The Mediterranean is establishing itself as one of the most dynamic regions for investments in hotels and tourism infrastructure, according to Colliers' latest analysis of the hotel market in Europe. After the pandemic, the region witnessed a rapid rise, and today it is entering a new stage, characterized by confident but stable growth, increased interest from international funds and an increased focus on asset quality and the expansion of the tourist season.
The Mediterranean markets already hold nearly a third (33%) of all hotel investments in Europe, with their share increasing from 19% (pre-pandemic) to 28% in the period 2020-2024. In 2025, the market sets new records – Spain, Italy and Portugal remain the main drivers of activity, while Greece is strengthening its position as a destination for capital investment.
The largest deal in the history of the Spanish hotel market - the sale of Mare Nostrum Resort Tenerife for 430 million USD - reinforces the region's status as a preferred location for international funds.
The sector has benefited from three years of exceptional profitability, fueled by growth in occupancy, average daily rate (ADR) and revenue per available room (RevPAR). These factors have made hotel properties one of the best-performing asset classes in Europe after 2020.
While the rise in hotel room rates and the surge in occupancy have already peaked, the market is entering a phase of “operational fine-tuning“, where added value comes not from increased prices, but from efficiency, management and marketing.
“The great potential of the Mediterranean is no longer just in the number of tourists, but in the quality of the offer and the stability of revenues throughout the year“, Colliers analysts point out.
The extension of the season – with more trips in April, May and even November – allows hotels to distribute the workload and revenues more evenly. This, experts say, increases the attractiveness of assets for long-term investors.
The Mediterranean market is no longer homogeneous. While mature economies such as Spain, Italy and Greece offer stability and well-developed infrastructure, Croatia, Montenegro and Albania are emerging as new growth areas.
Albania is investing heavily in transport infrastructure and new airports along the Riviera, extending tax breaks for international hotel operators until 2026.
Montenegro has received funding from the EBRD and the EU to modernise internal transport links, but the doubling of VAT on accommodation may dampen investor interest.
In Croatia, where short-term rentals prevail, the hotel sector faces regulatory and administrative barriers to new projects – a challenge that keeps some capital “on hold”.
Despite the growing interest in resort assets, city hotels in London, Paris, Barcelona and Amsterdam continue to absorb the majority of institutional capital. To remain competitive, resort assets in Southern Europe must offer higher profitability, sustainable management and product innovation.
Colliers forecasts that hotel investment will stabilize at around 15% of total real estate transaction volume in Europe as the market matures. Hotel nights in the region are expected to grow by +6.4% in 2026, outpacing the European average (+5.6%). International arrivals are forecast to grow by 4–6% annually until 2030, and travel spending – at a similar pace.
Investments in airport and transport infrastructure, along with diversification of tourism products and development of the “arm of the season“, will be key to retaining the flow of capital and tourists.
The Mediterranean hotel market remains a magnet for investors looking for long-term profitability, but now requires a more refined strategy: flexibility of seasons, better asset management, digital marketing aimed at new tourist groups from Asia and Gen Z, and regional partnership between countries for sustainable development.
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