Repositioning and Historic Adaptive Reuse Are Driving Hospitality Investment in Italy
By Christian Scali , Italy Access Advisory
Of all the forces behind hospitality investment growth in Europe, the two we watch most closely in Italy are repositioning and historic adaptive reuse. For US investors weighing where to put capital, these are the strategies to understand first.
Repositioning converts an existing hotel from one brand or star tier to another. Historic adaptive reuse converts a building that was never built as a hotel, such as a farmhouse or a palazzo, into one.
Both rest on a shift in how hospitality assets are owned and run. Management agreements now reward owners for improving performance, where fixed leases paid the same rent whatever the property earned.
Both are also open to foreign investors at varying investment levels, because neither requires the scale or the new-build permitting of a large development, which are virtually impossible in Italy. Heritage protections limit new construction across much of Italy, which makes conversion the most realistic route to new luxury supply.
The data in this article comes from hotels and the wider Italian market. Villa-specific figures are rarely tracked, and our post on the ISHC Rome data explains why hotel benchmarks do not translate to villas.
Repositioning: Converting an Existing Hotel to a Higher Tier
Hotel repositioning in Italy means converting an operating hotel to a new brand or a higher star tier, usually from a mainstream property to four or five stars. In GRI Institute's Italian Barometer, 42% of surveyed executives report focusing on it.
GRI Institute convenes Italian real estate investors and publishes the Barometer, a survey of executive sentiment. The figure shows where the market's attention sits.
The case for repositioning is practical. The building and the address already exist, so the investor funds renovation and a new operating model. New hospitality construction in Italy is virtually impossible in the historic centers and countryside where guests want to stay, which leaves existing buildings as the route to new supply.
Historic Adaptive Reuse: Giving a Building a New Purpose
Historic adaptive reuse in Italy converts a building that was never a hotel into a hospitality property. It works within heritage protections, and 29% of executives in GRI Institute's Italian Barometer support historic-to-boutique conversion.
The format suits luxury travel. Guests choosing Italy want a connection to the building's history and to the culture around it, and a restored palazzo or private residence supplies both.
Villa Ardore is Italy Access Advisory's (IAA) own example. It is a 16th-century Chianti farmhouse converted into an eight-suite luxury property, and GRI Institute's Q1 2026 Italian hospitality outlook names it as an example of heritage property development.
The Shift to Professional Management
A management agreement ties an owner's income to a hotel's performance, while a fixed lease pays the same rent whatever the property earns. Owners across Europe are moving from leases to management agreements, according to GRI Institute's H2 2026 outlook, because performance-linked income lets them keep the value a repositioning creates.
Italian operators show the same pattern. Il Sole 24 Ore reported in February 2026 that management is now the word in Italian hotellerie. At Falkensteiner, 43% of properties run under management contracts, 27% under leases, 17% are owned and 13% combine co-ownership with management.
Short-term rental rules push demand in the same direction. GRI's outlook points to Barcelona phasing out licenses by 2028, an Amsterdam cap of 30 nights a year, and a €64 million fine against Airbnb in Spain. Compliant, professionally managed stock gains as informal supply shrinks.
Why Both Strategies Work in Italy
Italy recorded roughly 71.6 million overnight stays in Q1 2026, up 7.5% year over year, with international arrivals above half, according to Jones Lang LaSalle (JLL). Only 17% of Italian real estate assets are institutionally managed, against a 43% European average, according to GRI Institute's Spotlight Report.
Demand brings the guests, and GRI reads the gap between 17% and 43% as a sign that professional management has years of growth left in Italy.
The investment side is covered in our post on hospitality incentives. Ernst & Young (EY) reports 2025 Italian hotel investment of €2.5 billion, up 19%, and Cushman & Wakefield ranks Italy first in Europe for hotel investment attractiveness.
Heading Into 2027
Italy is not posting the fastest growth in Europe this year. GRI's H2 2026 outlook shows the UK (up 119%) and Spain (up 26.5%) ahead on first-half investment gains. Italy's case rests on demand data from JLL, the management gap, and the survey evidence above.
The risks are specific. GRI's Spotlight Report puts construction and renovation costs 30 to 35% above pre-2020 levels. In the Barometer, 45% of executives cite a gap between what borrowers need and what alternative lenders offer, with alternative lenders pricing around Euribor plus 600 basis points.
The market case for both strategies is strong, and action will require support from more than market data. Cross-border property investment carries legal and tax complexity on both sides of the Atlantic, and it is far easier to structure correctly at the start than to fix later. Anyone serious about this market should bring in qualified counsel early.
About the Authors
Christian Scali is the co-founder of Italy Access Advisory and the founder and managing shareholder of Scali Rasmussen, a California business law firm he built in 2013. He has practiced law in California since 1998, with a practice spanning retail automotive litigation and transactions alongside a growing international practice in cross-border tax planning and market entry. He was named a 2026 Southern California Super Lawyer and recognized as a Legal Visionary by the Los Angeles Times. Christian is also the founder of LV Toscana, the hospitality management company behind Villa Ardore, the historic Chianti property he restored and now operates, the hands-on experience behind Italy Access Advisory.