Hotel Market Beat 2022 - Italy

Investment trends

The second half of 2022 saw transaction activity hampered as a result of rising costs of debt and economic instability. Transaction volumes declined by 32% compared to H1 2022, resulting in a yearly volume 15% lower than in 2021. Looking forward, we expect a slow start in 2023, with an uptick in transaction activity within the second half of the year, underpinned by rising investor interest and a healthy deal pipeline.

Prime yields

Limited transactional evidence within recent months has restricted transparency on the outward yield shift. While prime luxury assets are expected to hold their yield profile, other properties may see yield expansion in the first half of 2023 and stabilization during the latter part of the year.

Market Performance

Trading performance for the full year was a positive story as Italy as a whole and its major markets surpassed 2019 benchmarks (2022 RevPAR 17% above 2019). This was driven by sharp ADR growth, while occupancy was almost in line with 2019 figures. Milan made a strong comeback in the second half of 2022 thanks to business travel recovery. Looking ahead, growth in ADR will help absorb increases in energy & utility as well as staffing costs.

Supply

Italy recorded a number of hotel openings/re-brandings in 2022, totalling about 50 properties (over 3,300 rooms). This included several luxury urban assets, such as Portrait Ferragamo and Casa Cipriani, both in Milan, and Palazzo Portinari Salviati in Florence, as well as high-end resorts, such as the 7-Pines resorts in Sardinia and Adler Spa Resort in Sicily. The pipeline for 2023 remains strong (>3,800 rooms).

Demand

Demand is on a strong path to recovery. While driven primarily by domestic and European travellers, long-haul inbound visitation also saw solid growth, especially in the second half of the year. Overall, the total room nights spent in hotels during 2022 increased by 42% vs 2021, leading to average occupancy levels of 63%, less than 10% below 2019.

_{Sources: C&W, STR, Oxford Economics}

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Media Contact

Alessandro Belli

Head of Hospitality Italy [email protected] +39 33 5753 8523