IHIF EMEA 2026 - Leisure leads as hospitality shifts toward scale and scarcity

The message from this year’s International Hotel Investment Forum was of an industry of two parts. On one side a resilient, fast-growing leisure segment driven by affluent consumers. On the other, a more uncertain landscape of urban and corporate demand, increasingly exposed to geopolitical shifts and changing travel patterns.

Leisure assets, particularly resorts and destination properties, are now at the centre of capital allocation strategies. The logic is straightforward: wealthier travellers are travelling more frequently and proving less sensitive to macroeconomic volatility, which is being reflected in average daily rates at luxury properties continuing to outperform.

Yet the enthusiasm is not without caveats. Seasonality remains an inherent risk, while certain urban markets are showing signs of softening, particularly this reliant on Middle Eastern demand. Even standout performers such as Italy carry a degree of fragility, given their reliance on US travellers.

If leisure is the demand story, scale is the capital story. Across private equity and institutional investors, the shift away from single-asset deals toward platform strategies is now well established. Large investors are seeking aggregation: portfolios, branded collections and operating platforms that offer both efficiencies and clearer exit routes.

Geographically, capital is converging on a familiar map. Southern Europe has emerged as the industry’s core investment focus. The appeal is both practical and structural: strong leisure fundamentals, global brand recognition and a depth of repositioning opportunities.

Portugal in particular, has gained prominence as a market combining growth potential with relative accessibility. France remains desirable but difficult to penetrate, while Eastern Europe continues to represent a strong secondary market.

Rising construction costs and increasingly complex repositioning requirements are forcing investors to reassess underwriting assumptions. Deals are still being done, but with greater scrutiny on the true cost of transformation. In this environment, renovation is favoured over ground-up development, offering a more controlled path to value creation.

This pressure is also exposing a structural weakness: the industry’s limited supply of independent, high-quality asset management. Investors, lenders and advisors alike point to a gap between ownership objectives and operational execution, particularly in the luxury segment, where performance differentials can be significant.

At the same time, the traditional boundaries of the hotel model are shifting. Brand strategies are fragmenting, with operators expanding into softer, more flexible concepts and investors showing increased willingness to adopt white-label approaches. Boutique and ultra-luxury positioning continues to gain ground, often at the expense of standardised mid-market offerings.

Parallel to this, branded residential has moved from peripheral feature to central pillar. By integrating residences into developments, investors can unlock upfront capital, reduce project risk and extend brand reach beyond the hotel stay. The model is no longer experimental; it is becoming standard practice.

Even so, not all sources of capital are moving in lockstep. Middle Eastern investment remains significant but is showing signs of caution. Geopolitical tensions are beginning to affect both development timelines and outbound travel flows, with knock-on effects for European markets that had come to rely on this demand.

Leisure demand is reshaping performance expectations. Platform strategies are redefining how capital is deployed. Southern Europe is consolidating its position as the sector’s geographic core. And beneath it all, rising costs and operational complexity are raising the bar for execution.

For investors, the implication is clear: returns will depend less on market timing and more on strategic discipline. In a sector increasingly defined by scarcity, of prime assets, of operational expertise and of deployable opportunities, scale, selectivity and sophistication are becoming the decisive advantages.