As you read this, Italy’s new government will be revealing its plans for the years ahead, with investors hoping for a continuation in the support which has bolstered the volumes finding a home in commercial real estate.

The previous government committed €2.4bn to the tourism sector, with a particular focus on driving digitisation and sustainability.

The previous incumbents helped to drive a 14% year-on-year increase in total investment volume in commercial real estate, to €10.4bn, with familiar private equity houses such as Blackstone and Apollo showing their enthusiasm for the country.

In our sector, these were aided by a number of tax measures, including tax credits for commercial leases under certain circumstances and a ‘tax-free’ revaluation for legal and tax purposes of real estate assets owned by entities carrying out hotel activities. As part of efforts to revive the country’s tourism market, some property taxes were waived for hotel businesses, although this proved only temporary, in the wake of the worst of the pandemic.

The attractiveness of the country has been supported by growth in the split between hotel ownership and operations which has helped to bring traditional real estate investors into the sector in other regions. The government has also tried to reduce the impact of overtourism in locations such as Venice, promoting secondary locations and improving infrastructure around them.

Italy continues to attract the luxury end of the market. Most recently, Six Senses announced its debut in the country with a 96-room hotel close to the Trevi Fountain

Marriott International also announced an agreement with Bain Capital and Omnam Group, which will see the launch of the Lake Como Edition in 2025. The pair will own and develop the hotel through a fund managed by investment management company Kyralos SGR.

“There is an incredible opportunity for hotel investments in Italy, not only in large tourist destinations like Rome and Milan, but in specific locations that have a strong appeal for guests that look for high quality services and unique experiences,” said Paolo Bottelli, CEO of Kryalos SGR.

Rome is expected to benefit from events such as the Ryder Cup, the European Aquatics Championships and the candidacy for Expo 2030, while Milan, which is undergoing a city-wide renovation, is attracting growing attention from buyers looking for existing sites as well as development opportunities.

Earlier this year Foruminvest Italia purchased a site close to Milan Malpensa airport which will be managed by Accor under its Tribe brand. The agreement came shortly before the French group announced that it would manage a Novotel and an Adagio property in Milan Sesto, close to the new Sesto San Giovanni station, and the City of Health and Research.

Deals with Accor and Marriott illustrate the country’s move away from unbranded and towards the global flags, aided by the growth in investment and the ability to split operations and ownership. According to Horwarth HTL, in 2021 the chains’ penetration rate of the hotels increased to 5.4%. In terms of hotel rooms, that rate recorded a slight growth of 1.6%, reaching over 17.2% over the total Italian stock.

The WTTC reported that, before the pandemic, when travel and tourism was at its peak, the total contribution to Italy’s GDP was 10.6%.

The organisation forecast that the travel & Tourism sector will grow at an annual average rate of 2.5% for the next 10 years, five times the 0.5% growth rate of the overall Italian economy. It will be worth over €226bn by 2032.

An incoming government hoping to hold onto power is likely to look at those numbers with an eye to preserving, not endangering them.

Alex Sogno
CEO & Senior Hotel Asset Manager
Global Asset Solutions