Tourism: Descent of international hotels in Europe – Athens is in the top 10 – Economic Post Office

Greece is in the top 5 of the favorite investment destinations for hotel units in Europe, according to CBRE’s new research, which analyzes the scene that has formed in hotel deals in Europe, with the invasion of international giants. The dynamic development of Athens, which is included among the most attractive European cities, is noteworthy.

Europe continues to retain its appeal as a top destination for global travelers, with key tourist hubs and gateway cities attracting a significant share of international visitors. Over the past decade, Europe has consistently accounted for more than half of all global international travel, a trend expected to
further strengthened in 2024 and beyond.

Therefore, it is not surprising that European hotel investors focus on the vast majority of opportunities in their own region, in the domestic European arena.

And of course they attract many foreign investors, with the first place in capital flows being held by the Americans, followed by the Asians.

Investment crescendo in Europe’s hotels – Greece is in the top 5

Top destinations

Spain, the United Kingdom and Italy have emerged as the top investment destinations for hotels in 2024. In fourth place is France with Greece completing the top five.

In Spain, hotel investments in particular reached an important milestone in 2023, recording a total transaction volume of €4.1 billion. This figure represented 36% of the total commercial real estate volume in Spain and 28% of the total hotel investment volume in Europe last year. Demand for Spanish hotels remains
strong in 2024 as well.

The UK is steadily attracting global demand and 2024 is no exception, securing the second most desirable location for investment among respondents. Much of this demand is focused on investment in London, as well as other key cities such as Edinburgh and Manchester.

Investors continue to see Italy as an attractive market, ranking as the third destination in the survey. Hotels have shown increasing relevance in the wider real estate market in the country. While 2023 was admittedly a year with lower transaction volumes, hotels accounted for over 20% of the total volume of commercial real estate in Italy.

The emergence of Athens

At city level, the investment climate continues to favor London as the most attractive city for hotel investment. Given London’s historic and continued leadership in tourism and travel spending, this is no surprise.

Perhaps more unexpected is Madrid’s rise to second place, overtaking Paris. The city’s hotel dynamics are proving increasingly attractive to global capital, with particular interest from Latin America.

So, while London leads in total travel spending, Paris and Barcelona are also predicted to attract significant international tourist arrivals in 2024.

Amsterdam is also expected to see strong growth in international overnight visitor arrivals, earning fifth place in the survey.

CBRE’s report makes special mention of Athens, stressing that it has “emerged as an increasingly attractive market for investors, with a notable rise in hotel operating performance of over 30% year-on-year in 2023”. And the report adds: “This positions Athens as an emerging opportunity among key tourist cities, offering investors an alternative route for potential growth and portfolio diversification.”

Athens entered the top 10, demonstrating Greece’s strong position in the market over the past five years, the report said.

Invasion of international groups

Independent units and smaller brands are seeking to bring international hotel groups into the European “portfolio” in order to capitalize on growing demand for travel amid high construction costs for new resorts.

Holiday Inn owner InterContinental Hotels Group and Marriott unveiled plans last week to add hundreds of existing hotels across Europe to their brands in a bid to boost holidaymakers from the post-pandemic travel boom.

As the Financial Times writes, the InterContinental Hotels Group aims to double its portfolio in Germany to more than 200 hotels by 2028 through a 30-year franchise agreement with the country’s largest family-owned hotel business, Novum Hospitality. Yggotel, Select and Novum hotels will be called Garner, IHG’s new mid-range brand, while the niu brand will become Holiday Inn — the niu.

Marriott, meanwhile, said it will add 100 more hotels in countries including the UK, Italy, Spain and Turkey by the end of 2026, rebranding third-party hotels and converting existing buildings.

The cost of borrowing

International hoteliers are struggling to expand their portfolios at a time when high borrowing costs in Europe have slowed the pace of new construction. Real estate consultancy JLL reports that the number of conversions rose to an all-time high in 2023, with hotels taking advantage of existing resorts and even office space.

“The momentum in Europe is accelerating,” IHG chief executive Elie Maalouf told the FT, adding that the continent’s high construction costs and large number of independent hotels were “an opportunity”.

“[Η περιοχή έχει] lower penetration of global brands, many independent properties . . . but a strong industry,” he said. “People want more hotels.”

European travel is expected to remain strong this year: boosted by the return of Asians and business travelers, as well as events such as the Paris Olympics and singer Taylor Swift’s Eras tour in Europe starting next month.

Hotel groups are looking for a way to gain market share in the region at a time when new hotel development is slowing. From 2009 to 2023, total European hotel supply grew at a compound annual growth rate of 1.3%, according to CBRE. That is expected to moderate to just 0.9 percent this year, well below the estimated 3 percent annual growth in visitor arrivals, CBRE said.

Back to dealmaking

The survey highlights the broadly bullish sentiment in the hospitality sector that has led to a return to dealmaking post-pandemic. More than two-thirds of investors surveyed planned to put more capital into hospitality deals because of good deals and the expectation that lending conditions will improve if interest rates fall, according to CBRE.

Difficult to build

Mark Hoplamazian, chief executive of US hospitality group Hyatt, said building new hotels had become more difficult due to “very difficult” markets to raise capital, prompting the company to turn to converting and rebranding existing buildings. There is “much more demand than supply,” he said.

Hyatt, which owns brands such as Grand Hyatt and Andaz, said in January it was adding more than 70 hotels to its portfolio in Europe, Africa and the Middle East.

Hoteliers said that in Europe, 59% of hotel rooms are still independently operated, up from 65% in 2008. In the US, only 28% of rooms are independently operated.

Groups such as Hilton argue that small hoteliers benefit from franchise agreements, which give them the power of a larger brand. However, such agreements also come at a cost, as hotels must pay fees to the franchisor.