Italy unites to attract foreign investors, brands

The IHIF Italy panel. Photo credit: Katherine Doggrell

BERLIN—During the second day of the International Hotel Investment Forum, delegates learned how the Italian government is working to bring the public and private sectors together to foster growth and development. 

As the market becomes more transparent, investment is expected to expand in the country, and with it, growth in the international brands, the panelists said. 

The panel was held after preliminary results in the country’s elections saw a collection of right-wing, Eurosceptic  and populist parties  win a majority in the Italy’s parliament. The Five Star Movement was the biggest party, with around 32 percent of the vote, while the far-right League and center-right Forza Italia took around 17 percent and 14 percent, respectively. 

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While a government was being formed, efforts to drive the tourism sector forwards were continuing behind the scenes.

Public & Private Sectors

“When I came to Berlin five years ago, I saw that no one talked about Italy," said Giorgio Palmucci, president, AICA, Italian Hotel Association – Confindustria. "We see that there are large opportunities to invest, but the number of transactions is very small compared to other countries. In 2017, the volume of transactions doubled compared to five years ago, and in the pipeline, there are around 12,000 rooms. Investors have to invest in our country because now tourism is 11 percent of our [gross domestic product]. I am sure we can get to 20 percent in two or three years.” 

“The government has placed great attention on the dialogue between public and private," said Alessandra Priante, head of international relations for tourism, ministry of culture and tourism, Italy. "We have bought all the stakeholders together to write the first national strategy for tourism and we came up with an interesting document. Now we are getting into the operational phase. The regions all have independence in setting their own tourism policies, but in our experience, the regions are happy interacting when there is a strong center.  

“We’ve recently signed a three-year plan based on preferential credit lines for those [regions that are] developing tourism. We sat together as a government with the leading commercial bank in Italy to give attention to private tourism initiatives. This is what we need to do to water the seeds and let them grow.”   

Together, the banks and local teams have been working to organize all of the elements that will help the country improve as a whole. “What is perceived as reluctance to let foreigners in is probably true, but we are working hard to create a more welcoming environment,” Priante said. “Beaurocracy is a problem not only for foreign investors, but also domestic investors. The taxation is a nightmare.”  

“We started to understand that tourism is crucial for Italy," Marco Sangiorgio, general manager, CDP Investimenti SGR, said, advocating a growing fund for the country. “We want to be the real estate partners for management companies in the hospitality sector. We are planning to take the fund to the market with a target of €500 million in equity to invest. We have already acquired five hotels, with another pipeline of five hotels, for €200 million. This is a small number, but it is important to get our message across.  

“We act in two ways. We can do sale-and-leasebacks with operators that we like—the operators are crucial—but we can also buy properties for operators that we like. Sometimes we look at new investments with operators when the sellers are families. We want to reduce the number of families and increase the number of chains.  

“We invest in city hotels, but also leisure resorts. We can invest in properties that need refurbishment, but they need to be hotels already. We only have leases because we don’t want to have to deal with operations. We are also prepared to take minority stakes in other funds. If there are international investors who need a financial partner in Italy, that could be an idea.  

“Banks are staring to put distressed assets on the market. That has been a prudent way to deal with [nonperforming loans], but the market is changing. The real estate market has become much more transparent over the past 15 years.” 

“Attitudes in Italy are changing, and they are changing very quickly," said James Chappell, global business director, Horwath HTL. "Italy is very much open for investment.” 

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.