As global tourism rebounds, Italy stands out as one of the most attractive hospitality investment markets in Europe, surpassing pre-pandemic levels in both visitor numbers and ADR growth. Unlike Spain, where investment is spread across resort-heavy markets, and France, where high barriers to entry limit new projects, Italy offers a diverse range of opportunities from luxury city hotels in Rome and Milan to ultra-exclusive resorts in emerging destinations like Taormina and Lake Como.

With over €2.1 billion in hotel investment volume in 2024—30% higher than the decade-long average—Italy is not just recovering; it is outperforming its European counterparts, with luxury properties leading the charge in investment growth. In 2024, luxury hotels made up 45% of all hotel investment volume (and 19% of rooms sold), underscoring investor preference for high-end assets.

This surge is fueled by record tourism (64.5 million visitors in 2024) and strong financial performance, including rising average daily rates. As Italy solidifies its place among the world’s top travel destinations, hospitality investors are keenly focused on emerging luxury market trends, risk management strategies, and notable hotel transactions shaping the landscape.

Tourism and Hospitality Sector Rebound

The global tourism industry has seen a robust recovery in 2024, with international arrivals reaching an estimated 1.4 billion, according to UN Tourism’s latest World Tourism Barometer. This represents a 99% recovery to pre-pandemic levels and an 11% increase over 2023. Strong demand, resilient source markets, and the rebound of Asia-Pacific destinations have been key drivers of this growth.

Europe remains the world’s leading destination, hosting 747.3 million tourists—surpassing its 2019 peak of 742.4 million.

— Source: Global Asset Solutions

Italy, in particular, has emerged as a standout performer, ranking third in Europe and fifth globally with 64.5 million tourists in 2024, according to the World Population Review. The country also recorded an occupancy rate of 56%, placing it ninth worldwide.

— Source: Global Asset Solutions

Italy’s hospitality sector has demonstrated strong financial performance, with Average Daily Rates (ADR) rising by 4% in 2024—one of the highest increases in Europe. This growth is fueled by a combination of leisure and business travel, with projections for 2025 remaining optimistic.

— Source: Global Asset Solutions

Hotel Investment Market Performance

The EY Italy Hotel Investment Report 2024 highlights a remarkable 30% growth in hotel investments, reaching €2.1 billion—the second-highest volume on record and well above the decade-long average of €1.65 billion.

— Source: Global Asset Solutions

Rome, Venice, and Milan continue to dominate as top investment destinations. Rome led the way with €465 million in investments, followed by Venice at €353 million and Milan at €173 million. Beyond these urban hubs, resort destinations such as Lake Como, Sicily, and Forte dei Marmi have emerged as key hotspots, accounting for nearly 39% of total investment volume.

International investors remain a driving force, comprising 53% of total investment. European, Middle Eastern, and U.S. buyers are particularly active, reflecting Italy’s global appeal. Hotel operators also played a significant role, accounting for 38% of investments as they increasingly seek direct acquisitions to gain greater control over assets.

— Source: Global Asset Solutions

Luxury hotels led the market, making up 45% of total investment volume and 19% of transacted rooms. Four-star properties followed closely, contributing 44% of total investment and over half of the rooms sold. Notably, vacant possession transactions surged to 73% in 2024, up from 58% the previous year, as operators prioritised asset control. Leasehold transactions remained low at 12%, reflecting the limited availability of prime assets. Value-added investments, including renovations and conversions, accounted for 51% of all transactions, underscoring the sector’s ongoing transformation.

Economic Outlook and Market Drivers

Italy’s economic outlook is cautiously optimistic, according to the EU November 2024 Economic Report. GDP is expected to grow by 0.7% in 2024, driven by investment and declining imports. Growth is forecast to accelerate to 1% in 2025 and 1.2% in 2026, supported by consumer spending and funding from the Recovery and Resilience Plan.

Inflation is expected to moderate, declining to 1.1% in 2024 before rising slightly to 1.9% in 2025 and stabilising thereafter. Meanwhile, Italy’s government deficit is projected to decrease to 3.8% of GDP in 2024, dropping below 3% by 2026. However, the debt-to-GDP ratio is anticipated to rise to 139.3% by 2026, largely due to the fiscal impact of housing renovation tax incentives.

Despite these macroeconomic challenges, Italy’s real estate and hospitality sectors remain strong, benefiting from stable fundamentals and increasing investor confidence. The prime office sector continues to attract institutional capital, while retail, logistics, residential, and hospitality segments show steady performance improvements.

— Source: Global Asset Solutions

Hotel Sector Trends and 2025 Outlook

Italy’s hotel sector has sustained growth since 2022, overcoming challenges posed by rising operational costs and financing expenses. The investment volume is expected to surpass €2 billion in 2024, reflecting a 30% year-over-year increase. This growth is fueled by strong sector fundamentals, renewed banking support, and heightened interest from global investors.

Luxury hotels continue to capture investor attention, with major brands expanding their presence in key cities and resort destinations. Boutique and hybrid hotels are also gaining traction, appealing to younger travellers and high-end clientele alike. Market yields remain stable, supported by the European Central Bank’s June 2024 rate cut, which has improved debt liquidity and facilitated new transactions.

Looking ahead, 2025 is expected to see continued yield compression for premium assets, making core investments more competitive. Secondary market opportunities are also set to rise, particularly for properties requiring repositioning or redevelopment.

Luxury Market Trends

Italy’s luxury hotel sector spans ultra-luxury, high-end branded, and boutique segments, each catering to different niches of travellers and investors.

Ultra-luxury properties – often one-of-a-kind palaces, villas, or resorts – offer unparalleled exclusivity and command top prices. These trophy assets, such as the Castiglion del Bosco estate in Tuscany (sold for an estimated €300–400 million​ attract family offices and sovereign wealth funds seeking long-term iconic holdings.

High-end branded hotels (flagged by groups like Four Seasons, Marriott’s Luxury Collection, or Six Senses) marry five-star service with the marketing power of international brands. Investors favour these for their global distribution and loyal client base; for instance, the newly opened Six Senses Rome traded in 2023 for €245 million (a record €2.6 million per key)​, reflecting confidence in branded luxury demand.

Meanwhile, boutique hotels are gaining traction for their intimate, experiential appeal​. Often set in historic mansions or unique locales, boutiques deliver personalised luxury that resonates with younger affluent travellers seeking authenticity. Transforming a historic villa into a boutique hotel can be highly profitable, and Italy’s rich architectural heritage offers ample opportunity for such projects​​. This segment’s worldwide growth (projected to be $40 billion+ by 2030) further signals its investment potential​.

Emerging luxury destinations are another key trend redefining Italy’s hospitality map. While Rome, Venice, and Milan remain prime markets, investors are increasingly looking beyond these hubs. Notably, resort areas like Lake Como, coastal Tuscany (e.g. Forte dei Marmi), and Sicily accounted for nearly 39% of hotel investment volume in 2024​. Destinations such as Taormina in Sicily, the Puglia countryside, and the Dolomite alpine towns are stepping into the spotlight as high-end travellers seek new experiences.

Major brands are following suit: IHG, for example, chose Taormina for Italy’s first Kimpton hotel, debuting in 2025, to tap into the island’s upmarket appeal​. Similarly, Edition Hotels is opening on Lake Como in 2025 in partnership with private equity investors, citing “incredible opportunity… not only in Rome and Milan, but in locations with unique appeal”​. These emerging luxury locales benefit from less saturated competition and distinctive cultural or natural attractions—whether it’s vineyards in rural Tuscany, wellness retreats on secluded coasts, or heritage sites in secondary cities—offering investors attractive avenues for growth outside the traditional urban centres. Sustainability and wellness have become integral to luxury hospitality, influencing both guest preferences and investor decisions.

Today’s upscale travellers increasingly demand eco-conscious practices and health-oriented amenities as part of a “quality of life” travel experience​. In response, Italian luxury hotels are implementing green initiatives—from solar energy and plastic reduction to locally sourced cuisine—to meet these expectations. Sustainability is no longer optional: eco-friendly operations are “now essential for customer appeal”​, especially in the five-star segment. Resorts like Six Senses (renowned for wellness and sustainability programs) or Lefay Resort & SPA Lago di Garda (an eco-minded luxury spa hotel) exemplify how wellness experiences and environmental stewardship can be a selling point.

Investors are increasingly factoring in these elements during acquisitions and development. Properties that boast LEED certification, carbon-neutral targets, or wellness facilities may enjoy higher guest loyalty and pricing power, ultimately protecting long-term asset value. In short, the move toward wellness and eco-conscious luxury is both a market response and a strategic investment play—enhancing brand image, future-proofing assets, and potentially driving premium returns.

Risks and Challenges

Despite optimistic forecasts, hospitality investors in Italy must navigate several key risks in the luxury segment. Careful strategies are required to manage these challenges and safeguard returns:

Market Oversaturation:

With a pipeline of new luxury hotels in cities like Rome and Milan (and dozens of upscale openings across Europe​), there is concern that certain markets could become crowded. Milan, for instance, faces potential oversupply as at least three high-end hotels are slated to open in the next few years​.

Oversaturation can pressure room rates and occupancy if demand doesn’t keep pace. To manage this risk, investors are shifting focus to untapped destinations and differentiated concepts. Rather than add another generic five-star in a saturated city centre, many opt to develop in emerging locations or introduce novel formats (such as ultra-luxury wellness retreats or hybrid hotel residences) that face less direct competition.

Strategic partnerships can also mitigate oversupply risk – for example, teaming up with luxury brands or local authorities to ensure a new project has a built-in market (through brand loyalists or destination marketing support). In practice, this might mean collaborating with a renowned fashion house or wine estate to create a hotel experience with exclusive appeal, making the property stand out even in a crowded field.

Rising Operational and Labor Costs: High inflation across Europe has driven up energy bills and wages, tightening profit margins for hotel operators. Italian hotels have seen wage inflation and surging utility costs in 2023​, and renewed tourist demand also brings staffing challenges. Skilled labour shortages push salaries higher, and maintaining the meticulous service expected in luxury hotels can be costly.

Investors are addressing this through cost-control innovations and efficiency drives. Many upscale properties are investing in technology – from AI-driven revenue management to smart building systems – to streamline operations and reduce waste. Automation of routine tasks (like mobile check-in, robotic service for deliveries, and AI concierges) can offset labour needs, allowing staff to be reallocated to high-touch guest services.

Training and upskilling programs (or outsourcing specialised services) are used to close skills gaps without constantly adding headcount​. Additionally, owners are exploring economies of scale by centralising certain functions (e.g. cluster procurement or shared back-office services for multiple hotels) to save costs. While luxury hotels can, to some extent, pass on cost increases through higher room rates, there is a ceiling. Thus, maintaining profitability requires creative operational strategies – from installing solar panels to cutting energy expenses to re-evaluating F&B outlets and amenities for ROI.

Crucially, investors are conducting thorough due diligence on cost structures before acquisition, building in conservative expense projections and identifying value-add opportunities (like renovations to improve energy efficiency or re-negotiating supplier contracts) to ensure the asset can weather cost pressures.

Financing Difficulties:

The rapid rise in interest rates has made debt financing more expensive worldwide, and Italy is no exception. Traditional lenders (banks and institutions) have adopted a cautious stance on new hotel projects, especially those deemed risky or without proven performance​. This tightening credit environment can stall developments or acquisitions, even as market fundamentals improve. In Italy, while hotel investment volumes are high, many deals rely on innovative financing structures. Investors are increasingly turning to alternative financing solutions to bridge funding gaps​. Mezzanine loans, preferred equity, and joint ventures with private equity funds are common tools to reduce reliance on bank debt. For example, developers might secure a mezzanine tranche from a specialised hospitality fund to supplement senior debt – a strategy that, although at a higher interest rate, can make a project feasible.

The Italian government and EU have provided stimulus and grants (like Recovery Plan funds) for tourism and hospitality, which some investors are using for renovations and upgrades. Sale-and-leaseback or asset-light models allow investors to sell real estate (or a stake) to a capital partner while retaining operational rights, raising cash and lowering leverage. Additionally, soft-branding a hotel (affiliating with a major brand’s distribution system without full ownership change) improves performance and justifies financing.

Overall, the key is flexibility – investors who structure deals creatively and maintain lower debt ratios are better positioned to endure high borrowing costs. As evidenced by renewed banking support in late 2024 after an ECB rate pause​, those who navigated the financing dip with alternative capital are now able to move quickly on opportunities while others are still constrained.

Asset Management: In Italy, hotel Asset Management remains relatively underdeveloped, with many owners still relying primarily on operators to oversee daily operations and financial performance. According to the Italy Hotels & Chains Report 2023 by Horwath HTL, lease agreements account for 41% of all chain properties, while franchise models represent 34%, making management contracts—often linked to active Asset Management—far less common. This lack of structured Asset Management practices can limit profitability, operational efficiency, and long-term value creation, as ownership groups may not have the necessary expertise or independent oversight to maximize revenue and control costs effectively.

In a market as competitive as Italy’s, where luxury and independent hotels make up a significant portion of the industry, the absence of professional Asset Management often results in missed opportunities for optimizing business performance. Without an active asset manager, key financial and operational decisions may be driven solely by operators’ objectives rather than a strategic alignment with owners’ investment goals. This can lead to inefficiencies in capital expenditure planning, suboptimal revenue management strategies, and a lack of cost control measures—all of which directly impact profitability and return on investment.

By implementing structured Asset Management strategies, hotel owners can bridge the gap between operational decisions and financial performance, ensuring higher efficiency, optimized expenses, and a stronger competitive positioning. Asset managers act as a vital intermediary between ownership and operations, helping to increase EBITDA, improve market positioning, and enhance the overall value of the asset. As Italy’s hospitality sector continues to evolve, adopting Asset Management principles will be key to driving sustainable growth and long-term success in an increasingly demanding investment landscape.

New Luxury Hotel Openings 2025

Italy’s status as a premier luxury destination is reinforced by several high-profile hotel openings slated for 2025. Among them, the highly anticipated Romeo Hotel in Rome, designed by Zaha Hadid Architects, promises to redefine the city’s high-end hospitality landscape. Six Senses Milan in Brera is set to offer a refined urban retreat, while Nobu Hotel Rome will bring its signature blend of Japanese minimalism and Italian elegance to the historic Via Veneto.

These openings highlight the growing demand for unique, high-end accommodations that cater to discerning travellers.

— Source: Global Asset Solutions

Evolving Market Dynamics and Investor Landscape

At the Italian Hotel Investment Conference (ITHIC), industry leaders emphasised the evolving nature of Italy’s hospitality sector. While Italy remains a seller’s market—especially in cities like Venice, Florence, and Rome—investors are increasingly exploring emerging destinations where new value can be created. The continued growth in Average Daily Rates (ADR) is also making Italy more attractive than other European markets.

Italy remains under-branded compared to other major tourist markets, presenting significant opportunities for international hotel groups looking to expand. Investment activity is evenly divided between domestic and international buyers, with a notable trend of domestic investors acquiring properties outside major urban centers. Meanwhile, the mid-market and budget segments offer strong potential for expansion, particularly in well-connected secondary locations.

While financing remains a challenge, with institutional lenders adopting a cautious stance, alternative capital strategies are emerging. Mezzanine financing and government-backed grants are increasingly being utilised to bridge funding gaps, while soft branding and targeted property upgrades present attractive opportunities for asset value enhancement.

Selected Major Transactions (2021-2023)

— Source: Global Asset Solutions

Case Studies of Selected Major Transactions

Recent high-profile transactions in Italy illustrate how investors are executing deals and repositioning assets in the luxury space. These case studies highlight the investment rationale, financial outcomes, and strategic repositioning efforts behind each project:

Six Senses Rome – Prime Urban Redevelopment (2023):

Rationale: Capitalize on Rome’s thriving luxury market by repositioning a heritage property.

Deal: In late 2023, local investor Gruppo Statuto acquired the newly opened Six Senses Rome for €259million​ (italiabsolutely.com). The seller, Orion Capital, purchased the palazzo in 2018 for €95 million and transformed it into a 96-room Six Senses hotel that opened in March 2023​.

Outcome: The transaction — at €2.6 million per key, the highest ever in Rome — netted Orion a substantial profit and proved the demand for top-tier branded assets. Statuto Group’s rationale was to obtain a trophy asset in central Rome with a globally recognised luxury brand, betting on continued ADR growth and Rome’s limited supply of ultra-luxury rooms.

Repositioning: Since the hotel was brand-new, the strategy is to hold and benefit from Six Senses’ emphasis on wellness and sustainability to drive premium rates. This sale underscores that investors are willing to pay a premium for turnkey luxury products in Italy’s capital, especially when the historic charm is combined with a world-class brand.

Castiglion del Bosco Estate – Trophy Resort Sale (2022):

Rationale: Monetize and further develop an ultra-luxury lifestyle asset (hospitality + wine) through a partnership with global investors.

Deal: In 2022, the Ferragamo family sold a majority stake in the Rosewood Castiglion del Bosco resort in Tuscany to an international family office in a deal reportedly valued at around €300–400 million (italiabsolutely.com). The estate comprises a 5-star resort (managed by Rosewood), a Brunello di Montalcino winery, and 2,000 hectares of land – truly a one-of-a-kind property.

Outcome: The sale injected fresh capital for expansion (the resort added 19 new suites​ while allowing the Ferragamos to remain involved in management. For the buyers, this acquisition secured a rare trophy asset blending luxury hospitality, real estate, and wine production – with multiple income streams and significant land appreciation potential.

Repositioning: The new owners plan to elevate the estate’s profile as an exclusive retreat for high-net-worth guests, leveraging Rosewood’s brand and possibly integrating wellness and experiential programs (truffle hunting, vineyard tours) to maximise revenue. The deal demonstrates investor appetite for experiential luxury properties and the willingness to pay top dollar for assets that deliver both financial returns and legacy value.

Hotel Bauer Venice – Historic Repositioning (2024):

Rationale: Acquire a distressed iconic hotel in Venice and invest heavily to transform it into an ultra-luxury flagship.

Deal: In November 2024, Mohari Hospitality (the investment firm of entrepreneur Mark Scheinberg) in partnership with Omnam Group acquired the famed Bauer Hotel in Venice for approximately €326 million​ (realassets.ipe.com). The property had fallen into administration under its previous owner, opening the door for a new investor at a pivotal moment. Mohari’s vision is to restore the 19th-century palazzo’s grandeur and rebrand it under Rosewood Hotels & Resorts, which has been engaged to manage the hotel after a €150 million renovation (slated for completion by 2025).

Outcome: The acquisition gives Mohari a marquee asset in Venice – a city with extremely high barriers to entry – at a total project cost of ~€450 million, including renovations. Success will be measured by the Bauer’s post-redevelopment performance: projections suggest it can become one of Europe’s most prestigious hotels, justifying rates on par with Aman Venice or the Gritti Palace.

Repositioning: This is a classic value-add play. The new owners are essentially creating a “new” ultra-luxury product within the shell of a historic landmark. By partnering with Rosewood and investing in top-notch design and restoration, they aim to elevate the Bauer to palace-status luxury, thereby dramatically increasing its asset value. The strategy banks on Venice’s enduring appeal to affluent travellers and the lack of new supply in the city’s heritage buildings. If successful, Hotel Bauer will stand as a case study in turning around a distressed asset through timely acquisition, strategic partnership, and capital investment in quality and brand.

Baglioni Hotels Acquisition – Portfolio Expansion (2022–2023):

Rationale: Join forces with a global luxury resort operator to accelerate international growth.

Deal: Baglioni Hotels & Resorts, an Italian luxury hotel group (with properties in Rome, Venice, Florence, etc.), entered a partnership with Mexico’s Palace Resorts. In late 2022, Palace Resorts acquired 75% of Baglioni, and by October 2023, it had purchased the remaining stake to take full ownership​ (hotelmanagement-network.com).

Outcome: This two-stage acquisition gave Palace Resorts a foothold in Europe, leveraging Baglioni’s esteemed brand and Italian heritage. For Baglioni’s founders, the deal provided capital and a global distribution boost – an impetus to expand the Baglioni brand beyond Italy under the new parent’s investment. Already, new management appointments have been made to grow Baglioni within Palace’s portfolio​. Financial details weren’t disclosed, but the strategic rationale was clear: Palace gains a renowned European luxury brand and pipeline, while Baglioni gains a deep-pocketed partner to renovate properties and develop new ones (potentially in international destinations), keeping the brand competitive.

Repositioning: The strategy focuses on rebranding and expansion. Some Baglioni hotels may be upgraded (with Palace’s capital) or even reflagged to Palace’s own luxury brands in select markets while maintaining Baglioni’s Italian luxury identity for others. This cross-border acquisition highlights how investors can use M&A not just for single assets but to acquire entire operating platforms. It reflects confidence in the long-term value of Italian luxury hospitality, and the belief that an Italian brand with authentic roots can be exported globally with the right backing.

Conclusion: A Strong Future for Italian Hospitality

Italy’s hospitality sector is poised for continued growth, but success lies in astute investment strategy. Luxury and experiential trends are creating new opportunities – from ultra-luxe resorts in less-discovered regions to sustainability-driven upgrades in city hotels. At the same time, challenges like market saturation, cost pressures, and tight financing call for prudent risk management through innovation and partnerships. The recent transactions in Italy illustrate that while competition for prime assets is intense, investors who identify the right product and structure deals creatively are achieving strong outcomes. Ultimately, Italy’s unique blend of history, culture, and luxury lifestyle ensures its enduring appeal. For well-prepared hospitality investors, the country remains one of Europe’s most compelling destinations – where strategic investments and thoughtful repositioning can yield not only robust financial returns but also a stake in some of the world’s most iconic hospitality experiences.​

About Global Asset Solutions

Global Asset Solutions operates worldwide providing independent hotel asset management services. Clients include PE firms, institutional investors, sovereign funds and family offices, with over $20bn of assets managed in Europe, Asia and the Middle East. The company leans on decades of experience in the luxury sector to deliver bespoke solutions which allow investors to grow their asset value and realise the potential of their assets. www.globalassetsolutions.com