According to 2023 research by and Statista, with acknowledgments to CoStar’s hospitality data, approximately 77% of European hotels are independently owned.

In terms of deals, approximately two-thirds of investments in the European hotel sector involve a hotel brand. The report added that four hotel firms are responsible for opening “half of Europe’s new hotels.”

Markus Gratzer, secretary general of Österreichische Hoteliervereinigung, or the Austrian Hotelier Association, acknowledged the looming “chain-ification” of Europe's hotel industry.

“Indeed, a significant portion of investment in the European hospitality sector comes from larger hotel chains, which pose a competitive threat to independent and family-owned hotels to a certain extent,” Gratzer said.

The next step will be market consolidation, which will potentially marginalize the industry’s smaller players, he added.

The trend will likely see hotels with higher average room counts, said Tobias Warnecke, managing director of the Hotelverband Deutschland IHA, or German Hotel Association.

Smaller, mainly family-owned establishments are increasingly leaving the market, particularly in the small inn, bed-and-breakfast and guesthouse segments, Warnecke said.

“Even during the pandemic, international hotel companies, mainly focused on limited-service hotel concepts that focus on the core service — overnight stays — were increasingly entering the German market,” he said.

Warnecke said the current lending environment provides advantages to the larger players in the hotel industry.

Vladimir Aret is the CEO of Narva Hotels, which has one hotel, the 50-room Narva Hotel in the city of Narva, which overlooks Russia from the Estonian side of the Narva River. Aret said financing has been a challenge for a smaller hotel company like his.

“To develop services at hotels, we had to look for financing opportunities for a long time. Credit institutions are reluctant to provide loans to small businesses,” Aret said.

Consolidation is common among smaller hospitality businesses as future generations of families wish to exit hotels, Warnecke said.

“The vacant properties are increasingly being taken over by hotel chains or larger hotel operators,” he said.

According to 2023 data from the German Hotel Association, branded hotel firms managed 3,794 hotels and other accommodations establishments out of a total of 28,858 in Germany, a 13.1% share, Warnecke said. When room capacity is the main data point, the picture is different, with branded hotel firms accounting for 464,246 rooms (46.6%) of the total number of 996,102.