28 Oct, 2017
Milan: One Of The Best Place To Grow
Milan is one of the most important Italian cities not only for business but also for international fashion and fairs. The hotel market experienced considerable growth in 2015, driven by the EXPO. RevPAR experienced a decline in 2016 but ADR and occupancy levels remained higher than pre‐EXPO levels. The legacy of the EXPO, with large investments in infrastructure and other tourism facilities, is expected to contribute to the continued growth of the Milan market forecast at 1.9% and 1.7% growth in RevPAR in 2017 and 2018 respectively.
Milan, one of the biggest and more cosmopolitan Italian cities, is the national business and financial center and leader in technological and scientific research. Many national and international companies have HQs in the city.
Thanks to its important museums, theatres and landmarks, Milan attracts many visitors. In 2016, around 7,7 million tourists arrived in Milan City, an annual growth of 1,8% with respect to 2015.
The city is also well known for international events and fairs, including Milan Fashion Week (22,000 visitors in 2016, a growth of 10% compared to 2015) and the Milan Furniture Fair (372,000 visitors in 2016, a growth of 4%).
In 2016 there were over 34 thousand events with almost 2.3 million participants.
Driven by the EXPO, 2015 was a very significant year for the sector. EXPO visitors boosted a RevPAR increase of 27.8% and ADR by 16.8%.
In 2016 Milan hosted the UEFA Champions League’s Final and benefited from improved economic fundamentals, but the slowdown of 2016 showed the effects of a ‘technical' catch up after 2015's growth, with a RevPAR fall of -14.7% and an ADR decline of -9.8%.
In 2015 demand for rooms (rooms sold) increased by around 12.1% and supply (rooms available) increased by 2.4%. Under the effects of the ‘catch- up' trend, 2016 demand decreased by -9.0% and supply by -3.6%.
The wave of investments in the hotel sector started with the EXPO continued in 2016 and will continue to 2018, with more than 1,000 new rooms added in ambitious hospitality plans.
Some notable investments and deals of 2016 include the opening of the facility RoomMate Giulia, the sale of B&B Cenisio to Beni Stabili and the acquisition of Nhow Milan by Finint SGR.
The luxury and 4-stars hotel sector in Milan is growing strongly in terms of transactions, with new deals and investment coming from both national and international investors. New trends include the increasing budget and limited service hotels offer, and the conversion of office buildings into hotels in the heart of Milan.
Milan is now more attractive for the incentive segment, thanks to the urban transformation: from the Citylife and Porta Nuova project completion to redesign of the disused railway stations; thanks to new cultural centers designed by important architects, like the Fondazione Prada of Rem Koolhaas or Fondazione Feltrinelli of Herzog & De Meuron. The new Statale Univesity campus and Human Technopole project has located to the former EXPO area.
Milan has attracted international luxury chains like Melià, Fattal, Starwood, Shangri-la, Tulip, Marriott, Millennium and Accor. The budget and limited service segment is considered a segment with high potential.
The recovery of the Italian economy is expected to continue in 2017 and 2018 with GDP forecast to grow at moderate rates of 1.0% in 2017 and 1.1% in 2018. Despite improvements in the labour market, rising political uncertainty and weak export growth contributes to weaker than expected growth as a result of weak recovery in consumer and business confidence.
Following the large, one-off, increase in RevPAR in 2015, as a result of the Milan 2015 EXPO, RevPAR experienced a decline in 2016 with ADR and occupancy levels remaining higher than pre-EXPO levels. The legacy of the EXPO, with large investments in infrastructure and other tourism facilities, is expected to contribute to the continued growth of the Milan market forecast at 1.9% and 1.7% growth in RevPAR in 2017 and 2018 respectively.
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