86% of hotel investors plan to allocate as much or more capital to hotels in 2026 than in 2025, according to Cushman & Wakefield's Hotel Investor Compass.
Yet, the French hotel stock has only grown by 1.2% over ten years, according to the 2026 Rydge Conseil study on the French hotel industry.
When the number of rooms is barely changing, the value of a hotel investment lies elsewhere, and increasingly often in food and beverage.
The main ways to make a hotel investment
Before looking at value, you must first choose the vehicle. A hotel investment takes different forms depending on the available capital and the desired level of involvement in operations.
Block purchases and hotel club deals
A block purchase involves acquiring an entire property, either the real estate alone or both the real estate and the business assets. It is the most direct form of hotel investment, the one that most heavily involves the investor in management and the choice of operator.
A hotel club deal brings together several investors around a single asset, generally alongside a specialized operator. It pools risk and lowers the level of individual commitment, while maintaining direct exposure to the property's performance.
Funds, private equity, and listed real estate companies
Funds dedicated to the hotel industry and private equity players allow for exposure to the sector without directly managing a property. The investor becomes a shareholder, while the management team selects and oversees the assets.
Listed real estate companies, such as real estate investment trusts (REITs) specializing in the hotel sector like Covivio Hotels, offer daily liquidity since their shares are traded on the stock exchange. This is the most accessible route, at the cost of having no involvement in the asset's strategy.
Why does the return on a hotel investment no longer depend solely on the occupancy rate?
For a long time, a hotel's performance was measured almost exclusively by RevPAR, or revenue per available room. This perspective is becoming insufficient for understanding where value is truly being created in 2026.
RevPAR, TRevPAR, and the growing importance of F&B
TRevPAR provides a broader view by incorporating all revenue generated per available room, including food and beverage. In a hotel where F&B accounts for 25% or more of total revenue—which is common in 3- to 5-star establishments according to Rydge Conseil—ignoring this line item means underestimating a significant portion of the asset's profitability.
What the 2026 Rydge study shows about the polarization of the French market
The French hotel market is clearly polarizing toward the high end. The RevPAR for superior 5-star hotels grew by 17.7% in 2025, while that of 3-star hotels fell by 1.2% and that of 1-2 star hotels by 1.6%.
Over the same period, the share of 4-star rated rooms increased from 17% to 26% in ten years, that of 5-star hotels from 3% to 5%. Investments in France reached 3 billion euros in 2025, up 44% compared to the ten-year average.
This widespread move upmarket makes differentiation through food and beverage all the more critical for an investor.
Food and beverage: the primary driver for hotel investment valuation
This is a point many investors discover too late. Lenders no longer treat food and beverage as a mere ancillary service to accommodation; they now integrate it directly into their assessment of an asset's value.
The discount lenders apply to unmanaged F&B revenue
According to the Rydge Conseil study, a 10% to 30% discount can be applied to food and beverage revenue when its sustainability is not proven, for instance, in the absence of a clear concept or a stable team. Conversely, well-managed and documented food and beverage operations become a valuation asset in their own right at the time of sale or refinancing.
The F&B EBITDA threshold that shifts valuation
Banking institutions recognize additional value creation beyond a certain level of EBITDA generated by F&B, with Crédit Agricole citing a target of 15 to 20% for the best-performing assets. For its part, the Caisse des Dépôts describes the operator's track record as "decisive" when reviewing hotel financing applications.
Where hotel investment value will be created in 2026: four dynamics driven by F&B
The Rydge Conseil study identifies four transformation dynamics in the French market, all of which illustrate the same principle. Value no longer comes solely from the number of rooms; it comes from what food and beverage services bring to the asset.
Agritourism: the dining experience that defines the destination
Approximately 13,000 farms already welcome visitors in France. In this model, the restaurant becomes the primary reason for the visit and agricultural production the core of the menu—an investment in itself rather than a cost center.
The coast: upgrading rather than building
With coastal land in short supply, growth no longer comes from adding new rooms but from the revenue generated per occupied room. In destination hotels, F&B can account for 35 to 40% of total revenue, compared to a significantly lower average in cities.
Urban wellness, and the F&B that drives the club's daily life
A standalone spa often shows a negative direct margin in high-end establishments. It is the café, the nutrition menu, and the bar that provide the economic lifeblood for a hotel attached to a wellness club, thanks to a membership base that extends beyond just the overnight guests.
The hotel-as-a-world, a story told at the table
In some recent projects, the restaurant and bar have become the main stage of the experience, taking precedence over the room itself. Rydge Conseil refers to this as an "inversion of the hotel/restaurant relationship," a signal that dining can become the core of an asset's value proposition rather than its supplement.
Expected returns, taxation, and key considerations before a hotel investment
Beyond the chosen vehicle, an investor must also anticipate the realistic level of return, timelines, and the applicable tax framework.
What the European market says about expected returns
The Cushman & Wakefield Hotel Investor Compass 2026 places the average return expected by European hotel investors at around 15.6% ROE, with an average premium of 4.3% on the highest-rated environmental assets.
Value-add and opportunistic strategies currently dominate the market, particularly for assets in need of repositioning—a climate that favors buyers capable of transforming a hotel rather than simply holding it.
Taxation and timelines to anticipate
A tax deferral mechanism provided for by Article 150-0 B ter of the French General Tax Code may apply when selling company shares, subject to reinvestment, in accordance with the rules specified by the tax authorities.
Also allow for several months, sometimes more than a year for an asset to be repositioned, between searching for the opportunity and finalizing the acquisition. Independent legal and tax advice is recommended throughout the process.
Securing the F&B value of a hotel investment before buying
Since food and beverage operations directly impact valuation, they deserve the same level of scrutiny as a standard financial audit, even before signing.
Auditing F&B performance before acquisition
An independent F&B audit measures the actual contribution of food and beverage to revenue, its margins, and its potential for improvement. This step, distinct from a financial audit, prevents the discovery after the fact that a loss-making restaurant is dragging down the hotel's overall profitability.
Planning F&B in advance to prepare for resale
Planning the food and beverage concept before investing, rather than adjusting it afterward, avoids having to redesign spaces once construction has begun. It is also what allows you, at the time of resale, to demonstrate a well-managed food and beverage operation and thus avoid the discount mentioned above. Tomorrow Food supports this approach on projects such asHôtel Noucha or theBolivar Hotel.
Hotel investments are increasingly judged not by the number of rooms, but by the quality of their dining offerings. Before signing, have the F&B component of your project audited by the consultants at Tomorrow Food.
