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Hotels, more investments in Italy

23 February, Il Sole 24 Ore

The international hospitality sector is going through a positive phase, despite the threats of terrorism and immigration. The situation is getting better, even though some parts of the world are still off limits.

For 2018 the experts expect the growth to continue at global level and investments to increase in Europe, especially by American private equity funds.

According to JLL, Americas have seen stable investments in the sector, Emea has registered an increase of 5%, while Asia has plummeted by 25%-30%. Only Japan is experiencing a tourism boom, with an international tourist record.

In Europe, France is seeing its number of transactions rising, fighting the negative effects of the terrorist attacks. The UK also is getting a lot of interest, even though with slightly lower volumes compared to the past.

According to the figures published by JLL, Italy represents 5% of the European transactions. The most recent operation has been that for the acquisition by Belmond of the hotel complex Castello di Casole in the province of Siena for a value of 40 million. The 9th-century property features 39 rooms, 150 acres of land, vineyards and olive groves.

Who is buying in Italy? The international investors are plentiful: 60% against the 40% of the domestic ones. The Italian market has always attracted capitals in its most popular destinations such as Milan, Rome, Venice, and Florence, in some case even suffering from a lack of supply. “Most of the properties for sale have no contractual obligations, while a part is subject to lease contracts and an even smaller portion is regulated by management contracts”, reads a memo of the consulting company.

The offer for hotels in Italy is still very fragmented, and the presence of international brands is still very limited. Many hotel chains and investors are looking for new properties for sales on the market.  And returns. In Italy, trophy assets provide yields around 5%-5.5%, according to Duff & Phelps Reag, while for prime locations (like the centre of Rome, Milan, Venice and Florence) they’re around 5.5%-6.5%, in the suburbs of prime locations and minor cities returns are 6.5%-6.7%.

There are currently many requalification projects and news in the Italian market.

The conversion into hotel of the palace Giuseppe Statuto in Piazzetta Bossi in Milan is going on. In October 2017, Blu Hotel inaugurated in Milan the hotel Savona 18, a four-star hotel created from the reconversion of a 20th-century popular house. It features 43 rooms and suites, a meeting room and an inner yard.

H.n.h Hotel will open in the first part of 2019 its first hotel in Rome in a building of Reale Group.

In the meanwhile, in Trieste, a Hilton hotel will open in the former Ras Assicurazioni headquarters. The building is owned by Allianz and it will be managed under the Hilton brand doubleTree.

Finally, in Rome, the American fund Kingstreet has invested 100 million euro for two buildings in Via Liguria. Here, the first Italian hotel of the brand W of Marriott International will open. Always in Rome, the Hotel De la Ville owned by the group Rocco Forte Hotels will open in 2018 once its renovation will be completed.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

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