Article

No room at the inn: opportunities in European hotels

17 December 2021
Invesco
No room at the inn: opportunities in European hotels
Tel Aviv, Israel

The latest COVID-19 variant has caused concerns about the broader economic recovery story.

However, we continue to believe that the recent repricing of European hotels presents good opportunities. For example, the opportunity to acquire core hotels for a long-term hold, or value-add projects following a manage-to-core strategy. 

Figure 1. Prime yields of various real estate asset classes
Figure 1. Prime yields of various real estate asset classes

Source: Invesco Real Estate as of March 2021.

Although the sector has been hit hard by the COVID-19 pandemic, we believe this is a short-term shock rather than a reversal of long-term positive trends.

Indeed, between 2000 and 2019, the sector’s revenues grew by approximately 3% per annum compared to consumer price inflation of 2%1.

The early stages of the recovery in the third quarter of this year suggest that pent-up demand for tourism, and the slightly later recovery of business travel, will be key drivers for the sector going forward. 

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  • 1Source: Oxford Economics, 2021.

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