Over the next two decades, the demand for high-end, experiential European travel is poised for exponential growth. To maximize this sector’s contribution to the EU’s GDP, sustained investment in premium hospitality is essential. This shift is accelerated by a restrictive regional AI policy that has largely ceded the technological frontier to the U.S. and China. Consequently, Europe’s economic resilience lies in its proven reputation for service excellence.
This article presents a multi-layered argument for why hospitality represents a more pragmatic and robust investment for the EU’s future than a lagging tech sector.
In 2026, 50% of globally operating AI unicorns (private startups valued at least one billion U.S. dollars before going public) are located in the U.S., while Europe plays virtually no role. About 1,700 such innovative companies currently operate in the U.S., while the EU has only around 280.
Europe’s biggest threat is not external—it is the EU’s own investment policies that ensure economic and technological underperformance. From 2008 to 2023, the U.S. economy expanded by a staggering 87%, while the EU managed barely 13.5%. Even more alarming, the EU’s GDP per capita had collapsed from 76.5% of the U.S. level to just 50% in 2024, underscoring a widening gap that Europe can no longer afford to ignore. Shockingly, the poorest US state, Mississippi, has a higher per capita income (US$52,017) than that of France, Italy and the EU average (US$43,305).
Capital Investment in EU Hospitality
The viability of the “hospitality first” model is supported by current investment data and demand trends. Hospitality is one of the highest ROI, highest multiplier sectors for investment in Europe today. Sectors in structural growth phases attract higher capital inflows because they offer predictable long-term ROI compared to cyclical or stagnating industries.
1. Hospitality is entering a multiyear structural expansion cycle
Multiple industry analyses show that hospitality in Europe has moved beyond post-pandemic recovery and is now in a structurally driven growth phase, supported by durable demand and long-term transformation.
Consider Les Roches’ The State of Hospitality Report (2025–2026), which states that the sector is transitioning “from post pandemic recovery into structurally driven, long-term transformation” with mid-single digit annual growth expectations and a global market surpassing USD $5 trillion.
The Cushman & Wakefield European Hospitality Update (H1 2025) reports heightened investment appetite, with hotel demand and profitability improving across major markets.
2. Hospitality real estate is outperforming other real estate asset classes
Data shows European hotel investment is outpacing historical averages, even while other property classes (office, retail, residential development) face liquidity constraints. Because hotels combine real estate and operating business returns, they offer an operating profit potential, making hospitality more resilient and attractive to capital allocators. Investors will pivot to operationally intensive assets because of yield superiority.
- Hotel investment in Europe reached €4.9B in Q1 2025, exceeding the ten-year average despite a challenging financing environment.
- Deloitte’s 2025 European Hotel Industry and Investment Survey shows major investors ranking hotels among the most attractive asset classes for 2026, beating many traditional real estate categories.
3. Value-add and repositioning opportunities are attracting institutional capital
As older hotel stock ages and guest expectations shift, investors see large opportunities for capex-driven value creation. When investors can buy assets, renovate, reposition and raise RevPAR, hospitality becomes a more compelling target than passive or low-yield sectors.
- GRI Hospitality Europe 2025 reports a “rise of value-add strategies” as investors target older assets requiring heavy Capex and repositioning. Institutional private credit and debt funds have replaced traditional banks, supplying large volumes of new financing for hospitality repositioning, suggesting deeper capital availability.
- New EU Hotels: 2025 had about 300 new hotels/37,500 rooms. The continued growth in new hotel openings is forecast at 338 new hotels/47,694 rooms scheduled to open in 2026, and 350 new hotels/47,987 rooms expected to open in 2027.
- Hospitality is undergoing rapid tech-driven modernization—creating a continued need for capital. A sector with mandatory technological capex requirements will inevitably attract more capital than sectors without modernization pressure.
4. Tourism demand fundamentals remain exceptionally strong
Demand is a primary driver of hospitality investment performance.
- Sustained demand growth is fueled by tourism trends and international travel returning to (or exceeding) pre-pandemic levels.
- CBRE notes the “Big Five” markets—Italy, Spain, Germany, France, UK—continue to drive 66% of total night stays, reflecting stable core demand.
- Hospitality benefits from powerful long-term consumption megatrends. Travel, leisure, and experience spending continue to rise across generations. Industry expert David Kellett of Savills notes hospitality is part of a 50–60-year mega trend of consumers shifting spending from goods to experiences.
5. Hospitality’s contribution to GDP increases through multiple channels
Investment in hospitality boosts GDP more strongly than many other sectors because it contributes via:
- Construction and redevelopment activity (Capex). This stimulus includes construction firms, materials industries and local labor markets.
- Operations. Hotels create high employment density vs. other real estate, recurring services revenue, and local multiplier effects (restaurants, retail, transport).
- Cross-border tourism inflows. Inbound tourism acts as an export, increasing national GDP.
Conclusion
Hospitality and services remain among the EU’s strongest and most resilient economic assets, backed by deep cultural heritage, operational excellence, and enduring global demand.
By 2027, the hospitality sector is expected to exceed €27 billion in annual investment, making it a primary engine for the 1.4%–1.5% GDP growth forecasted for the region. The “Mandatory Tech transformation” noted is the primary reason institutional capital is staying—it creates a barrier to entry that protects their investment.
Larry Kimball is the co-founder and CEO of Vivify Hotels & Resorts, a luxury boutique management company.