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Hotels in Europe saw value uptick by 3%

  • April 25, 2023
  • 2 min read
Hotels in Europe saw value uptick by 3%

Hotels in Europe have seen their values rise by around 3% in 2022 with those in London, Zurich, Amsterdam, and Rome being the most highly valued. A number of factors in 2022 benefitted hotels. These include strong improvements in RevPAR (Rooms Revenue Per Available Room) and the recovery of ancillary revenues. All this is despite high inflation, an increasing cost of debt and the looming threat of recession leaving hotels below their peak in 2019.

“The pandemic year of 2020 saw hotel values plummet by around 15%,” report co-author Julia Dzerkach, analyst, HVS London commented, “although they rallied by around 5% in 2021. Last year was a mixed year in terms of hotel performance across Europe, with some aspects of 2022 much better than expected, while other aspects were much worse.”

By the end of 2022, many hotel markets were seeing a strong recovery from the pandemic. It was reported that with many gateway cities achieving higher RevPAR levels by December 2022 than 2019 thanks to significant uplift in leisure demand and corporate travel returning to two-thirds of its pre-pandemic volumes.

Companies are no longer signing contracts with set prices based on the volume of goods or services they expect to receive. Instead, they are negotiating more flexible contracts that allow for changes in price based on actual usage. This shift is beneficial for companies that are increasingly using remote work and video conferencing, as these methods can reduce the amount of goods and services they need.

However, labour shortages, room inventories, and rising energy bills are all presenting significant challenges for hotels in Europe. Increasing interest rates and the fear of an impact from the cost-of-living crisis on hotel demand and threats of recession are all cooling investors’ appetites for hotels. A looming banking crisis is also heightening these fears.

 

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