Access to bank financing for hotel projects has become more challenging in recent years. Lenders are increasingly cautious due to factors including higher interest rates and stricter credit conditions, which raise the cost of capital. There is also a risk assessment focus with banks now scrutinising location, operator strength, and projected cash flows more rigorously. ESG compliance also plays a key role as financing often requires sustainability measures (energy efficiency, green certifications). For private hoteliers, this means equity requirements are higher, and alternative financing (private equity, mezzanine capital) is gaining importance.

Hotels face significant cost pressures from multiple angles as construction and renovation costs have surged due to inflation and supply chain disruptions. Labor shortages in hospitality have driven wage increases, especially in skilled roles. Energy costs have remained volatile, pushing operators to invest in efficiency and renewables. This often results in tighter margins and a need for operational optimisation, digitalisation, and outsourcing of non-core services.

Developing or converting hotel properties involves complex hurdles including:

• Zoning and building permits can be time-consuming, especially for mixed-use or adaptive reuse projects.
• Environmental regulations (energy standards, waste management) and compliance costs.
• Local restrictions: In some markets, short-term rental regulations or tourism caps affect feasibility. These challenges require early engagement with authorities and often specialized legal and technical advisors.

Succession planning is a critical issue for family-owned hotels and the market is faced with generational shift; many owners are nearing retirement, but successors may lack interest or expertise. Selling or restructuring assets to enable succession is complex, especially when emotional factors are involved and more families opt for external management or joint ventures to secure continuity. This creates opportunities for investors and operators to step in with management contracts or lease agreements.

Austria’s hotel investment market is showing clear signs of recovery, with landmark transactions in Vienna, such as the Vienna Marriott Hotel and The Ritz-Carlton, driving significant volume. These deals alone accounted for over €200 million, representing more than 40% of the total transaction volume. This trend highlights renewed investor confidence in premium urban assets.

Three additional trophy assets are currently on the market:

• Grand Hotel Wien: Following insolvency proceedings, this historic property is being offered for sale. The hotel features 206 rooms, a spa, and extensive meeting facilities.
• Park Hyatt Vienna: Amid the restructuring of Signa Prime Selection AG, the Park Hyatt and adjacent luxury retail assets are being marketed for sale.
• Andaz am Belvedere: Another asset initially developed by Signa with 303 rooms and suites is currently being marketed for sale.

A notable portion of hotel transactions in 2025 stemmed from insolvencies and corporate restructurings. These special situations have created rare opportunities for investors to acquire prime assets at adjusted values. With some of these hotels not sold by the end of 2025, such opportunities will fuel the hotel transaction volume in 2026.

The European hotel operator landscape underwent notable consolidation in 2025, driven by strategic ambitions for brand scaling, portfolio diversification, and cross-border expansion. Key transactions included the acquisition of Dalata Hotel Group by Pandox, the sale of CitizenM to Marriott International, IHG’s acquisition of Ruby Hotels, Revo Hospitality’s takeover of German operator H-Hotels, and the sale of a majority stake in Motel One to P.A.I. Partners. We expect this trend to continue further in 2026.

In the current market environment, white-label operators are increasingly under pressure to meet the evolving expectations of hotel owners. This is particularly evident as owner-operators with proprietary brands gain competitive advantages by avoiding franchise fees, leveraging larger in-house technical teams during development phases, and in some cases, offering key money to secure strategic assets.