While the hospitality real estate sector revenue in Europe slightly decreased to €20.5 billion in 2022, Italy experienced a 40% increase to €3.5 billion, with a projected return to pre-pandemic levels by the end of 2024. Nevertheless, investment volume has dropped by 7%, amounting to €1.7 billion, primarily due to the progressive rise in interest rates by the European Central Bank and the subsequent cautious approach of investors. These signals of slowdown occurred during the second half of the year. These findings are part of the 2023 report on the hotel real estate market presented at the Hospitality Forum 2023, organized by Castello Sgr and Scenari Immobiliari in Milan.
Investment Segmentation in Italy’s Hospitality Real Estate Sector in 2022
Over the past 18 months, investments have mainly focused on the over 80 three-star structures (approximately 26%), four-star (41%), and five-star (approximately 32%) accommodations. In 2022 alone, investments were made in over 4,000 hotel rooms. Some transactions continued to target established locations such as Milan, Rome, and Venice, while others ventured into secondary cities and “peripheral” areas that have the potential to attract visitors but are primarily associated with seasonal tourism or unique experiential features.
The Italian Accommodation System: Key Figures
Currently, structured accommodation offerings in Italy can be divided into two main categories: the “hotel system” and the “non-hotel system.” The former encompasses all structures classified as hotels with star ratings, as well as apart-hotels. The latter includes campsites, tourist villages, rental accommodations managed as entrepreneurial ventures, agriturismo (farmhouse-style accommodations), youth hostels, holiday homes, mountain refuges, bed and breakfasts, and other accommodation services.
Italy boasts 32,400 hotel establishments, representing a 1% increase from 2021 and accounting for 21% of Europe’s total. These establishments offer approximately 1.1 million rooms, placing Italy in the first position in Europe and fifth globally. The United States tops the global list with over 5 million rooms. Analyzing the hotel offering in Italy, approximately 2% consists of five-star and luxury hotels, 20% are four-star hotels, 46% are three-star hotels, and 32% are one- and two-star hotels and apart-hotels. Moreover, the number of chain or affiliate hotels has increased by nearly 60% from just over 1,300 units in 2013 to approximately 2,000 by the end of 2022. International groups account for about 140 hotel brands, representing around 35% of the overall industry, while national groups have nearly 160 brands.
Scenari Immobiliari forecasts a portfolio expansion of nearly 25,000 rooms for hotel chains by 2025, with around half falling within the upscale segment and approximately 25% in the upper upscale and luxury segment. Notable international players entering the Italian market include Nobu Hospitality, Ruby Hotels, and Auberge Resorts Collection. Furthermore, Italy boasts around 190,000 non-hotel structures (46% of Europe), with bed and breakfasts representing 17% and entrepreneurial rental accommodations accounting for 61%. Private individuals manage approximately 465,000 apartments.
The Two Directions for the Development of the Italian Hotel Real Estate Market
“The revenue growth seen in the Italian hospitality real estate market in 2022 is undoubtedly an encouraging signal,” commented Giampiero Schiavo, CEO of Castello Sgr. Given the current uncertain circumstances, it is essential for all market participants, each playing their role, to continue focusing on two key directions: making the entire national territory more attractive, including through infrastructure enhancements, and ongoing revitalization of Italy’s hotel assets to increase international tourism appeal.
