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Hotel InvestorBeat

According to research by Cushman & Wakefield over a third of investors are interested in increasing their hospitality portfolio across Europe.

Despite the interruption of the tourism and travel sector caused by the pandemic, 79% of active investors in the Continent intend to continue investing and, in some cases, increase acquisitions in the hotel sector.

The results published today are part of a survey by Cushman & Wakefield, which involved over 50 of the largest investment groups active in Europe and in the hotel sector, including private equity, real estate funds, REITs and other institutional investors.

The investors involved have invested a total of over €26 billion in the last 5 years (2006-2020) by purchasing over 660 hotels with around 130,000 rooms, representing around a quarter of the total volume of hotel investments in Europe.

Dario Leone, Partner and Head of the Italian Hospitality Team at Cushman & Wakefield said:
In the future, our country will be increasingly attractive, especially as a leisure destination, so we expect a faster recovery than other asset classes. In fact, 85% of the investors interviewed believe that by 2023 the performances will be back in line with the levels of 2019. In addition, the vaccination campaign against COVID-19, together with the growing consumer confidence, has re-emerged the desire to resume holidays abroad. This increases the interest of investors in increasing their portfolio with hotels, proving to also be a strong barrier against inflation. In our country, I also expect the launch of the new Serviced Apartments market which is still in its infancy in Italy, but which is already attracting strong interest. "

According to the research, the recovery of large cities, often linked to international tourism, is expected at a slightly slower pace than that of leisure destinations; 75% of the investors surveyed expect a recovery between 2023 and 2024 and 21% in 2025.

This is a more optimistic view than the recovery after the global financial crisis in 2008/2009, which took about 5 years and means to bring the RevPARs (Revenue per Available Room) of the large European cities to pre-crisis levels.

Business trips or holidays?

The resorts, villages and seasonal structures are the type of accommodation that has a greater interest on the part of investors.

Despite the complexity of their functioning and the often marked seasonality, the majority of respondents (70%) now consider them more attractive than before the pandemic.

This is likely to depend on an expectation of a faster recovery and the long-term growth prospects of leisure travel.

Even the "serviced apartments" have seen a significant increase in interest from investors (60% of respondents), no doubt for their resilience during the pandemic, high profitability, low operating costs and their flexibility in the usability in the short and long term.

On the contrary, hotels focused on the Meetings, Incentives, Conferences & Exhibitions sector (MICE hotels) and those located near airports, obviously found less interest in most investors, given the more significant impact attributable to Covid-19; namely the changes in the way of working and the impossibility of being able to host large-scale events in the short term (see figure 1 below).

In light of these findings, Cushman & Wakefield equally expects a return to business travel and business-related events, since the lack of personal interaction experienced through remote work has created the need for structured meetings and events organized in person.

Some investors recognize this need, with 21% saying their desire for MICE-related hotel acquisitions has not changed due to Covid-19.

Dario Leone concludes: "The survey revealed that most investors (59%) would consider hotel investment opportunities by applying a moderate pre-covid price discount of 15% or less. Only 12% of investors are looking for more complex opportunities, with a high risk component, with a price reduction of at least 25%. "






H1 2022

Italian Real Estate Overview H1 2022

The first half of the year has been quite an eventful period for the world, with some countries ending up in domestic political turmoil, such as UK and Italy. Indeed, in July Italy experienced the collapse of Prime Minister Mario Draghi's national unity government leading the President Mattarella to dissolve the chambers and call new elections for September 25th. Combined with that, the war in Ukraine, the geopolitical turmoil, the energy crises, rising inflation and tightening policy from central banks have all resulted in warns of recession for the global economy. For real estate it means that the low-rate environment is a memory of the past and investors and banks are preparing to face a not-negative interest rate scenario for the upcoming months.

But it will be a story for the next part of the year, while first half ended posting positive outcomes, both for the economy and the property sectors.
Raffaella Pinto • 01/08/2022
Piazza Venezia, Rome, Italy
MarketBeat • Topical Report

Italy MarketBeat

Cushman & Wakefield MarketBeat reports analyse quarterly Italy commercial property activity across office, retail and industrial real estate sectors including supply, demand and pricing trends at the market and submarket levels.
Raffaella Pinto • 20/07/2022


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