French real estate investment group Covivio has signalled it will increase its exposure to the European hotel sector, as it actively manages its existing properties in the marketplace.
The group has committed to growth via two routes, conversion and acquisition. It expects to add around EUR400 million by executing office to hotel conversions, exploiting opportunities in European city locations where older office buildings are no longer attractive, or worth upgrading. And it is eyeing around EUR300 million of new acquisitions. Many of these purchases are likely to be hotels that will benefit from a strategy of property improvement, and active management.
Blending a Mixed Portfolio
Currently, almost half of Covivio’s total property portfolio is office buildings, largely located in Paris, Milan and the larger German cities. Around 30% of the assets are residential properties, with much of those blocks in Germany. And hotels, which make up 21% of the portfolio currently, are largely located in key European destinations, with major brands leasing or managing the assets under familiar hotel sector names.
In 2024, Covivio agreed a complex asset swap with Essendi, another major hotel landlord formerly known as AccorInvest. This agreement gave Covivio much greater control over key assets. In its annual results for 2025, the company declared this deal was already delivering strong results: “this consolidated portfolio has already recorded a +13% increase in value in 2025 and offers significant additional value creation potential through capex programmes and brand repositioning.”
During 2025, several transformation projects were started, including the transformation of the 125 room Mercure Nice. In Paris, work is under way to reposition the 326 room Ibis Montmartre, which will become instead a Moxy by Marriott hotel, delivering higher room rates. Other improvements are taking place at the Ibis in Antwerp city centre, and Novotel Paris Pont de Sevres. Added up, these projects represent an investment of around EUR48 million.
During the 2026 to 2028 period, a further 15 enhancement projects are planned. This “value enhancing” work is expected to deliver a 13% yield, by delivering improved hotel properties that will enjoy higher operational returns.
In future, Covivio is also looking to capture more value from its hotels, by operating more of them internally. Its operating platform, WiZiU, managed 24 hotels at the end of 2025, and as it scales up, Covivio reports improved efficiency and better returns.
Building a Southern Europe Presence
In its annual results report, Covivio revealed it was negotiating a major portfolio acquisition deal in Italy and Spain, which is expected to see it acquire around EUR300 million of hotels in the two countries. While giving few further details, the company said these would be properties already leased to operators, and should deliver a yield of more than 6%.
Within its own office asset portfolio, Covivio has identified five properties for conversion from offices to hotels. These are in Paris and Boulogne-Billancourt in France, and Bologna in Italy. The French properties have already seen their occupiers leave, so are ready to proceed to conversion works. Covivio has said it expects the five new hotels to be open during 2028 and 2029.
