Italy is known for its fragmented hotel market, dominated by family-owned and operated hotels. However, this is likely to change in the next ten years.
The hotel market is moving into a new chapter with an increasing presence of international hotel operators. The family hotel business is losing ground as the younger generation is no longer interested in it. Moreover, with the arrival of new international players, the competition for local owners becomes tougher, and many of them realize that now is the perfect time to sell their hotels. The trends of successful development in Italy’s hotel industry were evident long before the COVID-19 pandemic. The average daily rate (ADR) continues to grow, as does demand. Italy remains a top destination for international tourists, leading the list of UNESCO World Heritage Sites and offering a variety of experiences and landscapes.
According to key revenue indicators, Italian hotels are thriving in all major cities and resort destinations, surpassing the figures of 2019. International tourist flows continue to increase, along with the average daily rate, with significant growth observed in both 2022 and 2023. Consequently, more and more active international investors want to join the Italian hotel market, given the high potential of the Italian hotel market. Investors are particularly interested in added-value investment opportunities.
Italian Hotel Real Estate Market: Trends and Investment Opportunities in 2023
The average daily rate in Italy in 2023
The average daily rate in Italy was €271.84 in June and €263.89 in July, 2023. For comparison, the average daily rate of a in Spain was €156.24 in June and €168.64 in July, 2023 (43% and 36% of the average daily rate of hotels in Italy). The Italian hotel market is showing strong dynamics that will lead to changes in hotel supply both in short and medium term.
The average daily rate in Rome and Milan in 2023
In Rome and Milan, the average daily rate in 2023 reflects significant shifts, particularly in the luxury segment. Rome has welcomed new players such as Six Senses, Edition, W Hotels, Bulgari, Rosewood, Four Seasons, and Mandarin Oriental, among others. The increase in branded luxury hotels has led not only to a rise in the number of wealthy guests but also to a significant increase in the average daily rate in Rome. For the first eight months of 2023, Rome experienced a 28% growth (compared to 2022) in the 5-star segment, with an average cost of €840 per night. However, Rome is trailing behind Milan, where the average daily rate reached €910 in the same period.
By the end of the summer, in August 2023, the occupancy rate of hotels in Rome reached 71.9%, and the average daily rate in August was €228.56, 22% higher than the previous year. The average revenue per available room (RevPAR) in Rome reached €164.42, increasing by 40.9% compared to the previous year. Meanwhile, in Milan, the hotel occupancy rate in August was 70.3%, the average daily rate increased by 18.3% compared to 2022 to €199.05, and RevPAR grew by 43.4% to €139.88.
The positive changes in the Italian hotel market are opening up new and exciting opportunities for both local and international investors.
Investors are also interested in Italy’s secondary cities such as Bologna, Naples, Lecce and Verona, as well as resort destinations such as Lakes Como and Garda, the Dolomite Alps, Sardinia and Sicily.
