• Hotel investment in the CEE-6 region reached EUR 464 million, up 74%
  • For investors, ESG is now a key challenge but also an opportunity to reduce expenses and increase asset value with around a 6% “green premium”
  • Less than 5% of hotels in CEE-6 capitals have a verified ESG certification
  • CEE-6 hotels need to achieve a more than 50% carbon footprint reduction by 2030

International law firm CMS and leading global commercial real estate services company Cushman & Wakefield have today published the findings from the fourth edition of their joint report on the hotel investment scene in CEE: Getting Real about ESG in Hotel Real Estate.

Strong recovery in the hotel sector expected to feed more investment

Hotel investment activity in the CEE-6 region reached EUR 464 million during the 12 months ending June 2023, despite a notable increase in financing costs and the ongoing economic and geopolitical challenges. Between H2 2022 and H1 2023, 23 hotels comprising almost 3,000 rooms were sold. With several significant deals in progress, this year’s transaction volume may reach EUR 563 million by the end of 2023, nearly 30% more than in 2022. Investor appetite is fuelled by the strong recovery in hotel performance across the region, with revenue per available room (RevPAR) surpassing 2019 levels by 6% in H1 2023.

Magsud Rahmanov, Head of Hotel Transactions, CEE & SEE, Cushman & Wakefield commented: “In the hospitality sector across the CEE-6 countries, transactional activity between H2 2022 and H1 2023 was boosted by increasing pressure on owners to dispose of or refinance their assets, and investors to deploy accumulated capital – but also by improving hotel performance. Despite lower occupancy than H1 2019, ADR growth lifted CEE-6 capitals’ RevPAR above pre-pandemic levels in H2 2022–H1 2023, and the CEE region’s upward trend is set to continue: while ADR growth will ease, rising occupancy will help sustain positive RevPAR momentum. The combination of stabilizing inflation, improving hotel performance and the return of international investors – particularly from Asia and the Middle East – will likely drive a further uptick in hotel sales over the next year. We have several deals in progress that confirm this trend.”

ESG – an increasingly important factor for investment

According to the report, half of hotel investors in the CEE already address ESG in their transaction due diligence, and 40% are in the process of including it, presenting the opportunity to increase the value of assets – as well as the threat of potential issues during transactions. Over 50% of investors encountered ESG-related challenges while conducting hotel acquisitions and disposals. For approximately 35% of investors, this resulted in significant financial consequences, surpassing half a million euros.

In addition, ESG has become an important standard to measure a company’s long-term impact on the environment and society, as it further supports talent attraction, innovation, brand value enhancement, and opportunities for better financing. Sustainable hotels can also get better commercial terms from operators, who will also be affected by increasing ESG EU regulation.

Lukas Hejduk, Head of Hospitality, CMS commented: “ESG is not only a moral imperative, but also a key driver of value creation and resilience in the hotel industry. As the expectations of guests, investors, and regulators evolve, hotel owners and operators need to adapt and innovate to meet the growing demand for sustainable and socially responsible practices. The EU is dynamically developing legislation to promote the green transformation. Several legal acts have already been adopted to strengthen the effectiveness of reporting on environmental, social and governance issues. These will have a direct impact on the financial sector as well as on the hospitality sector, because stakeholders will increasingly assess the ESG performance of hotels.”

Lack of formal ESG certification clashes with drive from by international brands and institutional investors

A wide range of various eco-labels exists in the hospitality sector, with inconsistent quality and reliability. Less than 5% of hotels across major CEE cities have ESG certifications recognised by Google Travel (BREEAM, LEED, Green Key, Green Globe, Earth Check, GSTC, etc.). In contrast, institutional investors tend to have strong ESG policies, sometimes including compulsory certification of their real estate portfolio.

To comply with increasing requirements from investors, regulators, and other stakeholders, hotels in the CEE region will need to notably reduce their carbon footprint and energy intensity. According to energy reduction pathways in the latest Carbon Risk Real Estate Monitor (CRREM) tool, which many institutional investors and other stakeholders use, the carbon intensity of hotels across the CEE-6 countries is expected to be reduced by ca. 17% by 2025 and 53% by 2030.

David Nath, Head of Hospitality, CEE & SEE, Cushman & Wakefield commented: “Branded and large hotels typically target international corporate and MICE demand that appreciate formal eco-certifications. Also, many renowned operators and tenants encourage owners to get a certification, and some even have their own sustainability programmes. However, most hotel markets in CEE have a relatively low brand penetration. Further, most hotels are relatively small and in older properties, frequently historical buildings, which makes it more challenging to achieve a satisfactory certification level. The exception is Warsaw, where many hotels are branded and relatively modern.”

Bořivoj Vokřínek, Strategic Advisory and Head of Hospitality Research, EMEA, Cushman & Wakefield, added: “The data shows that while the expected energy intensity reduction pathways are challenging, they are achievable. Furthermore, there is also an option to generate renewable energy onsite or purchase green energy, which would reduce the carbon footprint of hotels and help them to comply with the decarbonisation pathways despite higher energy intensity.”



  • CMS

    Founded in 1999, CMS is an integrated, multi-jurisdictional organisation of law firms that offers full-service legal and tax advice. With 81 offices in 45 countries across the world and more than 5,000 lawyers, CMS has long-standing expertise both in advising in its local jurisdictions and across borders. From major multinationals and mid-caps to enterprising start-ups, CMS provides the technical rigour, strategic excellence and long-term partnership to keep each client ahead in its chosen markets. The CMS member firms provide a wide range of expertise across 19 practice areas and sectors, including Corporate / M&A, Energy & Climate Change, Funds, Life Sciences & Healthcare, TMC, Tax, Banking & Finance, Commercial, Antitrust, Competition & Trade, Dispute Resolution, Employment & Pensions, Intellectual Property and Real Estate. For more information, please visit cms.law