The number of luxury hotels in Italy continues to grow, so much so that there are already worries of an excessive availability. Especially in Rome, where no fewer than 19 new high-end entries will open over the next three years. Yet customers are willing to spend, and even with a sluggish demand room prices continue to rise. A real paradox for the industry, given that rates normally rise as occupancy levels rise, and not vice versa.
According to data from the Boston Consulting Group, in 2022 the average rate per night in Milan’s five top hotels (Mandarin, Bulgari, Armani, Four Seasons and Hyatt) was €1,210, which is almost €500 higher than the €750 of the pre-Covid 2019 year. And this is with a room occupancy of just 59%, compared to 71% four years ago. Moreover, this trend reaches further than Milan as in Florence, Venice and Rome too rates are now 30%-50% higher than in 2019, and again with occupancy rates far from pre-Covid levels. In four years, the average Revpar (revenue per available room) has therefore risen by 40% in Rome, which tops the list and by 20%-25% in the other cities.
This phenomenon, which also touches secondary destinations such as Taormina, Capri, Portofino and Genoa, is such that it cannot simply be explained by the recent boom in inflation. What is more likely is that there is now a growing number of consumers with a relatively low sensitivity to the price of experiences. According to A pulse check of the luxury consumer, the latest report by Bcg and Highsnobiety, the Millennials and Gen Z generation in particular are pushing consumption towards exclusive experiences, at the expense of mere possession and ostentation. They contributed 41% of the spending in 2019, and are set to reach 75% in 2026.
Massimiliano Sarti
Journalist
