For a comprehensive review of the Europe market, click below:
HVS In-Depth Europe Hotel Valuation Index:
2024
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2001
The capital city of the Italian region of Tuscany is also its most populous, with approximately 368,000 inhabitants as of January 2024, expanding to more than 988,000 over the greater metropolitan area. Florence was declared a World Heritage Site by UNESCO in 1982. The city is noted for its culture, Renaissance art and architecture, monuments and numerous museums and art galleries, including the Uffizi Gallery and the Palazzo Pitti. Florence benefits from a strong fashion sector, with the likes of Roberto Cavalli, Salvatore Ferragamo and Emilio Pucci all based in the greater city area. Florence hosts the biannual Pitti Imagine fair at the Fortezza da Basso in January and June, every year.
Whilst 2018 and 2019 were somewhat stagnant years in terms of international visitation to Florence, domestic tourism supported the total arrivals to the city. Overall, total visitors grew at a compound annual rate of around 1.5% between 2010 and 2019. The city is generally heavily reliant on international feeder markets, which account for around 70% of demand. After several years of RevPAR growth, performance dropped substantially on account of the COVID-19 crisis, with RevPAR reaching 15% of the 2019 level in 2020 and 40% in 2021. In 2022, the Florence hotel market saw a major uplift in both occupancy and average rates, which resulted in the RevPAR returning to pre-pandemic levels in real terms. The return in force of US demand, so important to Florence, and its strong leisure base, helped to drive rates in 2022 by more than 30% of the 2019 levels in nominal terms. 2023 saw a surge in hotel occupancies and average rates, both experiencing double-digit growth year-on-year. This helped the market achieve a record-breaking RevPAR of close to €200, around a quarter above the 2019 values in real terms.
The city’s hotel market is characterised by small properties and a proportional lack of international operators, as many hotels are independent or part of a regional brand or group. Barriers to entry are extremely high on account of most of the city centre’s buildings being listed, making conversions very costly. Florence’s current hotel pipeline consists of seven projects, which are expected to bring around 1,200 rooms to the city’s hotel market. The future hotels, all but one of which are in the construction phase, include one independent hotel opening in April 2025 and six branded hotels: the 118-room Anglo American Hotel by Curio Collection by Hilton, recently reopened in April 2024 following a full refurbishment and a rebranding, the 118-room Ruby Bea Florence (opening July 2024), the 121-room A&O Florence hostel (opening September 2024), the 82-room Collegio alla Querce (opening 2024), the 550-room Social Hub Belfiore (opening early 2025) and the W Florence with 120 rooms (April 2025).
The hotel transactions space in Florence was very strong in 2021, mostly driven by international private investors. The 212-room Hilton Metropole and 121-room Hilton Garden Inn Novoli were acquired by British investment firm Pygmalion Capital in April 2021 for an undisclosed amount. Real estate investor Hines acquired the regeneration project of the Manifattura Tabacchi in December 2021 for €80 million with the intention of developing new student housing with more than 500 beds. Other transactions include the sale of the 115-room NH Anglo American in April 2021 to Castello SGR and the 173-room 25hours in November 2021 to Invesco. No hotel transactions took place in Florence in 2022 or 2023.
Overall, our HVI analysis indicates a value increase of 4.7% per key in Florence in 2023 compared to 2022 – values per room remain 4.1% below the 2019 values for this market. The performance for this market should continue to be supported by its strong leisure base and high barriers to entry.
The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide.
Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the
hospitality investment market.
In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely
insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related
restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.
Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with
an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide
insights on the likely trajectory of decline and recovery for hotel values.
For the Latest Information and Analysis on the Impact of COVID-19Click Here
If you’d like to speak to someone personally to review details of our most current analysis, please don’t hesitate to contact
us directly.
ADR, Demand, Occupancy, RevPAR, and Supply Projections:
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