Europe -  Florence, Italy

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The capital city of the Italian region of Tuscany is also its most populous, with approximately 382,000 inhabitants, expanding to more than 1.5 million 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 Immagine fair at the Fortezza da Basso in January and June each year. In 2020, the event could not take place physically, so Pitti Connect was created to virtually recreate the exhibition and networking experience of the original show online. It remains uncertain whether the exhibition will resume in-person in June 2021 or take place online again. Owing to a number of terrorist attacks across Europe, visitation to Florence fell by around 1.7% in 2016, driven by lower foreign visitation, resulting in the lowest level of total visitation to the area since 2013. 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 growth rate of 1.4% between 2010 and 2019. The city is generally heavily reliant on international feeder markets which account for around 70.0% of demand.

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 due to most of the city centre’s buildings being listed, making conversions very costly. Only a handful of pipeline projects exist, and they include the currently under construction 25hours Hotel (to open in November 2021), the 38-room Calimala Hotel, the 670-room Student Hotel Belfiore (opening 2022), the 122-room W Hotel Florence (2023), the 318-room Student Hotel Florence Manifattura Tabacchi (2021), the 150-room lifestyle Manifattura Tabacchi Hotel (2022) and the 70-room Leeu Collection Florence (2023). In respect of the pandemic, the likelihood of proposed projects being delayed or altogether cancelled has increased; some of the mentioned new supply may therefore be deferred or cancelled.

Two hotel transactions were recorded in Florence in 2020. The 166-room Hotel Londra, situated at Via Jacopo da Diacceto, originally opened in 1966 and transacted in Q4 2020 for €22 million. Secondly, the 86-key NH Palazzo Gaddi at Via Del Giglio 9, transacted in September 2020. This sale transpired as part of the Dedica Anthology Portfolio 2020, and the allocated price was €63.9 million. The full-service, centrally located asset, with 408 m² of meeting space, was purchased by Covivio Hotels from Varde Partners.

Our HVI analysis reveals a value drop of 17.5% per key in Florence in 2020. Given its light pipeline and strong leisure base combination, Florence is likely to recover quicker than many other European markets. However, reliance on foreign visitors and a slow national vaccine rollout (7.0% of the population has been vaccinated as of 1 March 2021) could be limiting factors.

Change In Value For Market: (€Euro)

Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

For more information, please contact:

Sophie Perret, MRICS, MBA
[email protected]
  • +44 20 7878 7722 (w)
Nikola Miljković
[email protected]
  • +44 20 7878-7721 (w)
  • +44 7 593572865 (m)