The Hospitality Investor Sentiment Index remained unchanged in the first quarter of 2026, maintaining the same positive level of 59 it achieved at the end of 2025. The index has given up most of the positive gains it made over the past year and it is also worth pointing out that much of the research was carried out before the escalation of conflict in the Middle East.
Highlights
Despite the fact that there was no change in the oversell score, there were some interesting changes under the hood, including the following:
- Hurdle rate: +12.7 to 58
- Brokerage services requirement: +8.8 to 60 and Legal services: +6.2 to 62
- ESG application within asset management strategy: −12.5 to 48
- Urban markets focus: −7.1 to 58
Demand confidence vs return expectations
The continued growth in consumer travel spending post-pandemic is something we’ve kept a close eye on. What has been particularly remarkable is the multiple crises the global economy has faced since 2020 don’t seem to have dented people’s appetite to travel. Our survey reflects that and Q1 finds investors still in an optimistic mood.
What is interesting is the view on expected returns, which at one point tracked well with demand, has decoupled, indicating investors’ expectations have softened. In fact the gap between the two is widening.
What this tells us: Investors are still bullish on the long-term trajectory of travel but much more cautious on how any returns will be delivered.
Stock availability vs competition
There has been a lot of griping about the dealmaking environment in European hotels over the last few years. Things seem slow but in reality 2025 was a decent year. According to HVS total transaction volume reached €22.6 billion, up 30 per cent on 2024. However, volumes were 17 per cent below 2019 levels. Tracking stock availability vs competition we can see that investors are saying the availability of investable hospitality stock has improved, which is a good thing. However, competition is elevated.
What this tells us: All signs point to liquidity improving in 2026, although there is an acknowledgement that doing deals, and getting the right structure and financing in place will be challenging.
Asset management alpha
With dealmaking challenging and investment returns under pressure, active asset management is key when it comes to making money on a property. This quarter’s figure fell 3.1 points to 62, but remains in positive territory. Tied to this are concerns around profitability and it is easy to see why. Costs around energy look set to rise in the wake of the conflict in Iran (although responses were made before the escalation) but there is also the specific impact of government initiatives e.g. in the UK and the Netherlands.
What this tells us: Expect to see owners and operators working harder to squeeze every drop out of an asset.
Methodology
The Hospitality Investor Sentiment Index gauges the sentiment of equity investors active in the hospitality sector, by polling their opinions on a quarterly basis across consumer demand and operational performance, the demand for, and availability of stock, appetite for risk and the pricing of investment opportunities.
The key elements of the methodology are:
1. A questionnaire answered by senior decision makers, who are members of Questex’s Investor Council, representing the leading investment firms.
2. Responses are based on whether confidence levels are ‘higher’, ‘the same’ or ‘lower’ than the previous quarter based on a particular outcome.
3. A diffusion index method is used to arrive at the index score. The resulting index values are bound between 0 (all investors respond lower) and 100 (all investors respond higher), with a theoretical no-change mark at 50 (all investors respond ‘the same’ or equal proportions respond ‘higher’ as do for ‘lower’). Values above 50.0 indicate an increase and below 50.0 indicate a decrease. The distance from the 50 no-change mark signals the implied rate of change in the variable, the further from 50.0 the greater the rate of change.
Example: Take a movement from 60.0 in Q1 to 55.0 in Q2. Although the level of the index has fallen, it has nonetheless posted above 50.0 in both quarters. The correct interpretation is that the sentiment increased in both Q1 and Q2, but that the rate of increase was slower in Q2 compared to Q1.
4. The overall Questex Hospitality Investor Sentiment Score is based on a weighted average of the quarterly results.