Before COVID-19, Venice was bursting at the seams in terms of tourism demand, with close to 250,000 visitors arriving every day and cruise ships dwarfing the delicate canals and canal-side streets that make the city unique.
The pandemic led to a sudden end of that demand strain, and for the first time in decades fish could be seen in clear canal water. Even in March 2021, dolphins were seen swimming close to St. Mark’s Square.
Now that COVID-19 restrictions have eased somewhat across Europe, tourists are returning to Venice and traditional events have resumed.
“The Venice Carnival 2022 has seen the return of many visitors to the city," said Gianrico Esposito, general manager of Hotel Danieli, part of Marriott International's Luxury Collection. "The peak days during the weekends have seen the streets crowded almost at the level of pre-COVID-19 days. The city has been visited by a mix of local and proximity tourists and travelers mainly from European countries.
“The success of the event, with the confirmed appeal of the destination, reinforces the very positive outlook for the coming months [in which] where we continue to see a strong booking activity.”
Venice's Recovery
Venice's luxury hotels are expected to rebound healthily as pandemic restrictions lift, and a full events calendar should help demand recover, Esposito said.
“Regarding the expected performance, we see a positive outlook for the coming months. The progressive ease of the sanitary restrictions and the travel limitations will certainly drive resurging demand,” Esposito said.
Other large events in Venice expected to generate hotel demand include Homo Faber, Biennale Arte, Salone Nautico and the International Film Festival.
Occupancy for Venice’s luxury and upper-upscale hotels for full-year 2021 was only 28.8%, according to data from STR, CoStar’s hotel analytics firm. For full-year 2019, pre-pandemic hotel occupancy was 60.3%. STR data for the market incorporates the city of Mestre on the Italian mainland, which sits opposite Venice.
Venice's hotel average daily rate for full-year 2021 was 394.98 euros, 3.3% higher than full-year 2019 ADR. Revenue per available room for full-year 2021 was 113.84 euros, down 50.6% when compared to full-year 2019 RevPAR.
Esposito said Venice always has been and always will be resilient.
“Indeed, the last two years have been very challenging. Nevertheless, whenever the conditions were favorable, Venice has been among the top destinations for … international tourism,” he said.
New Funding for Hotel Danieli
The return of that demand has not been lost on hoteliers, and the chance to own a piece of hotel real estate in Venice doesn't come around often.
Hotel Danieli, which occupies a spot on the Riva degli Schiavoni alongside the Grand Canal and close to St. Mark’s Square, has been at the center of one ownership tussle.
On Jan. 10, Italian real estate company Statuto Group announced it had raised 330 million euros ($365.6 million) to keep the famed Hotel Danieli in Venice, Italy, with the help of U.S. private-equity company Starwood Capital Group.
According to a news release from legal firm White & Case, which advised Starwood Capital, Statuto’s new capital injection has been “implemented through the issuance of certain non-convertible bonds listed on the third market of the Vienna Stock Exchange … and organized by the U.S. investment fund King Street Capital Management.”
A few days before the refinancing announcement, various media reported that Cascade Investment Group — the ownership vehicle of Microsoft founder Bill Gates — had purchased Hotel Danieli. Supposedly in that deal, the 204-room hotel, which celebrates its 200th anniversary as a hotel this year, would have been rebranded under Four Seasons Hotels & Resorts. The deal was due to close by the end of January before Statuto Group announced its intent to refinance the property.
Four Seasons manages two other Italian Statuto-owned assets, the Four Seasons Hotel Milan and San Domenico Palace, Taormina, a Four Seasons Hotel, in Sicily.
Seattle-based Cascade has an ownership stake in Four Seasons and increased its stake in the brand to 71.25% in September 2021, after signing an agreement to acquire 50% of Kingdom Holding Company’s shares in Four Seasons for $2.21 billion. The new deal valued Four Seasons at $10 billion.
Sarmad Zok, chairman and CEO of Dubai-based Kingdom Hotel Investments — a subsidiary of Kingdom Holding Company — told Hotel News Now that his company has had a good history with the Four Seasons brand.
“[Kingdom has] been investors in Four Seasons for the past 25 years, and this transaction provides the opportunity to unlock some of the value we helped create with our partners whilst continuing to hold a strategic minority to capture the future growth of the company and support it in its next phase.”
The Danieli-Four Seasons deal did not happen, with one reason perhaps being animosity to increased foreign ownership of historic buildings in Venice and other parts of Italy.
Made in Italy, the Italian state-run organization charged with keeping Italian heritage within Italian hands, became involved, even though the hotel was previously owned by an American hotel firm.
In 2005, Starwood Hotels & Resorts — a decade before it became part of Marriott International — sold Hotel Danieli to Statuto Group for 177 million euros. Marriott continues to manage the hotel under its Luxury Collection soft brand.
Emails and calls to Cascade Investment, Made in Italy and Agenzia ICE, the Italian Trade Agency, had not been returned by press time.