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Investors target Italian hotels sector again as lockdown eases

The landmark Luna Baglioni hotel in Venice was bought by the Reuben Brothers for €100 million

As a premium tourist destination Italy’s hospitality sector has been hit hard by the pandemic. But the market is stirring again, reports Nicol Dynes.

Investor interest is growing and activity in the Italian hotel sector is picking up this year, with deals being negotiated and finalised as hospitality is keen to leave behind last year’s annus horribilis.  

There are two types of investors and deals being done or negotiated at the moment. At the top end large groups and institutions are buying luxury hotels in the expectation that travel restrictions will be lifted and that Italy will resume its place as one of the world’s leading tourism destinations.

At the other end family-owned hotels are attracting interest from opportunistic investors which are counting on the widespread distress in the sector to grab some bargains.

“Today in Italy there are very many investors looking for opportunities,” says Marco Zalamena, head of EY’s hotels department.  

The core segment is receiving the most attention: according to a new report by EY, in 2017 more than 70% of transactions were value-add, while this figure has now dropped to 48%, and core transactions have increased.

Rome in the spotlight 

The most recent example of top-end deals is the acquisition by Arsenale Spa, an Italian company, of the family-owned historic Hotel de La Minerve in Rome for an undisclosed sum. The 16th Century building, a stone’s throw from the Pantheon, will be totally restructured and will reopen in 2023 as part of Accor’s luxury Orient Express brand. 

“We are pleased about our important partnership between Arsenale and Orient Express and proud to be involved in the creation of a top-end landmark in such an iconic city,” says Sébastien Bazin, chairman and CEO of Accor. 

Six Senses is planning 10 hotels throughout Italy. The first project is already underway in Antognolla, in a 12th Century castle and village near Perugia in Umbria


Rome has also been chosen as the location for a new Soho House hotel, which will open later this year. The celebrated chain’s first hotel in Italy will be a 10-storey building in the San Lorenzo area of the city, with 49 rooms and 20 suites as well as restaurants, private rooms, a cinema, a spa and a swimming pool on the roof terrace. 

Six Senses, another luxury group owned by the InterContinental group, is also showing an interest in Italy. Its first branded hotel in the country, owned by private equity group Orion Capital Managers, will open later this year in Rome in an 18th Century palace in Piazza San Marcello. It will have 95 rooms and suites, a restaurant and a panoramic roof terrace with views over the city centre.

“We are strong believers in Italy’s tourism potential,” says Neil Jacobs, CEO of Six Senses. “The pandemic will pass and the country will go back to being one of the world’s top destinations especially when it comes to art, culture, nature and wellness, and that’s why we are investing in this type of project. Tourism will bounce back and we’ll be ready.”

‘The pandemic will pass and the country will go back to being one of the world’s top destinations especially when it comes to art, culture, nature and wellness.’

Neil Jacobs, Six Senses

Jacobs is planning to open at least 10 Six Senses hotels in Italy. The first wellness & nature project is already underway in Antognolla, in a 12th Century castle and village near Perugia in Umbria, which will include a golf course, a riding school, a cookery school and an organic farm. Other similar projects are being finalised in Sicily and on Lake Como. 

Another landmark deal in February was the acquisition of the historic family-owned Luna Baglioni hotel in Venice by London-based property investors the Reuben Brothers for €100 million. The 91-key luxury hotel is next to Piazza San Marco.

Baglioni Hotels has also been chosen by Cushman & Wakefield as the operator of the Paradise Resort & Spa. The 5-star hotel on the beach in Puntaldìa, Sardinia, is being rebranded and will reopen in June as a new member of The Leading Hotels of the World organisation. 

“There’s a real interest from hotel operators, especially those working in the luxury category, in prestigious spots such as Puntaldìa,” says Dario Leone, head of hospitality at Cushman & Wakefield Italy. “The recovery to pre-Covid performance levels is expected to be faster in maritime leisure destinations compared to other locations.”

Arsenale Spa has acquired the historic Hotel de Minerve in Rome, which will reopen in 2023 as part of Accor’s luxury Orient Express brand 


Last year, due to the pandemic, investment volumes in Italian hotels were at their lowest for five years and there were only 31 deals, a 68% drop from 2019. Even then, EY’s Marco Zalamena points out that even in such a difficult year foreign investors never left, accounting for 77% of deals. 

According to the EY report, this year investment volumes will not return to the record levels of 2019 (€3.2 billion) but they will grow by 50% to €1.5 billion from €1 billion in 2020. The bad news is that on average offers are likely to be 25-30% below what used to be market value. In the luxury segment, however, the discounts are likely to be limited to 5-10%.

“Today there is more supply in the market, but there is a price expectation gap,” adds Zalamena. “We haven’t seen any repricing yet, but as the pandemic goes on and there are delays in the roll out of vaccines, sale prices might well be revised.”

He expects this will result in more realistic prices, rather than pre-Covid estimates, and this will lead to many more transactions being concluded. 

Baglioni Hotels has been chosen as the operator of the Paradise Resort & Spa in Sardinia, and will reopen in June


Financing remains an issue, as international banks “have vanished” and Italian lenders are being ultra-cautious. “We’re seeing a lot more sale-and-leaseback deals, and more investors are selling one or two assets in order to finance the acquisition of another,” says Zalamena.

The Italian media has been full of stories about opportunistic buyers, especially Chinese, Russian and Albanian, targeting 3-star, family-owned hotels in trouble and offering prices 40% below market value. More than 580 hotels closed last year and many more are in serious financial difficulties after months of lockdown and little help from the government.

Bernabò Bocca, the head of the Italian hotel association, Federalberghi, said he cannot confirm the rumours but he is definitely aware of a “renewed and intense interest” from foreign buyers. “Speculation is inevitable given the situation. Demand is booming and the hotel market is in turmoil.”

Venice the most attractive

According to EY figures, last year Venice attracted the most investments in the sector in Italy, accounting for €413 million, 39% of the total, followed by Rome with 26% (a 48% drop on 2019), Florence with 11% and Milan with 7%. 

Venice was also the most expensive city, with an average price of €540,000 per room, well ahead of Rome (€248,000), Florence (€200,000) and Milan (€90,000).

The biggest single-asset deal of 2020 was the sale of the Bauer Palazzo hotel on the Grand Canal in Venice, sold by the Elliott Fund to Signa Prime, an Austrian company, for an undisclosed sum. According to market reports, the price was above €240 million. 

The biggest deal of all was the sale by Varde Partners of the Dedica Anthology European hotel portfolio to Covivio for €600. The Italian component of the deal, which comprised two hotels in Venice, one in Rome and one in Florence, was worth €330 million.

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