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Hotel Market Beat 2023

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Hotel Market Beat 2023

Investment Trends

Following a slow start, hotel investment activity surged in the second half of 2023, exceeding €1 Bn (+74% vs H2 2022). Total investment volumes for 2023 amounted to €1.5 billion (+1% vs 2022), reaffirming hospitality as a leading sector in the Italian real estate market. Key transactions included the acquisitions of Six Senses Rome, Aermont Pellicano Portfolio, and the sale of Blackstone’s 35% stake in HIP.

Investment Trends 2023 - Italy— Source: Cushman & WakefieldInvestment Trends 2023 - Italy— Source: Cushman & Wakefield
Investment Trends 2023 – Italy— Source: Cushman & Wakefield

Prime Yields

While transactions picked up in the latter half of the year, the yields continued to decompress, reflecting the tight lending conditions. This trend is anticipated to persist for lower-quality assets in the near term, while high-quality assets are expected to hold value, especially in the luxury sector.

Market Performance

In 2023, the Italian hotel sector recorded one of the highest performances in Europe (top-3), and experienced the second strongest growth relative to 2019 (+44%). This was mainly driven by a strong increase in ADR (+46%), while occupancy stands 1% below 2019 levels. Among European key markets, Rome experienced the fastest RevPAR growth (+55% vs 2019). Looking ahead, we expect moderate RevPAR growth in 2024.

Supply Outlook

H2 2023 was marked by numerous new openings of 5-star hotels, primarily situated in Italy’s top four tourist destinations. The most notable was the Palazzo Cordusio, a Gran Meliá Hotel (84 keys) in Milan, while a substancial expansion occured in the key Italian mountain and lake tourist destinations. In 2024, over 55 hotels are expected to open across Italy, although in Rome and Milan the supply growth will remain below 2%.

Nature of Investments 2023 - Italy— Source: Cushman & WakefieldNature of Investments 2023 - Italy— Source: Cushman & Wakefield
Nature of Investments 2023 – Italy— Source: Cushman & Wakefield

Demand Outlook

Italy’s tourism sector demonstrated a sustained demand recovery throughout 2023, with domestic travelers and international visitors generating an estimated 154 million overnight stays (+12% on 2022) and 120 million overnight stays (+18% on 2022), respectively. In 2024, increase in international travel will be the key driver of growth, with mounting interest in Italy’s major leisure sea, mountain and lake destinations.

Transaction Heat Map 2023 - Italy— Source: Cushman & WakefieldTransaction Heat Map 2023 - Italy— Source: Cushman & Wakefield
Transaction Heat Map 2023 – Italy— Source: Cushman & Wakefield
Selected Major Recent Transactions 2023 - Italy— Source: Cushman & WakefieldSelected Major Recent Transactions 2023 - Italy— Source: Cushman & Wakefield
Selected Major Recent Transactions 2023 – Italy— Source: Cushman & Wakefield

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