Major European real estate investor Covivio has confirmed its long term confidence in the hotel sector, adding to its portfolio with a major investment in Italy.
The group, which has a major holding of hotels operated by brands including those from the Accor group, has spent EUR217 million buying four hotels in Milan, Italy. The properties were acquired in a sale and leaseback transaction from operator Invest Hospitality, who will continue to manage the hotels.
A Well Understood City Market
The hotels are in the Scalo Farini area, in Bicocca, in Corso Buenos Aires, and in Piazzale Loret, and in total offer almost 900 rooms of accommodation. They have recently been refurbished, so are in good condition, but will undergo further upgrades to improve their environmental performance.
The Milan market is one that Covivio knows well, as the company already has several office properties it owns in the region. It believes the four star hotels are underpinned by strong market fundamentals.
Covivio says its agreements with Invest are 21 year leases, with a minimum guaranteed rent combined with an additional variable income payable depending on the revenues the properties create. For Covivio, this should deliver a guaranteed minimum 6% return on investment, with a target yield of 7%.
The hotels sit in a city hotel market that has limited new supply. Marriott has just opened a Residence Inn hotel at Linate airport, while Hilton has just launched its refurbishment of the Hilton Milan. Later this year, openings include Accor’s launch of a dual branded project, Novotel Sesto San Giovanni and Adagio Access Sesto San Giovanni, in the north east of the city.
In addition, the 105 room Palazzo delle Stelline, which is part of Accor’s MGallery collection, is undergoing a refurbishment. Also coming later this year is an addition to Hilton’s Canopy brand, the 96 room Canopy by Hilton Milan Duomo.
During 2027, Milan’s luxury hotels will see increasing competition, with the opening of Six Senses Milan, and a new Rosewood hotel in the city. The centrally located Rosewood is being created from historic 19th century buildings that were once the occupies of the Italian Commercial Bank.
New brands are also lining up their arrival into Milan. In 2028, IHG will open another Ruby hotel as it expands the “lean luxury” brand across Europe, with a 128 room property in the Isola district. Also coming is Asian upstart Hotel101, which is planning a substantial 429 room property in the south east of the city.
Hotels Continue to Perform Strongly
The purchases in Milan came as Covivio reported a 1.4% like for like revenue growth for its hotel division, in the first quarter of 2026. The figure included a 2% increase in variable revenue, as its hotels performed strongly.
The business also reports on its decarbonisation progress, as it looks to green projects to reduce energy use across its office, hotel and residential portfolios. Compared with a 2010 benchmark, Covivio has reduced carbon intensity by 31%, and is well on course to hit a 2030 target of a 40% reduction.
