Milan Market Spotlight - YE July 2026

OVERVIEW

The sample of full-service branded hotels in Milan recorded a strong improvement in bottom-line performance between YE July 2025 and YE July 2026, with GOPPAR increasing by 34.2% to €118 PAR. Although total revenue increased by €38 PAR, operating expenses rose by only €7.4 PAR, resulting in a strong profit conversion.

Performance during YE July 2026 was significantly influenced by the Milano Cortina 2026 Winter Olympics in February 2026, which generated exceptional demand and contributed to the year-on-year increase in both occupancy and average rate.

The main driver of revenue growth was the Rooms department, with RevPAR increasing by €32 PAR (+18.9%). This was driven by a 9.2% increase in ADR to €273, alongside an 8.9% rise in occupancy to 74.4%. F&B revenue also increased by €5.6 PAR (+12.9%).

On the cost side, total operating expenses increased by €7.4 PAR (+4.8%), primarily driven by Other Expenses, which rose by €4.5 PAR, followed by Payroll (+€1.6 PAR) and Cost of Sales (+€1.5 PAR). These increases were partially offset by Utilities, which declined by €1.1 PAR.

Based on public announcements, 11 new hotels with 1,036 rooms commenced operations between August 2025 and July 2026. On a weighted basis, this represents a +1.8% increase in overall market supply.

Revenue growth significantly outpaced costs, resulting in a 5.9 percentage points increase in GOP margin to 46.1%. Consequently, the GOP flow-through reached 80.2%, meaning that approximately €0.80 of every additional euro of revenue was converted into operating profit.

MILAN OLYMPICS

The Milan-Cortina 2026 Winter Olympics took place from 6 February 2026 to 22 February 2026. Across the selected full service branded hotels in Milan, hotel performance strengthened materially during the Olympic period, with both occupancy and average room rates recording significant year-on-year growth, including months before and after the event.

The Olympic uplift peaked in February 2026, when occupancy increased by 18.8 percentage points to 86.7% and ADR rose by 112.2% to €503. This resulted in RevPAR of €436 (+171.1% YoY). The positive impact extended beyond February, with RevPAR also increasing by 32.5% in January and 13.5% in March, highlighting the broader benefit of the Games across the surrounding months.

The Olympic uplift translated into exceptional profit conversion. Compared with February 2025, hotels generated approximately €314 PAR in additional revenue (+151%), and €279 PAR of additional profit (+415%). This represented flow-through of nearly 89%.

SUPPLY

Based on public announcements, 11 new hotels opened in Milan during the 12-month period ending July 2026. These additions contributed a total of 1,036 rooms. When accounting for the number of days each property was open during the period, this translated into a +1.8% increase in market supply.

Hotel openings were predominantly concentrated in Municipio 3, accounting for 36.1% of total new supply across four hotels (374 rooms). Municipio 1 follows, with four hotels adding 260 rooms, representing 25.1% of total new supply.

Majority of new hotels were Upscale properties (74.9%), followed by Luxury (11.7%), Economy (10.5%) and Upper Upscale (2.9%) hotels, while no new Midscale or Upper Midscale supply was recorded.

Looking ahead, only one hotel is expected to open during H2 2026, J.K. Place Milano with 38 rooms (conversion). A further five properties comprising around 560 rooms are scheduled to follow in 2027.

COSTS

PAYROLL COSTS

Payroll costs increased from €61.7 PAR in YE July 2025 to €63.9 PAR in YE July 2026 (+€2.2 PAR, +3.6%). The rise was mainly in the Sales & Marketing and Rooms departments, which recorded uplifts of €1.0 PAR and €1.2 PAR, respectively. In contrast, F&B staffing costs decreased by €0.2 PAR (-1.1%). Despite the increase in absolute terms, payroll costs declined from 28.2% to 25.0% of total revenue, driven by stronger top-line growth.

COST OF SALES

Cost of Sales increased to €18.5 PAR (+€1.2 PAR, +6.8%), driven almost equally by the Rooms (+€0.7 PAR) and F&B (+€0.8 PAR) departments. Nevertheless, Cost of Sales declined from 8.0% to 7.4% of total revenue, reflecting improved cost efficiency.

UTILITY COSTS

Utility costs remained broadly stable at €10.1 PAR. Higher Electricity costs (+€0.5 PAR) were offset by reductions in Fuel & Gases (-€0.4 PAR) and Water & Sewer (-€0.1 PAR). As a share of revenue, Utilities declined from 4.6% to 3.9%.

OTHER EXPENSES (excl. Utilities)

Other Expenses increased by €4.5 PAR to €39.4 PAR (+12.8%), mainly in Sales & Marketing (+€2.3 PAR) and Rooms (+€1.2 PAR) departments. Nevertheless, this expense declined from 16.0% to 15.4% of total revenue amid robust top-line growth.

PROFIT & LOSS STATEMENT

Departmental Revenues

Total revenue across the selected full-service branded hotels in Milan increased by €37.5 PAR, or 17.2% YoY, reaching €255.9 PAR. Growth was primarily driven by Rooms revenue, which rose by €32.3 PAR. F&B revenue contributed a further €5.7 PAR increase. OOD revenue remained stable, while Miscellaneous Income increased by €0.3 PAR.

Departmental Expenses

Departmental expenses increased by €3.2 PAR (+4.2%) YoY, significantly below the increase in revenue, supporting stronger departmental profitability. The growth was primarily driven by Rooms expenses, which rose by €3.0 PAR, while F&B expenses remained broadly stable with a marginal increase of €0.2 PAR. Consequently, Total Departmental Profit increased by €34.3 PAR, with margin improving from 64.9% to 68.8% of revenue.

Undistributed Expenses

Undistributed expenses increased by €4.2 PAR to €58.0 PAR, (+7.9% YoY). Sales & Marketing was the main contributor, rising by €1.8 PAR, followed by A&G and POM with increases of €0.7 PAR and €0.5 PAR, respectively, while utilities remained broadly stable at €10.1 PAR. Although undistributed expenses increased in absolute terms, they declined from 24.6% to 22.7% of revenue.

Gross Operating Profit

GOP increased by €30.1 PAR (+34.2% YoY) to €117.9 PAR, resulting in a 5.9 percentage points increase in GOP margin to 46.1%.