Private Equity Will Drive Hospitality Liquidity in 2021

Private equity and institutional investors were responsible for 54% of hotel investment volume last year, and they are likely to continue to drive activity in 2021.

Private equity and institutional investors have started to return to the hotel market, a trend that began in the second half of 2020. According to research from JLL, private equity and institutional investors were responsible for 54% of total hotel transactions last year and they are likely to remain active in the market this year, driving investment activity.

French group Covivio in September finalised the €573m acquisition of seven Italian hotels, including Rome’s Hotel Exedra, from US private equity group Värde Partners, which bought the hotels for €150m in 2017 from Venice’s Boscolo family.

New York hedge fund Elliott Management sold famed Venice hotel Bauer to Austrian real estate group Signa over the summer after only a year of ownership, while London-based Orion Capital announced it was expanding luxury hotel brand Six Senses into Italy after acquiring an 18th century palazzo in Rome.

Italy is the only European country with more than 1m hotel rooms and big chains account for only 5 per cent of them, with the rest of the market dominated by small family-owned businesses.

To block distressed domestic hotel owners from selling to foreign investors at a discount, state-backed investor Cassa Depositi e Prestiti has launched a €2bn real estate fund to take over the properties while leaving the management to the former owners with the aim of selling it back to them after 10 years. CDP is the biggest institutional hotel owner in Italy, followed by the Qatari sovereign wealth fund and BNP Paribas.

But some investors believe CDP’s scheme cannot be a long-term solution. “It’s like giving someone who is having a heart attack a cup of warm water,” said Paolo Barletta, chief executive of Gruppo Barletta, who is expanding Rosewood and Soho House into Italy.

Source:  GlobeST