Invesco Real Estate’s acquisition of a five-star Radisson Collection hotel in Bilbao is yet another sign of a trend that is becoming increasingly difficult to ignore across the industry. Drumroll please: it’s that hotels are very fast dominating the spotlight as the darling gateway asset for institutional investors, private banks and wealth managers looking to tap into long term growth fuelled by travel, lifestyle and experiential spending trends. Let’s unpack.
The acquisition of the 137-room property completed alongside Santander’s Private Banking’s real estate arm SPREA, is the second deal between the two groups following a residential land acquisition in Madrid. Leaving its past life as a bank headquarters firmly behind, the Bilbao building underwent a capex-heavy refurbishment programme and now features a rooftop restaurant, wellness facilities and meeting space, and carries LEED Platinum certification.
Joining the party
While hotels historically sat slightly outside the comfort zone of many institutional and private wealth investors because of their operational complexity and perceived volatility compared to traditional asset classes such as offices or residential, the tune is changing from a hesitant hum to a lively jig. In previous years, if you were thinking large-scale hospitality investment, you were probably thinking sovereign wealth funds, private equity firms and specialist hotel investors. Now however, wealth managers and private banks are looking to hotels as a way to diversify client portfolios while capturing structural shifts around travel, lifestyle and experiential spending.
And there is evidence of this trend accelerating globally.
Blackstone has continued expanding its hotel exposure across Europe through assets including its investments in Bourne Leisure and Village Hotels while KKR has increased its presence in European hospitality through platforms such as Room Mate Hotels. In the Middle East, sovereign wealth-backed groups are also doubling down on hospitality and lifestyle assets tied to tourism growth strategies. Meanwhile, firms including Brookfield, Starwood Capital and Henderson Park continue to pursue large-scale hotel repositioning strategies across gateway and secondary European markets.
And this deal is a strong signal of how hospitality is being packaged as an institutional-grade investment product. Invesco is not only deploying capital into hotels but also using partnerships with wealth platforms such as Santander’s SPREA to widen access to private market real estate opportunities. In other words, hotels are being used as vehicles through which wealth managers can offer clients exposure to long-term real estate themes.
As Jonathan Pierce, senior director – fund management, wealth at Invesco Real Estate notes: “Bringing together the inherent benefits of real estate and other private market assets with the wealth channel is a key focus for Invesco Real Estate as we look to 2026.”
Changing times
Post-pandemic travel recovery, combined with the resilience of luxury and lifestyle demand have also played huge roles, changing the perception of hotels into one of the more attractive areas of commercial real estate. While offices continue to battle structural uncertainty around hybrid working and retail continues to polarise between prime and struggling secondary stock, hotels have continued to benefit from strong pricing power, resilient leisure demand, the continued expansion of global travel and the ability to reprice revenue daily.
In an inflationary environment such as that we currently find ourselves in, that flexibility matters. Unlike offices locked into long-term leases, hotels can adjust room rates dynamically in response to demand spikes, major events – like we’ve continued to see with sporting events and music world tours - and seasonality. And that pricing power is of particular note in the luxury segment where affluent travellers have continued spending despite broader economic pressures.
And so the Radisson Collection Bilbao as well as others in that bracket and above are the perfect tool to take advantage.
Location, location, location
The location is also one to note, pointing towards the growing appeal of premium assets in secondary European cities rather than investors’ laser focus on traditional gateway markets such as London, Paris, Marid or Rome. Secondary cities like Bilbao are attracting institutional attention because they combine strong tourism fundamentals with cultural appeal, lower entry pricing and growing international visibility. As such, destinations including Bilbao, Porto, Valencia and Palermo are being targeted because of their growing international visibility and stronger upside potential.
This growing interest of institutional capital also mirrors - and follows the fact that - luxury travellers are upping sticks from overly saturated global capitals towards experience led destinations that feel culturally distinctive and relatively untouched. In Bilbao specifically, rising overnight stays and airport traffic, combined with improving connectivity and the continued international draw of cultural assets such as the Guggenheim Museum Bilbao, make Invesco’s and Santander’s move look particularly well timed.
On the topic of cultural capital, the repositioning of former landmark buildings into luxury hospitality assets also continues to resonate strongly with investors. In London, it’s the transformation of the former Old War Office into Raffles London at The OWO. In Paris, Maybourne acquired the former French Ministry of Defence, converting it into The Maybourne Saint-Germain, an ultra-luxury hotel with very lucrative branded residences. In Rome and Venice, historic palazzos continue to be converted into high-end hospitality assets targeting affluent global travellers. And now following suit is this Radisson Collection in Bilbao which was originally built in 1945 and used to be the former headquarters of Banco Hispano Americano.
So while this acquisition is just one of many, the broader picture is crystal clear. Luxury hotels are sitting pretty to becoming one of the biggest beneficiaries of institutional capital seeking to diversify.