HVS Valuation Index reveals that European hotel values have moderate upside in 2023

ECONOMY TOURISM WORLD

According to the annual European Hotel Valuation Index (HVI) HVS 2024 published this week, business values have experienced a modest rise without reaching pre-pandemic levels. The post-pandemic rise has been driven by a prolonged need to travel.

These influences combined to offset the impact of a number of geopolitical challenges including the war in Ukraine, the war between Israel and Hamas and the shaky Chinese economy as well as increasing operating costs, and high interest rates. The result was a modest 1% uplift in hotel values across Europe, keeping them at around 97% of 2019 levels. 

“Revenue and profit recovery still resulted in marginal gains in value over the year, despite the still challenging outlook on valuations parameters,” commented report co-author Julia Dzerkach, associate with HVS London.

The year saw hotels in Paris, London, Zürich, Amsterdam and Rome remain the most highly valued across Europe with Geneva, Florence, Milan, Barcelona and Madrid completing the top 10.

Hotels in Athens experienced the strongest value growth in 2023, according to the HVI, with a double-digit improvement prompted by strong RevPAR [Rooms Revenue per Available Room] and active interest from investors while Florence, Dublin, Brussels, Barcelona, Paris, Madrid and Lisbon saw value increases of 3-5%.

The German markets of Berlin, Hamburg and Frankfurt were amongst those seeing a decline in hotel values for 2023, largely owing to a slower recovery of significant demand generators such as corporate demand, conferences, exhibitions and fairs business.

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,” concluded report co-author Clemence Sennavoine, associate, HVS London. 

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.” 

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