The challenges of the hotel industry in Europe


The hotel industry represents an increasingly attractive asset class for corporate real estate investors. This attraction is notably due to the uncompressible advantage of the hotel sector: the assured growth in the number of tourists worldwide. 1.4 Bn tourists expected for 2020 and 1.8 Bn for 2030, i.e. a growth forecast of 40%.

Dominique Ozanne, Deputy CEO of Covivio

Europe is the leading world tourist destination and hotel investment is a necessity for all European countries that want to benefit from this external growth and maintain their positioning.

At the same time as the increase in demand, we are seeing changes in consumer expectations, which are becoming increasingly sophisticated. “Traditional” hotel products must be redesigned to correspond to guest expectations: the wish for more services, more customization as opposed to product standardization, the search for conviviality and all that within sustainable, high quality infrastructures.

Moreover, the main international operators have changed their Business Models, by spinning off real estate to focus on operational asset management (“asset light” strategy). At the same time, they have repositioned themselves in the mid and high range segments.

Faced with this triple finding, Covivio has adopted a value creating, sustainable strategy allowing it to be more agile and responsive to market transformations. Covivio’s hotel strategy focuses on the following 4 pillars:

  • investing in the major cities in the main European markets such as France, Germany, Spain, UK and Italy in prime assets;
  • Continuing to diversity our portfolio by diversifying countries and operators. Our ambition is to have a balanced portfolio and critical size in the main European markets by being a partner for local operators and the leader in each of these markets;
  • improving the quality of our overall portfolio by looking for a higher-end positioning for our assets. Unlike other hotel investment players, we have taken the gamble of focusing our efforts on midscale and upscale assets to better meet consumer demands and avoid being in direct competition with the new players in the collaborative economy;
  • lastly, maintaining our agility by being able to manage assets under lease, management or franchise, with all types of operators.

Thanks to solid fundamentals, the hotel sector has a bright future and Covivio intends to benefit from it!