In 2021, investment in the Italian hotel sector was about 20% of total real estate investment overall
The goals of flexibility and versatility will be the drivers in 2022 and the next two years as they respond to the demand of the ‘new traveler’
The ‘bleisure’ segment, characterized by the concomitance of business and leisure travel, is developing
The hotel market resumes its growth, both globally and locally. In 2021, global real estate investment in the hotel sector more than doubled compared to 2020, approaching 70 billion euros. Europe is also doing well, closing 2021 with a turnover of 21.2 billion and expected to rise to 26.6 billion in 2022. Italy’s hotel real estate sector expects to close 2022 with a turnover of 3.1 billion euros, up 25 percent from the end of 2021.
Highlighting these figures was the 2022 report on the hotel real estate market, presented in Milan during Hospitality Forum 2022, organized by Castello sgr and Scenari Immobiliari. The validation also came from Nomisma’s Real Estate Observatory, whose presentation – also held on July 7 – mentioned hotels as one of the most exciting sectors for investment in real estate.
“In 2021, the hotel real estate market in Italy shared with the logistics sector the top podium for investment growth, thanks to a turnover increased by more than 65 percent compared to 2020,” explains Scenari Immobiliari. They add that the change brings the sector’s performance closer to 2019, a year that saw the highest investment levels ever. “Significant revenue growth of 25 percent is expected for 2022, which will bring the indicator in line with 2018 while exceeding 2019 results is not projected until 2024.”
Hotel growth trends: the development of the “bleisure” segment
“Flexibility and versatility will be the driver in 2022 and for the following two years. The new type of travelers are the following: the unorganized worker, the frequent tourist, and the seasonal excursionist,” said Francesca Zirnstein, managing director of Scenari Immobiliari. She added that among the elements that bring optimism are a widespread increase in overnight stays, record-breaking occupancy rates for certain times of the year, and the multiplication of short vacation opportunities to make up for some of the lost time. Last but not least is the development of the ‘bleisure’ segment, characterized by the concomitance of business and leisure travel.
Challenges to be faced
Some elements could hurt the hotel sector. These include new waves of contagion, rising inflation, the cost of energy and rising prices of stay, labor shortages, and the slow restart of trade fairs and meetings.
“We operators, together with national and local institutions, have a duty to accompany the recovery by responding to the new needs of travelers and offer them a more valuable experience,” said Giampiero Schiavo, managing director of Castello sgr.
Hotel assets in Italy
“Although lodging facilities within the three stars category still make up about 80 percent of Italy’s hotels, in the decade 2010-20, there has been a significant increase in superior facilities. Italy has had an increase of about 21 percent of 4-star hotels and around 60 percent, more precisely 57.7 percent, within the 5-star category,” said Federica Selleri, Director of Property Valuation at Crif Real Estate Services.
She presented the findings of the 2nd Real Estate Market 2022 report during a presentation organized by Nomisma, explaining that there is an excellent focus on superior facilities.
Unlike in the past, the hotel market has not seen price levels plummet since the financial crisis; however, most rates have risen, and demand is still high. “The average occupancy rates recorded in May 2022 are around 73 percent on average, significantly higher than the 2021 figures, which averaged 24.2 percent, thus reaching the 2019 figures that showed an occupancy of almost 76 percent,” Selleri explained, pointing out that the change in 2022 over 2021 is huge (+202.3 percent). However, there is still a tiny lag over 2019 (-3 percent), but the trend is growing.
Focus on higher category hotels
Regarding average revenue per occupied room, the data are all very positive. “The Italian average stands at €218 in May 2022, compared to €137 in May 2021 and €176 in May 2019, with a standout figure for hotels in the 5-Star category reaching very high levels: +25.7% over 2019, compared to +13.9% for 4-Star hotels and +11% for 3-Star hotels,” Selleri continued, a sign that there is growing focus on higher category hotels.
“It is no coincidence that in 2021, investments in the Italian hotel sector alone accounted for about 20 percent of total real estate investments, leading the sector to become the third most important asset class,” added Selleri. He then concluded: “We note considerable investor interest in trophy assets and the resort category, which has shown particular resilience even during pandemic periods, gaining significant investment interest. Repositioning and rebranding strategies have been somewhat of a fil-rouge for investors who have often found the need for significant investment, especially in the luxury sector. The uptick in hotel performance, driven very much by domestic demand (a trend that will continue in the future), has allowed Italy to remain one of the preferred destinations for investors in the hotel sector, with a particular focus on the leisure sector in major cultural cities and the premium and luxury segments.”
