Hotel performance across Europe’s capitals remains elevated by historical standards, but the underlying product has evolved in ways that matter for both operators and investors. Since 2019, the standard definition of hotel service has shifted from full daily provision to a more balanced model shaped by sustainability, energy management, and structural cost pressures. Daily housekeeping is no longer guaranteed in much of the mid-market. Many city hotels now clean on request or on alternating days, while luxury operators have restored full service as a brand differentiator. Plastic miniatures have disappeared almost entirely, replaced by refillable dispensers in line with EU environmental directives. These shifts, initially temporary responses to the pandemic and energy crisis, have since hardened into operating norms. Energy remains a central driver. Since the 2022 energy shock, hotels have invested heavily in efficiency. Climate control now runs within stricter ranges, corridor lighting has been reduced, and linen reuse is promoted as standard. Behind the guest-facing changes lies a capital shift: retrofits in heating systems, solar installations, and EV charging infrastructure are now integral to hotel investment pipelines. Digitisation has moved from optional to mandatory. Mobile check-ins, app-based room keys, and contactless payments allow operators to offset staffing shortages and improve operational margins. Breakfast service and bars, largely restored, run on shorter timetables with leaner teams. EV chargers, almost absent five years ago, are becoming as important as car parks in positioning urban hotels for demand. Pricing remains strong. STR and HRS confirm that average daily rates across Europe rose again in 2025, albeit at a slower pace than in 2023–24. London, Paris, and Nordic capitals continue to sit at the top of the scale, while Warsaw, Vilnius, and Riga are the most affordable among major capitals. Weekend and bank-holiday stays illustrate how compressed demand drives volatility: three- or four-day breaks often trigger double-digit price lifts, especially in markets hosting events or with constrained supply. In Southern and Eastern Europe, dynamics vary widely. Athens remains among the priciest SEE markets, with ADRs nearing €200 in peak months, further elevated by a national accommodation levy introduced this year. Bucharest has recorded rate growth well above inflation, supported by strong occupancy, while Sofia and Belgrade remain at the value end of the market. Zagreb has softened, with rates falling six percent in the first half of 2025, despite higher arrivals, while Ljubljana’s mid-market positioning is reinforced by trade fair-driven seasonality. For investors, the outlook is clear: European hotels remain resilient, but growth is uneven and highly event-driven. Markets with diversified demand bases, such as London, Paris, and Berlin, continue to support premium pricing. Central and Eastern capitals retain their value positioning but are experiencing upward pressure as modern stock comes online and international brands expand footprints. In Southeastern Europe, policy interventions such as taxes are increasingly material to investment returns, while volatility around events is more pronounced. Seasonality remains a decisive factor. Rates peak in spring and autumn and dip in late summer where leisure demand cannot offset weaker corporate traffic. Yet pricing discipline has become a consistent feature of the market. Even where occupancy dips, operators have largely avoided aggressive discounting, signalling structural confidence in demand. The European hotel market of 2025 presents a redefined value proposition. Guests are paying more for rooms, but operators are delivering sustainability, digitisation, and energy efficiency rather than unlimited frills. For investors and developers, the challenge is to recognise where this recalibration strengthens margins and where it risks eroding guest satisfaction. The sector’s ability to hold elevated rates through a period of structural change confirms hospitality’s enduring resilience as an asset class. But the balance between affordability, service delivery, and environmental responsibility will shape the next investment cycle across Europe’s urban markets. Editorial Note: Views expressed are prospective and for information only, not financial, legal, or investment advice.