ROME — Hotel development in Italy is beset with well-meaning bureaucracy and regulations centered on heritage and building conservation.
Government and private entities attempting to bring historical buildings back into use, often as hotels, need to blend commercial and public interests, according to speakers on a development panel at the recent Italian Hospitality Investment Conference.
Fabio Guerra, strategic adviser for Italian government agency Invitalia, which attracts foreign direct investment, said his organization mostly engages with developers who invest a minimum of €20 million ($22 million) and adhere to industry, tourism and environmental protections.
“Projects providing an investment of at least €50 million gain access to a fast-track procedure. Those higher than €7.5 million can only be supported if [the project involves] abandoned properties or are in selected geographical areas,” he said.
Guerra added Invitalia does a lot of the legwork.
“We are involved in the scouting of assets, supporting the participation in public tenders, networking with relevant real estate stakeholders and conducting … due diligence. We also undertake the procurement of legal, fiscal and financial professionals through national associations,” he said.
Agenzia ICE ITA, which helps develop foreign trade, partners with Invitalia and also attracts capital via 80 international officers covering 130 countries, said Marco Cito, its head of foreign investments attraction. His agency secured €493.5 billion in foreign direct investment in full-year 2023, an increase of 7.5% compared with full-year 2022.
“The three main markets for inbound investment are the U.S., Germany and the United Kingdom, respectively, and mainly to northern regions of Italy,” he said.
Development in Rome often can be delayed when construction work unearths Roman artifacts, an occurrence that will get the notice of numerous other government agencies.
Guerra said the type of contract and authorization formulated will take into account considerations required for change of use and the approval of building permits.
It might be a cliché that Italy has numerous cases of red tape to slice through, he said, but not doing so in many cases risks the erosion of what guests come to Italy to experience.
Guerra said his agency preferred to work with projects of a larger surface area because of their generally higher level of economic impact.
“Value-add or opportunistic assets, these are not core. [Projects] must be one that are to be restored or regenerated,” he said.
Luxury projects in Italy still drive hotelier interests. Roberto Gualtieri, Rome’s mayor and a former Italian minister of finance, said he estimates a “30% increase in luxury hotels in Rome in the next three years and a 50% increase in the next five … the second highest in the world, behind London.”
He said 11 luxury hotels with more than 1,500 rooms are due to open in Rome in the next year.
“Currently, luxury is only 9% in Rome. Until Rome is No. 1, we have work to do. I do not think overtourism is a problem in this city,” he said, adding the government that came to power in Italy in 2022 has continued the fiscal policies from the previous government.
Italy has more €1,000-per-night hotels than any other country in Europe, said Livio Stracca, deputy director general at the European Central Bank.
He said the country was on the correct path in being cautious in how hotels are developed across the country, and how many.
“But construction is happening. There are often delays, but I do not see a cliff-edge scenario,” he said.
Stracca said Italy is one of the few countries in Europe where, with the exception of economic powerhouse Milan, house prices have fallen. He pointed to other challenges such as a lack of government, legal and societal reforms, sluggish productivity and high debt.
“A lot of that debt is based on pensions,” he said, “although fiscal policy is generally well-behaved.”