It is no longer a gamble, but a clear trend: hospitality has become one of the most closely watched asset classes in European real estate.
“Today, the Italian hotel market is no longer perceived as an ‘alternative’ sector, but as a true asset class within operational real estate.” This is according to Roberto Necci, president of the Research Center at Federalberghi Roma, who emphasizes that this transformation is based on solid and measurable fundamentals. “In 2024, Italy set a new tourism record with 139.6 million arrivals and 466.2 million overnight stays in accommodation facilities and rose to second place in the EU for overnight stays, surpassing France,” he comments.
These figures explain why the sector has become central to investment strategies, a trend also reflected in transaction volumes. “2025 proved to be a particularly dynamic year, with over 120 transactions completed and a total volume of approximately 2.25 billion (out of a total of 12.1 billion invested in real estate), positioning hospitality as the third-largest asset class after retail and office – emphasizes Gabriele Fiumara, AssocRics, senior RE consultant for hospitality & operations at Wcg – And the figure is up from 1.8 billion in 2024 and 1.11 billion in 2023, approaching the record levels of 2019.”
According to Francesca Zirnstein, CEO of Scenari Immobiliari, “2025 marked the best performance since the onset of the Covid pandemic.” A trend that, moreover, is set to continue: “Interest in the asset class remains very strong, and Italy is considered one of the most attractive markets in Europe for 2026–2027,” states Zirnstein.
Hotels and hospitality: from niche to asset class
Growth, however, is not merely quantitative. It is above all qualitative. “The sector is undergoing a phase of profound transformation, a true ‘replacement’ of the traditional model. Istat data in fact highlight a gradual shift away from 1-, 2-, and 3-star properties toward 4-star hotels and higher categories – explains Fiumara – An evolution that affects both the product and management models: family-run operations are increasingly giving way to structured operators and major international brands, which are driving the sector’s growth and repositioning.”
But this fits into a broader picture: “An still highly fragmented offering that is often not fully aligned with international standards, leaving ample room for repositioning,” observes Necci. The result is a market where value isn’t found—it’s built. “Conversions, rebranding, category upgrades, operational efficiency improvements, and the development of hybrid formats are creating new value,” continues the president of the Federalberghi Roma Research Center.
Luxury Hotels and Redevelopment: The New Value-Add Strategy
In this context, there is one key word: redevelopment. “The portfolio currently available is one that needs to be developed,” explains Zirnstein, adding that almost all of these are value-add initiatives carried out by established operators. This trend also reflects the very structure of the Italian market.
“According to Istat data, by the end of 2024 there were nearly 30,000 active hotel establishments in Italy (over 265,000 including non-hotel accommodations), for a total of approximately 998,000 rooms and over 2 million beds. This translates to an average of just 33.5 rooms per property, a figure significantly below the standards required by institutional investors,” Fiumara points out. He goes on to say that in this context, strategies are polarizing: “On one hand, core investors are focusing on prime assets; on the other, interest in value-add transactions is growing.”
And this is where the real watershed of the sector comes into play. “In the hotel sector, management carries immense weight because the asset’s value is directly linked to its ability to generate cash flow,” explains Necci. “Location remains a necessary condition, but management is increasingly the sufficient condition.”
Hotel real estate: who is investing in Italian hotels today
The investor landscape has also transformed. “Today we see a much broader and more sophisticated capital pipeline: alongside traditional operators, we find REITs, real estate funds, private equity, institutional investors, family offices, HNWIs, and international capital,” observes Necci.
Underlying this interest is also a structural reality: “There is still a great deal of capital ready to be invested, there is ample liquidity available, and the average capital per operator is quite high,” explains Zirnstein, “and this capital is targeting specific areas. The key markets remain the major Italian cities, particularly Rome and Milan, followed by Venice and Florence, and, to a lesser extent, Genoa and Turin” .
But it’s not just a matter of major cities. “In addition to traditional destinations, opportunities are growing in areas with a strong experiential identity: districts linked to food, sports, music, or the so-called Motor Valley, where the tourism offering integrates with cultural and thematic elements, creating new sources of appeal for investors,” continues Fiumara.
What is really changing is the approach. “Capital doesn’t just want ‘bricks and mortar’; it wants a platform for returns. That’s why we’re seeing hybrid models emerge: financial investor + hotel operator + brand + local partner. In short, the market is shifting from an asset-based logic to an industrial logic,” summarizes Necci.
Hotels, returns, and capital: new opportunities in tourism
When it comes to returns, the picture is equally multifaceted. “We expect a slight rise in returns. This is not so much due to conditions directly affecting the real estate product, but rather the broader context and instability that lead to a perception of slightly higher risk, despite the fact that debt and financing conditions are objectively improving,” observes Zirnstein. He then adds: “If we look at other asset classes, hospitality could still manage to command a premium over more mature ones, such as core offices or prime logistics.”
But there is no single figure. “The key point is to always distinguish between ‘prime’ yield, ‘stabilized’ yield, and ‘transformative’ yield,” explains Necci. “For trophy or prime assets in the best locations that are already well-positioned, initial yields are tighter because the market prices them as defensive and highly liquid products.”
In the first half of 2025, prime yields in Italy remained essentially stable, with a slight compression in some trophy transactions, especially in Rome and Venice. When, on the other hand, we’re talking about a 7–8% gross yield, we’re more easily entering the realm of value-add assets, properties to be repositioned, strong secondary properties, or transactions where the yield depends on much more active management. So that 7–8% is more accurately considered a selective target.”
And once again, everything comes down to execution capability. In hospitality, in fact, location alone is not enough: it is the quality of managerial oversight that makes the difference between just any property and a true investment.
(Article excerpted from issue no. 90 of We Wealth magazine, May 2026)
