More and more foreign chains are looking at Italian structures because the Belpaese is still considered very attractive as a tourist destination, despite the pandemic and strict restrictions. The Italian character of the offer, however, does not seem to be at risk: those who come to us want to experience the style that distinguishes us; at the cost of spending big bucks.
One thing is certain, Italy continues to be a very attractive tourist destination. In spite of a still precarious epidemiological situation and restrictions that last longer than expected and more severely than in other countries, hotellerie investors believe in the beauty of the Peninsula, also considering that the value of investments in the hotel sector during 2020 in Italy was around one billion euros. The numbers, from the point of view of absolute value, are down 68% compared to the peak reached in 2019, which was, however, a record year: compared to the volumes of the last five years, the drop can be calculated at around -25%. Signs that, nevertheless, mean something positive when placed in the catastrophic context that has persisted since February 2020 and has ‘eliminated’ two Easter, one Christmas and good parts of summer.
Foreign investment, pros and cons
Having put this point on the appeal of Italian hotels – perhaps more for the tourism value of the area rather than the actual goodness of the structures – it is however necessary to analyse who the investors are. Because a glance at the operations carried out would suggest that they are more foreigners than Italians. And this risks being negative for the domestic market and for the small entrepreneurs who have made the history of Italian hospitality.
In 2019, according to a study by Ernest&Young, deals worth 3.3 billion were concluded in the hotel sector, up 158% on the previous year. 83% of transactions had been completed by foreign capital, compared to 45% recorded in 2018. In 2019, 91 hotels and 11,400 rooms changed hands. Geographically, the main share of invested capital is attributable to Venice (20.8%), followed by Rome (14.4%) and then Catania, Milan, Florence and Genoa all with shares between 8% and 10%.
If it is true that foreign investors have been looking at Italian tourism assets for some time, it is equally true that the crisis has triggered new real estate investments. In September 2020, the French group Covivio bought seven Italian hotels, including the Exedra in Rome, for €573 million from the Varde Partners fund, which in turn had bought it for €150 million from the Boscolo family. The Elliott fund sold the Bauer in Venice to the Austrian real estate group Signa.
The largest deal recorded was the sale by Varde Partners of the Dedica Anthology hotels to Covivio (around 330 million for the Italian properties), while the most significant single asset deal was the sale by Elliott/Blue Skye of the Palazzo Bauer in Venice to the Austrian investor Signa.
As far as the future is concerned, alternative destinations to the big art cities are favoured for upcoming investments, and investors’ focus is on luxury, resort, lifestyle and hybrid solutions, capable of diversifying income sources, on resorts and lifestyle hotels. The pipeline for 2021 saw 100 hotels opening with over 17,000 rooms, of which 64 are under construction and 36 planned. Alternative locations such as Trieste, Bergamo, Bologna, Cortina d’Ampezzo and Perugia have shown particular resilience, while the fantastic four (Milan, Venice, Florence and Rome), where 78% of the cities’ hotel property values are concentrated – out of a total Italian hotel property stock estimated at over 117 billion in 2020 – remain penalised by the blockage of foreign flows.
Large projects in the hands of foreigners
Most of the large projects are foreign-owned. In particular, the trend is for historic hotels and palaces to be purchased for use as hotels. These are very high-profile projects that follow on from other operations already undertaken in recent years. The tendency is to propose a hotel offer that goes towards the ‘big’ and for this the business of the large chains seems to be the most credible. Also because investors are moving today to be ready in 2023, when the international tourism machine will start up again. Foreign chains can bring even more foreign tourists and this can only be advantageous for Sistema Italia because the induced activity generated by these is very rich. The hope is that the structures will keep as many Italian staff as possible, but they must update, train and broaden their horizons to be ready.