Condo Hotel Investments: Europe's Expanding Market in 2025

The condo hotel investment model—where investors purchase individual hotel units and earn rental income while the property is professionally managed—is experiencing remarkable growth across Europe. While Poland has been a pioneer in this space, the model is now thriving in multiple European markets, offering investors diverse opportunities for passive income generation.

The European Condo Hotel Boom

The European hotel investment market is experiencing unprecedented momentum in 2025. Hotel investment transactions in Europe were up by 49% year-on-year in the first half of 2024, with early indicators from January 2025 suggesting strong investment appetite for luxury hotel assets continues, with 11 transactions recorded in the first month alone.

European Hotel Investment Volume Growth: €7.3B to €10.95B (2022-2024)

This surge reflects a fundamental shift in how investors view hospitality real estate. Private equity accounted for 50% of investment volumes last year, with high-net-worth individuals and owner-operators also showing strong interest—especially in luxury and limited-service segments.

Key European Markets for Condo Hotel Investment

Italy: The Rising Star

Italy has emerged as one of Europe's most dynamic condo hotel markets. This new type of property investment is rapidly spreading in the Italian market, with successful projects already generating significant returns.

The Allegroitalia Hotel & Condo stands as a prime example of the model's success. This condo-hotel has an annual turnover of over 20 million euros and is among the pioneers of the condo-hotel segment in Europe. The Italian market benefits from strong tourism fundamentals, with Italian hotels having 90.3 million reservations with an average stay of 2.97 nights in 2016.

Italy is a universal target for investments in condo hotels

Spain: International Expansion Hub

Spain is attracting significant international investment in the condo hotel space. Hotel101, a chain of three-star condohotels, is expanding outside its home market of the Philippines with one of its first European properties planned for Madrid.

The Hotel101 model offers a clear investment structure: units cost 188,000 euros each and investors can buy one or multiple units with a 30/70 split of gross revenue between the owner of the unit and Hotel101 once the hotel is operational. This transparent revenue-sharing model provides investors with predictable monthly income regardless of their specific unit's occupancy.

France: The Established Leader

France boasts one of Europe's most mature condo hotel markets. Aparthotels Adagio is the European leader in medium and long-term stays with a network of more than 130 aparthotels, 14,700 apartments in 17 countries.

The French market demonstrates the scalability of the franchise model. Since 2018, Adagio has quadrupled its franchised network from five aparthotels then to 28 today, representing around 20% of its portfolio now. This expansion strategy shows how established operators are leveraging the franchise model to accelerate growth.

United Kingdom and Germany

London and Paris were named as investment hot spots for condo-hotels, with the UK market benefiting from a well-developed debt market that allowed investors to buy condo-hotel units with much less equity than in other European countries, sometimes as low as 30%.

UK could became a favorite condo hotel spot given the financing availability

Investment Advantages of the European Condo Hotel Model

Superior Occupancy Rates

One of the most compelling aspects of condo hotel investments is their operational performance. Serviced apartments often have higher occupancy rates (84% in 2016) compared to hotel properties in general (70% in 2016).

Lower Operating Costs

The efficiency of the condo hotel model is reflected in its cost structure. Serviced apartment operating expenditures average 40% of revenue compared to 60% for hotels for two reasons: most apartment hotels do not offer breakfast and clean the rooms weekly, not daily like in hotels.

Lean Operating Model

Apartment-style hotels offer investors a unique blend of stability and flexibility, while appealing to a diverse range of guests. The segment's light staffing model offers cost savings and operational efficiencies.

Attractive Returns

The financial performance of condo hotels can be compelling. Net guaranteed yields operators offer to the end investors vary by market, with Adagio, Pierre & Vacances and RésidHome apartments in France offering 4% per annum, after maintenance and management expenses.

Market Expansion Trends

Growing Demand Across Segments

Operators expressed interest in developing in southern Europe, with Italy, Spain and Portugal the main targets. Western Europe also remains an appealing market, such as France, Germany, the Netherlands and the UK.

Franchise Model Growth

The franchise approach is gaining momentum as operators seek to expand without heavy capital investment. Select brands are increasing their franchise pipeline, with Adagio targeting two-thirds of future openings to be carried out using the franchise model.

Premium Market Focus

Upper-upscale and luxury hotels remain top investment priorities, driven by strong post-pandemic performance and sustained demand from high-net-worth travellers.

Investment Opportunities by Country

Most Attractive Markets for 2025

According to industry research, the Iberian Peninsula, Italy and France remain the most attractive destinations in Europe for hotel investment in 2025, with Madrid, Barcelona and Rome the most attractive destinations overall.

Emerging Markets

Among the cities with the largest year-on-year increase in interest are Prague (+14%), followed by Munich (+8%), Milan (+4%) and Edinburgh (+4%).

Market Outlook for 2025

The European condo hotel market shows strong fundamentals for continued growth. 70% of investors expect hotel prices to rise in 2025, due to lower cost of capital, increasing hotel performance and rising investor demand in a context of product scarcity.

With capital actively seeking opportunity and fewer new developments on the horizon, 2025 could be a seller's market in European hospitality.

Conclusion

The condo hotel investment model has successfully expanded far beyond its Polish origins, establishing itself as a viable investment strategy across multiple European markets. From Italy's rapidly growing market to Spain's international expansion projects, France's mature franchise systems, and the UK's favorable financing environment, European investors now have numerous opportunities to participate in this growing asset class.

The combination of strong occupancy rates, efficient operating models, and the ongoing recovery in European tourism creates a compelling investment environment for those looking to diversify their portfolios with income-generating hospitality assets.

For investors considering condo hotel investments, the key is to partner with established operators who understand local markets and can provide transparent revenue-sharing models, professional management, and clear exit strategies. As the European market continues to mature, early investors in quality projects are likely to benefit from both regular income streams and long-term capital appreciation.