Market Beat Italy - FY 2025

INVESTMENT ACTIVITY

Hotel investment activity in Italy reached its highest level in a decade in 2025, with a total volume of €2.5 billion (+29% vs. 2024) and 110 transactions closed: the highest number recorded since 2007. Value-add strategies accounted for 45% of deals, while the upper upscale and luxury segment absorbed 48% of total capital deployed. Rome remained the primary destination, representing 23% of national hotel investment volume, followed by Milan, whose share grew to 15%. Domestic capital continued to dominate at 53%, alongside European (28%) and North American (9%) investors.

PRIME YIELDS

Prime hotel yields in Italy show signs of potential compression, supported by strong operating fundamentals, sustained demand and a limited supply of high-quality, institutional-grade assets. The ongoing ECB monetary easing cycle is expected to drive new investment opportunities, reinforcing the attractiveness of the hospitality sector relative to other asset classes. Pricing for properties in prime locations and continued investor competition are placing downward pressure on returns in the prime segment. By contrast, secondary assets exhibit greater yield dispersion, reflecting differences in risk profile, repositioning needs and capital expenditure requirements.

SUPPLY & DEMAND

Hotel demand in Italy continues to expand from already strong levels, supported by growing international tourist flows and resilient domestic consumption. Supply growth remains moderate and controlled, generating a favourable structural imbalance that underpins occupancy levels and pricing stability across the market.

PERFORMANCE

Italy closed 2025 as the top-performing country in Europe for RevPAR growth since 2019 (+53%), reaching €159, driven by sustained rate increases (ADR +55% over the same period) and occupancy levels in line with pre-Covid benchmarks. On a year-on-year basis (2024 vs. 2025), both RevPAR and ADR grew by around +2%. Rome ranked fourth among European markets by RevPAR (€183, 74% occupancy, €247 ADR), while Milan recorded €160 RevPAR with an ADR of €216. Resort destinations outperformed urban markets in terms of RevPAR growth, with the 5-star and luxury segment delivering particularly strong results. Rome's luxury hotels posted a +46% RevPAR increase vs. 2019, and Milan's +58% over the same period.