While Italy is most definitely “having a moment” in the hospitality investment stakes, few perhaps realise just how impressive its capital markets performance has been in an annus horribilis for the European economy.
Although the headwinds of high inflation and interest rates continue to batter the eurozone, and Italy’s own economy remains sluggish at best, its hospitality real estate has outperformed most of its European neighbours.
One firm taking advantage of the country’s soaring occupancy and profitability is midscale heavyweight B&B Hotels, which has been taking over a number properties via its asset light model, according to Liliana Comitini, president and CEO of B&B Hotels Italia. “We are focused both on business and leisure travel, targeting a clientele that is very focused on affordability and quality,” Comitini says.
Hospitality Investor is a partner for the upcoming Italian Hospitality Investment Conference (ITHIC). The event takes place in Rome between 17 and 18 October. You can buy tickets here.
“This is giving us a great opportunity to grow. Last year we reached 70 hotels in the country, this year we have already opened one new property and are planning to add another eight by year end, to reach 150 hotels by 2030. Yes, it’s a big expansion plan but Italy is a great country in which to grow at the moment,” she adds.
Accessible opportunities
Italy itself has also been working hard to make its opportunities more accessible. For a country which was averse to granting planning permission in its historic cities for many years, this is an important sea change. “We currently have a very strong team attracting inward investment to Italy,” confirms Ferdinando Fiore, director of the Berlin office of the Italian Trade Agency. “In 2023 alone, there was an investment in hotels that reached €1.6 billion, with a focus on luxury hotels in cities like Rome, Tuscany and Lake Como. But we also expect further demand to invest in the midscale segment, confirming Italy’s very good “moment”.’
Investment specialists don’t necessarily think that this “moment” will be short lived. “It is riding the wave now, but I think this will continue in the coming years,” says Marcello Cicalò, CEO of Bluserena Hotels & Resorts. “There is a lot of dynamism and prices are increasing.” He notes that the number of small enterprises within the sector help defend the “character” of Italian hospitality. “We currently have 13 resorts… we need to concentrate on the product that we serve to our guests, to make sure it keeps the passion and the unique selling point that we can offer.”
Expansion mode
Starhotels is another Italian home-grown brand which has been in successful expansion mode, although Fabrizio Gaggio, co-CEO & asset director of Starhotels Group, sees an opportunity to “improve areas like development” still further, while re-examining its business model. “We should think about a new ‘composition’ of ownership,” Gaggio says. “Propco and opco give a balance between the two branches of the company, to ensure that each side is performing as well as the other.” He said that the firm’s mantra was “improving, improving, improving”.
While in growth mode, investors and operators still need to keep an eye on sustainability, underlines Christian Lungarotti, head of economic section of the Embassy of Italy in Berlin. “It is crucial that Italy remains ‘intact’ while growing,” he says. “Italy’s charm to overseas guests lies in its mix of love for nature, culture, lifestyle, food – all elements which cannot be decoupled from the topic of sustainability.”
Lungarotti adds that German travellers in particular – one of Italy’s most important markets – place a naturally high value on environmentally-friendly practices, which they expect to encounter when visiting the country.
Based on past performance, he concludes that the outlook is bright. “We did well as a country in terms of investment in these times of high interest rates. I believe that the cost of borrowing will be lower next year. Overall, as these two factors combine, when the interest rate falls, the investment aggregate in Italy will surge.”
Gaggio backs the thesis of a bright outlook. “Our first quarter this year has seen 15 per cent year-on-year growth,” he notes, adding that a raft of “big events” in the country in the coming years, including Rome’s Jubilee in 2025, should mean more “opportunities for everyone”.