European travel market shows optimism according to Booking.com data, with Germany lagging behind other countries in recovery.
The European hospitality sector is experiencing a robust recovery post-pandemic, according to the latest reports, including Booking.com's Accommodation Barometer focus for 2025. Spain leads the pack, with revenue up by 6.9% in the first half of 2025 compared to 2024, and occupancy rates stable or slightly improved, such as Madrid's 76.6%. The average daily rate (ADR) in Spain has also increased significantly (+6.5%), surpassing the 1% average growth in Europe.
Globally, guest satisfaction reached an all-time high in Q2 2025, with the Global Review Index at 86.9%. However, department-level satisfaction metrics, such as Cleanliness and Room quality, showed slight declines. Value for Money perception slightly worsened for 4- and 5-star hotels, indicating price sensitivity among guests, but the decline has slowed. Review volumes have plateaued due to the "Engagement Paradox" and survey fatigue, meaning high occupancy rates are not necessarily translating into proportionate review growth.
Occupancy rates are also stable or increasing modestly in major markets like Thessaloniki (+4.3% occupancy). ADR is rising steadily, boosting revenue. The supply side is affected by regulatory controls, but new supply and refurbishment remain at record levels. For instance, there are 750 projects and 53,000 keys underway in Spain alone.
Investment markets remain dynamic, with a record number of new hotel projects and refurbishments, despite high construction costs. However, there is margin pressure from rising labor costs and food and beverage profitability concerns. New collective labor agreement negotiations are a key challenge for controlling costs. International tourism, especially from the USA, continues to drive investment attractiveness in Europe, with +7% year-on-year growth in arrivals and +6% for Spain specifically.
Chains and larger properties have a structural advantage due to favourable access to financing. Higher-star-rated hotels are outperforming lower-star ones, although they face more pressure to justify pricing. Staffing issues have become a critical pressure point, with negotiations around new collective labor agreements underway. Rising employee costs combined with F&B profitability warnings put a strain on hotel margins.
47% of European accommodations struggle to find and hire skilled and experienced candidates, particularly in management, sales, marketing, and spa and recreation. Despite this, almost two-thirds (63%) of hoteliers expect continued improvement in the coming season. Greece has the highest hiring plans, needing an average of 7.45 employees per hotel. On average, European hotels plan to hire 3.59 employees in the next 12 months.
The broader European outlook remains anchored in durable optimism heading into the 2025 season. Croatia, Greece, Italy, Portugal, and Spain all show "very positive" future expectations. Austria, France, and Germany have expectations at 50% or below. 62% of respondents plan to maintain current levels of investment.
Proactive investments in staff training, tech, and AI tools are common among chains and larger properties. Almost two-thirds (63%) of hoteliers expect continued improvement in the coming season. Negative sentiment remains minimal, with fewer than one in ten respondents viewing current conditions poorly. The gap between countries remains, with Greece and Italy showing consistently strong sentiment across metrics, and Germany and France showing greater caution.
[1] Booking.com's Accommodation Barometer report for 2025 [2] Skift Research's European Hotel Market Outlook 2025 [3] HVS European Hotel Valuation Index 2025 [4] STR's European Hotel Performance Report H1 2025
- The luxury segment of the European hospitality sector is anticipating a promising future, as indicated by Booking.com's Accommodation Barometer report for 2025.
- Guests are increasingly seeking eco-friendly accommodation options, as shown in Skift Research's European Hotel Market Outlook 2025.
- Holidays are on the rise, and travelers are looking for luxury and eco-friendly hotels, according to HVS European Hotel Valuation Index 2025.
- High-tech and AI tools are becoming essential for managing hotels, as observed in Booking.com's Accommodation Barometer report for 2025.
- Hoteliers are planning to invest in staff training and technology to improve guest satisfaction and boost revenue, as revealed in STR's European Hotel Performance Report H1 2025.
