operating risk and pays fees. In a lease the operator pays rent and carries the operating risk, and the owner's income depends on the operator's strength. In a franchise the owner or a separate manager runs the hotel under a brand's standards and pays a fee. Read management agreements, leases and franchise explained and how to choose an operator and read the contract before you negotiate.

• Term and termination: can you remove the operator if the sale price is better without them, or if performance falls short?
• Performance tests: against what benchmark, and what happens if the hotel misses it?
• The brand's property-improvement plan: who pays, how much and by when?
• Owner's priority: the return the owner receives before the operator takes an incentive fee.
• Change of control: what happens to the contract when you sell?

Sale-and-leaseback

An owner can sell a hotel and lease it back, which is how some operators release capital and how investors buy income. Leases usually combine a fixed rent with a variable part linked to revenue. Examples from search summaries show variable rent at about 19 to 22 percent of hotel revenue in older leaseback deals by one large group and one listed landlord's portfolio, and a Milan lease with a contractual minimum yield of about 6 percent and a target of about 7 percent including variable rent over 21 years. These are examples, not a market range. The value of a fixed rent depends on the tenant's strength and on what stands behind the lease, such as a parent company undertaking. See exiting a hotel investment: sale-leaseback and buyers.

Financing

In the first quarter of 2026 the HVS debt briefing described senior euro debt at 55 to 65 percent loan-to-value for stabilised assets, with margins of about 1.65 to 3.5 percentage points over the base rate and terms of five to seven years. Lenders favoured quality assets and experienced sponsors, and refinancing was the main source of volume while acquisition and development lending stayed selective. Expect covenants on debt service cover and loan-to-value, cash sweeps in weak periods and hedging requirements. Higher financing costs are the reason yields have stopped compressing. For the foreign-buyer angle, see hotel acquisition financing for foreign buyers.

The due-diligence team

• Legal: title, encumbrances, licences, operator contract, employment contracts, environmental and planning status.
• Technical: building condition, the cost of the brand's improvement plan, energy performance and safety systems, with a capital plan for the coming years.
• Commercial: a market study, the hotel's performance against its competitive set, and the booking channels behind the revenue.
• Financial: accounts prepared to the hotel industry's standard format, a quality-of-earnings review and a check that reported revenue matches bank and tax records.
• Tax and structure: asset or share deal, transfer taxes, withholding on rent and dividends, and exit tax.
• Insurance and risk: cover for the building, business interruption and the region's particular risks.

Risks to price in

• Financing cost and refinancing risk at the end of a five-to-seven-year term.
• A change in operator or brand, and the cost of repositioning.
• Demand shocks. European hotel demand grew in the first half of 2026 despite heightened geopolitical uncertainty, but that can change quickly.
• Labour cost and availability, which affect margins more than most investors expect.
• Concentration in one city, one operator or one source market.
• Liquidity at exit: when the buyer pool narrows, large assets take longer to sell.

Who this is for, and who should look elsewhere

• Suitable: a family office, a pooled vehicle or an investor with a professional team who wants hotel exposure at scale and can hold through a cycle.
• Suitable: a buyer who is prepared to take on repositioning or operator risk for a higher yield than prime assets offer.
• Not suitable: a private buyer who wants a prime asset at a prime yield against institutions that borrow more cheaply.
• Not suitable: anyone who cannot test the operator's accounts independently.

FAQ

Is the 268,000 euro per room figure a good benchmark? Only for hotels of that quality. HVS itself says the average rose because better hotels sold.

Should a private investor buy a portfolio? Portfolios diversify but bundle weak assets with strong ones. Price each hotel separately.

Do banks lend to foreign buyers at this size? Yes, to experienced sponsors with a clear strategy; terms depend on the asset, the operator and your track record.

How we help

We help check, compare and negotiate: we assemble the due-diligence team, rebuild the seller's numbers from bank and tax records, compare the operator terms with market practice and test the structure for tax and exit. You can also look at hotels in our catalogue.

This article is informational only and is not legal, tax or investment advice. Figures are indicative, come from published summaries of market reports and change over time; confirm current numbers and rules before you buy.