It might be a stretch to say that Rome has fallen out of fashion this year, but negative publicity around overcrowding – with millions of pilgrims expected in the Vatican’s Jubilee year – has definitely made some tourists hit pause on the Italian capital. “Visitor numbers to the capital are expected to soften this year in the light of some negative hype, although overtourism isn’t really seen as a problem in Italy,” says Luca Cerretani, head of Italy at PKF. “Venice is the exception, as a city with some unique challenges, particularly around volumes of day-trippers.”
For investors, too, Rome has shades of being a victim of its own success. With a significant pipeline of luxury hotels still to open – including the Nobu, Four Seasons, Mandarin Oriental and Corinthia – in the wake of launches including the new Orient Express – the top end of the market is starting to look saturated. Milan and Florence too are about to see a glut of luxury hotels, dampening the appetite for core trades.
However, there are still swathes of deals happening in other areas of hospitality, led in particular by private equity, seeking value-add opportunities. “Serviced apartment companies are rushing to get anything they can in the big cities, and student housing is also on everyone’s mind,” Cerretani notes. “Student accommodation is slightly less profitable than hotels but also includes a social component, and massive undersupply in Italy is driving hospitality investors to scrutinise the sector.”
Accessing deals
Savvy funds, too, are starting to look beyond the traditional city hotspots, safe in the knowledge that Italy’s hidden gems don’t stay hidden for long. “Wherever foreign tourists go in Italy, investors will follow,” says Andrea Mancini, lead director for Italy hotel transactions at JLL. “Lake Como is a consolidated destination from an operator perspective, but the lakes of Garda and Maggiore are higher on hit lists than ever before. Then ski resorts, from Cortina to South Tyrol and Courmayeur, are also interesting for their luxury potential.”
International brands keen to expand in Italy are prepared to adapt their brand standards to expand into historic downtowns and to occupy heritage buildings, Cerretani adds. “In 2021 and 2022 respectively, we brought Hilton brands Conrad and Curio to Chia Laguna in Sardinia, as well as bringing Marriott’s Autograph Collection to Tuscany,” he notes. As part of this tangible shift, Accor has successfully launched lifestyle brands Mama Shelter and 25 Hours in Rome and Florence. “IHG also acquired lifestyle brand Ruby hotels to continue its European push,” he adds.
In this vein, Cala Ponte, a Tribute Portfolio Hotel by Marriott, launched just weeks ago in Puglia’s Polignano al Mare. Also opening next month in Puglia, the four star Mövenpick Hotel Bari will continue this trend of brands embarking in new locations.
“With two airports in Bari and Brindisi, and plenty of coast in between, Puglia is really attracting interest,” Mancini adds. “Meanwhile, in Campania, eschewing the typical appeal of the Amalfi Coast, Rocco Forte and W have decided to open in Naples. Rocco Forte will also launch in Noto, Sicily, after its success in Palermo and with its Verdura resort, again seeking first mover advantage.”
Southern appeal
Indeed, from Campania to Puglia, Sicily to Salento, the up-and-coming south seems to be resonating more and more with investors and operators. And while international investors usually reach the deal table with financing tied up, regional public funds for hospitality refurbishment and development are helping local investors bring new hotels to market.
Calabria, Italy’s ‘big toe’, is one such region determined to revolutionise its fortunes through tourism. Combatting the dual challenges of high youth unemployment and the tendrils of the local mafia, the ‘Ndrangheta, recent public tenders have offered incentives to hotel owners or would-be developers which avoid mafia connections and renovate hotels to international standards.
For the town of Crotone, wine tourism is a growing trend, thanks to an agrarian revolution in Calabria. The region is winning more and more awards for its wines, and regional versions of northern Italy wine festivals – such as the Merano Wine Festival and Vinitaly – are placing it on the map for gastronomic tourists. In turn, vineyards with rooms and country house hotels are tempting guests south via Ryanair-served Lamezia Terme airport.
Investment records
All this activity suggests that Italy is in line for another record year of hospitality deals. In 2024, some €2.1 billion of hotels changed hands, according to EY data – a remarkable 30 percent growth on the previous year. And while Rome, Venice and Milan continued to dominate deals, responsible for €465 million, €353 million and €173 million in trades respectively, deals in resorts and lesser-known regions made up 40 percent of total volumes.
Mancini notes that the first quarter of 2025 has already see €670 million of deals, with the end of June likely to push volumes to €1.2 billion, setting the country up for a fresh record, bearing in mind that most trades tend to happen in the final quarter of the year.
What remains interesting is the complexity of Italy’s capital markets, with its rich tapestry of domestic and international investors. “While international capital is responsible for about 80 percent of trades in terms of deal volume, there are still more Italian players in the market,” Mancini explains. “Last year, out of 65 trades, around 40 were executed by domestic players.”
He sees an opportunity for local players to partner with international capital to drive dealmaking further. “The more that private family owners can collaborate with international flags, for example, the more their assets will be worth,” he notes. “And there is huge potential here – still only 7 percent of Italy’s hotels are branded, with 93 percent run independently.”
For international investors, too, partnering with local experts often means access to trophy assets in a market bound by bureaucracy. Take Abu Dhabi developer Eagle Properties, which is investing in Venetian icon Grand Hôtel des Bains – the filming location for Death in Venice, on the island of Venice Lido – through a tie-up with Milan-headquartered Coima. The two companies are investing €200 million to refurbish the property via the jointly launched Coima Des Bains fund. The vehicle has cleared the hotel’s considerable debts of €54 million and is set to restore the 180-room property to its former glory. “This is more than a restoration – it is a revival of European legacy,” says Mohamed Alabbar, chairman and founder of Eagle Hills, which is making its first investment in Italy.