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Hotel & Luxury

An overview of the current state and the next future of the luxury and ultra-luxury segment in the hotel sector.


The gamble on the hotel sector is overcoming the challenges of the last two years, as demonstrated by a number of summer deals, possible closings in 2021 and major investment from Microsoft co-founder Bill Gates, who will increase his stake in Four Seasons Holdings from 47.5% to 71.25%, acquiring, at a cost of $2.2 billion, half the stake of Saudi Prince Al Waleed bin Talal by January 2022.

As highlighted in Colliers’ “Investment Market in Italy” report for Q2 2021, prior to the 2019 record, investments in this asset class accounted for around 10% of the market. In the first six months of this year, 14% of investments recorded in Italy involved hotel products. Venice, in particular, witnessed strong investment, confirming the trend of buying assets to reposition upwards that began in 2019, especially in the luxury/ultra-luxury segment.

Rome, on the other hand, the leading destination in past years, seems to be going through a period of transition, with change of use becoming the preferred approach.

The Italian Summer

Summer 2021 also saw interesting transactions in Florence with the appointment of Auberge Resorts Collection, an award-winning operator of luxury hotels and resorts, to manage the Collegio alla Querce. The former Renaissance college will be ready to open in 2023 with 82 rooms, including 20 suites and a signature suite of over 600 sqm.

Recent months have also seen a new trend of moving away from the city centre, as in the case of Barry Sternlicht, Chairman and CEO of Starwood Capital Group and SH Hotels & Resorts, who in July announced the opening of the first Baccarat Hotel in Florence, in the beautiful 14th-century Villa Camerata estate, located between the city centre and the hills of Fiesole.

In short, while tourism flows in Italy have inevitably decreased compared to the pre-Covid period, investors clearly still have a strong interest in the hotel sector with the goal of renovating existing structures or creating new products ready for the rebound in demand expected in 2022.

In Venice, in May, the ECE European Lodging Recovery Fund purchased the historic Bonvecchiati complex, around 10,000 sqm located about 150 metres from Piazza San Marco (St Mark’s Square), directly from the owner family for €100 million. Meanwhile, multibillionaire real estate tycoons brothers David and Simon Reuben snapped up the Hotel Baglioni Luna, another of the city’s iconic assets, for the same sum.

The Value of Conversion

The increased investment in the luxury/ultra-luxury segment is, however, leading to lower availability of adequate facilities in the country: the existing and available product is limited in Italy and requires investment to adapt the facilities to the standards required by ultra-luxury brands.

To date, in Italy, one of the solutions most commonly adopted by investors in this sense has been conversion with change of use. Current transactions of existing luxury products account for a significant part of the market and reveal a preference for single asset transactions for conversion into ultra-luxury hotels.

Examples include the former BNL headquarters in Via Vittorio Veneto and Piazza del Parlamento in Rome, transactions involving properties in the historic centre with the aim of converting them into ultra-luxury hotels and thereby enhancing the destination and surrounding area. Indeed, high-spending customers are expected to have a positive impact on the city’s entire economic network, leading to growth in related activities. The concentration of investment in a given area could also have the potential to attract other major investments in the area, triggering a virtuous circle of regeneration of areas that have lost their vibrancy in recent years.

Further analysing the typical transactions of the luxury product in Italy, it should be noted that they always include important issues related to the CapEx plan, with figures that reach over €700,000 per room.

The Revival of the Italian Luxury Tourism

Considering our country’s real estate assets and the expectations of ultra-luxury users, it is already clear that some of the 5-star products currently on the market will necessarily have to adapt to international luxury standards, entailing revised layouts and a possible reduction in the number of rooms in order to offer spaces aligned with large chain facilities in the main European tourist destinations.

In this scenario of complexity and transformation, as well as great opportunities for reviving Italian tourism, it is more necessary than ever to turn to advisors with both vertical and cross-cutting skills that encompass the entire lifecycle of the hotel product: from pre-acquisition underwriting through to property management and development, in order to manage the facility’s complexities and maximise its performance.

In particular, skills and operational knowledge are becoming crucial for analysing the effectiveness of the brands’ proposals and for selecting a manager who knows how to maximise the luxury facility’s potential by identifying its best position in the target market.

The main traditional tourist destinations – Rome, Venice, Florence and Milan – are clearly attractive to the luxury and ultra-luxury sector in Italy. However, foreign investors are also showing interest in a range of destinations once considered secondary with a more leisure-oriented vocation. 

Investors’ current objective is still to take advantage of this period to renovate existing hotels or create new products to land on the market when the sector recovers in 2022 with the right product aligned with new demand, taking into consideration luxury tourists’ growing interest in experiences outside the big cities, as in the case of Four Seasons, which will open a 150-room hotel in Apulia, about 40 km from Ostuni, or Belmond, which has purchased the Veronesi family’s Masseria Le Taverne in the same area to transform it into the white city’s first extra-luxury resort.

The next few months will therefore be very interesting for the whole of Italy, both in terms of the qualitative growth of the hotel product and of the diversification of investments, with the prospect of being able to more effectively intercept a target of high-end tourists.

The Impact of Luxury

According to the “The high-end tourism market” report published in May by Altagamma in partnership with Bain & Company, high-end tourists spend up to nine times more than average tourists (about €5,000/pax), providing around 10,000 direct jobs. Each year, however, Italy “only” captures three or four out of ten high-end non-European tourists and with far less frequency than other competing destinations; capital markets operations closing later this year could start to reverse this trend.

There is talk of rather significant CapEx plans related to a couple of investments totalling several hundred million euros in Rome, about half of which will be completed in September, and a number of Concrete Operator Searches in the main Italian cities such as Rome, Milan, Venice and Lake Como.

A warm autumn lies ahead.

Related Experts

Marco Comensoli

Head of Hotels & Leisure | Italy


Responsible for advisory and transactional services for the Hotels & Leisure department in Italy, he helps investors in improving the performance of their hotels portfolio and searching (and creating) new hospitality opportunities.

In his previous roles in Italy, he was the Country Director for Luxury Hotel Partners Ltd, a company specialised in luxury hotel consulting and earlier Senior Hospitality Consultant for Advisor Hotels & Tourism working with a number of high profile, international luxury hotel companies and independent properties. In Dubai, as Group Development Director for the hospitality division of Zabeel Investments, he was in charge of expanding the group’s portfolio.

A graduate of the Glion Hotel School in Switzerland, Marco has worked operationally at a number of international properties including the Boca Raton Resort and Club in the US and Hotel Saratz in Switzerland.

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Sara Bindo

Hotels & Leisure


Sara Bindo joined Colliers Italia in 2017, initially as Research Analyst in the Research Department, participating in numerous projects on the Rome office market and the hotel asset class.

From 2018 onwards, she joined the Hotels & Leisure team at Colliers Rome office. Her expertise predominantly focuses on the Hospitality sector, and in the area of Advisory in particular.

Before embarking on her professional career in real estate, she obtained a PhD in Planning at Rome’s Sapienza University and subsequently specialised further with a Master’s Degree in Real Estate Management from the Milan Polytechnic.


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