Europe: Hotel consultancy HVS has published its European Hotel Valuation Index (HVI) which reveals an uplift of around one per cent in 2023.
During 2021 and 2022, the HVI reported value rises of 3.8 per cent and 4.5 per cent respectively.
In 2023, the result was an uplift of around one per cent which keeps hotel values in Europe at approximately 97 per cent of 2019 levels.
The slowdown in recovery is considered to be impacted by the war in Ukraine, the war between Israel and Hamas, and the Chinese economy, as well as increasing operational costs and high interest rates.
Hotels in Paris, London, Zurich, Amsterdam and Rome remain the most highly valued across Europe with Geneva, Florence, Milan, Barcelona and Madrid completing the top 10.
According to the HVI, hotels in Athens experienced the strongest value double-digit growth in 2023 supported by strong RevPAR. Only Athens, Amsterdam, Dublin and Paris saw values return to pre-pandemic levels, mostly driven by strong average rate performance.
The German markets of Berlin, Hamburg and Frankfurt were amongst those which experienced a decline in hotel values for 2023, largely due to slower recovery of demand generators such as corporate business, conferences, exhibitions and fairs.
HVS London associate Julia Dzerkach, who co-authored the report, said: “Revenue and profit recovery still resulted in marginal gains in value over the year, despite the challenging outlook on valuations parameters, but the elevated cost of debt in the first half of 2023 and the persisting macroeconomic influences have resulted in a subdued market for hotel transactions with a wide bid-ask spread for sales and acquisitions.”
Co-author Clemence Sennavoine, associate, HVS London, added: “There’s still global uncertainty in the year ahead, but we should see more stability in terms of price changes moving forward. The prospect of declines in interest rates coupled with modest RevPAR growth as demand volumes completely recover, should bode well for 2024. Over the past few years investors have adopted a ‘wait and see’ approach to hotel investment meaning that substantial amounts of capital remain available and, as has been demonstrated again in 2023, hotels remain a strong investment option as a good hedge against inflation.”
The HVS 2024 European Hotel Valuation Index can be downloaded here.
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