Barcelona has displaced Madrid and a cluster of Western European rivals to tie London as the most sought-after city for hotel investment in Europe, according to CBRE's 2026 European Hotel Investor Intentions Survey.

A year ago, Barcelona ranked fifth among European cities. CBRE's latest survey of the hotel investment community places it level with London at the top of the city ranking, with Madrid third and Milan and Paris tied for fourth. Spain has simultaneously moved to the most popular country in Europe, ahead of Italy and the United Kingdom, the same top three as a year ago but with a new order.

What drove Barcelona's rise?

The city has tightened regulation on tourist apartments and restricted new short-term rental licenses, CBRE noted. New hotel development continues to constrain future supply growth in Barcelona. That combination of regulated short-term rentals and a constrained pipeline has pulled capital toward traditional hotel assets. The United Kingdom still ranks as the largest market by deal count, even if it does not lead on aggregate value.

How are investors positioning their capital?

Ninety percent of European hotel investors surveyed plan to increase hotel allocations across 2026. The appetite for global brands rose to 53% in 2026, up from 43% a year earlier, while independent hotels fell to 24% from 40% over the same period. Soft brands captured 24% of investor preference, a category CBRE described as continuing to grow because of its flexible appeal.

The report characterized the brand-versus-independent reversal as a signal that investors now view branded operations as a value-creation tool rather than a constraint on flexibility. Opportunistic deals also climbed to 25% of transactions from 15%, which CBRE read as a more selective return to higher-risk opportunities rather than a wholesale pivot.

Where is the demand concentrated?

Luxury remains the dominant segment. Fifty-three percent of investors named luxury hotels as their preferred segment, with CBRE's research team flagging rising interest in operationally resilient formats such as extended-stay and all-inclusive models. Those formats offer more stable income streams at a time of cost pressure and geopolitical uncertainty.

What are the operators and distribution implications?

A 10-point swing toward global brands and a 16-point swing away from independents carries direct consequences for how travel is sold. Branded inventory typically routes through central reservation systems, global distribution systems and chain-level loyalty programs, which concentrates commission flows and rate control with the flag. Soft-brand collections, which sit at 24%, leave operating autonomy with the property while pulling it into a flag's distribution and loyalty infrastructure. Investors reading the CBRE data are effectively voting for tighter brand affiliation and the distribution leverage that comes with it.

Luxury and extended-stay concentration also shapes channel mix. Extended-stay demand skews toward longer booking windows, direct relationships and negotiated corporate rates, a different commission profile from luxury, which relies more heavily on travel advisors and premium OTAs. Sellers of travel should expect a higher share of European hotel capital to flow into segments that already command pricing power.

How are CBRE's leaders framing the cycle?

Kenneth Hatton, head of hotels, Europe, at CBRE, said the 2026 results point to a market underpinned by structural demand, including the rise of experiential travel across generations. He added that hotels have withstood cost pressures and geopolitical uncertainty, reinforcing them as a compelling real estate allocation.

Ronald Chan, CBRE's European hotels research lead, said sustained travel demand and the sector's pricing power continue to underpin investor appetite. "We are also seeing a shift in focus towards assets and formats where investors can unlock value while benefiting from more stable income streams, particularly in segments such as luxury and extended-stay hotels," Chan said.

The question for the next survey cycle is whether the 90% allocation-increase signal translates into closed deals, or whether Middle East conflict and macroeconomic uncertainty keep capital on the sidelines longer than 2026 investor sentiment currently implies.