Market Beat Italy - H1 2026

INVESTMENT ACTIVITY

Italian hotel investment reached €1.3 billion in H1 2026, down 18% YoY from an exceptional H1 2025, yet still 53% above the 10-year average. A total of 57 hotels comprising 9,343 rooms changed hands at an average price of €170,374 per room. The activity was driven by smaller deals, with acquisitions below €25m accounting for 74% of transactions. Milan led the market, with investment volume rising 143% YoY to €346m, followed by Rome at €308m (-36% YoY). Sicily and Sardinia also gained momentum, together contributing more than €200m and broadening demand beyond the two gateway cities. Cross-border capital dominated, accounting for 67% of total volume, with European buyers rebounding sharply (+249% YoY), while capital from the Americas fell 86%. By segment, investment shifted towards Upscale (35% of volume, +127% YoY) and Upper Midscale (33%, +54% YoY) assets, while Luxury and Upper Upscale volumes declined (-76% and -81%, respectively) following an exceptionally active 2025. Economy hotels accounted for 43% of rooms transacted. Notably, all assets traded either with vacant possession (61%) or with a lease in place (39%).

PRIME YIELDS

Prime yields for leased hotels remained resilient at 4.5%-5.0% in H1 2026, underpinned by sustained investor appetite for high-quality, income-producing assets, despite renewed pressure on financing costs. Scarcity of prime, institutional-grade stock continues to underpin top-end pricing, while secondary assets display wider yield dispersion, reflecting differences in risk profiles, repositioning potential, and capex requirements.

SUPPLY & DEMAND

More than 80 hotels opened in Italy during H1 2026, with approximately half belonging to the 4-star segment and averaging around 78 rooms. Nonetheless, adjusted for opening dates, supply increased by only 0.2% year-on-year during the period. Although a further 100+ openings are anticipated by year-end, the pipeline remains constrained. At the same time, despite geopolitical headwinds, demand remains robust, with tourist arrivals reaching 88 million (+4.4% YoY), while international arrivals increased by 6.5% to 35 million. Growth was broad-based, led by Calabria (+10.5%), Umbria (+9.7%), and Piedmont (+9.2%).

PERFORMANCE

Hotels in Italy delivered RevPAR growth of +11.3% in H1 2026, well above the European average of +3.0% and among the strongest performers in Europe, behind only Bulgaria and Hungary. Growth was rate-led, with ADR up +10% and occupancy up +1%. Milan was the standout, with RevPAR up +206% YoY in February on the back of the Winter Olympics (occupancy +12%, ADR +84%). Rome also continued to perform strongly, with a RevPAR increase of +3.4% YoY, reaching over €176 in YTD June 2026 - building on 2025, when Italy had already closed as Europe's top RevPAR performer since 2019 (+53%).