Beyond the Traditional Hotel: 3 Examples Showing Why Italy’s Hospitality Future Is Lifestyle-First
From beds to brands: why experience-led formats now lead the market.
Welcome to a new issue of the Unlocking Real Estate Value newsletter. Each week I will provide you with exclusive advice and professional insights to help you realise long-term value through real estate development.
Italy’s hospitality story is moving from rooms to lifestyles.
From recent calls I had with different investors, three formats keep coming up: design-led hostels, lean serviced apartments, and 5-star branded residences. Why? Travelers want community, space, and effortless service.
Below are three examples of how that plays out in Italy—and where returns can beat traditional hotels. (Savills, 2024; HVS, 2024; Grand View Research, 2024; HospitalityNet/EY Italy 2024)
Example 1: Hostels now compete with midscale hotels on vibe and value.
“Hostel” no longer means bare bunks. Brands like YellowSquare and Generator mix dorms with 30–50% private rooms, co-working, bars and nightly programming. Guests come for the scene as much as the sleep. It now sits beside 3-star hotels, but with better social energy and stronger F&B.
The numbers are catching up with the story. Generator’s ~€776M deal (May 2025) signaled that bigger capital believes in the model (CoStar; see also FT). YellowSquare reported €14.4M revenue in 2023 across three properties, lifted by spend on food, drinks, and events (STAY WYSE). On unit economics, F&B often contributes ~15% of revenue with high margins in hostels, thanks to simple menus and bar sales (HVS, 2013). And as Italy tightens oversight of short-lets - CIN registry and stronger compliance - demand tilts toward licensed, service-rich products (Idealista explainer; remote self-check-ins were re-legalized in 2025 after a court ruling: RentalScaleUp).
What to look for as an investor? Central sites near transit or universities. Buildings ripe for conversion rather than ground-up. Capex per bed in the €15–30k range can work if design is simple, durable, and Instagram-ready. Aim to make F&B 15–25% of total revenue with solid late-night trade and community events. Keep the tech stack light but reliable: great Wi-Fi, mobile check-in and cashless POS.
Example 2: Serviced apartments turn long stays into high-margin cashflow.
Serviced apartments promise a home with hotel reliability. Think studios and one-beds with kitchenettes, weekly cleaning and code locks → not a full restaurant and spa. Guests are a mix of project teams, relocations, digital nomads and families. Italy is still under-supplied versus peers, which points to clear upside (Savills, 2024; HVS, 2024).
Operators such as Numa, Sonder and Staycity are scaling fast by automating check-in, cleaning cycles and pricing. The model runs lean. Across Europe, extended-stay has posted strong GOP margins and double-digit RevPAR gains in recent years (HVS, 2024). In Italy specifically, the category could reach ~€7.5B by 2033 (Grand View Research and their press note).
Where to play? Milan and Rome fringe CBDs, close to corporate demand and transport. Target offices or tired hotels that convert cleanly to RTAs (aparthotels) under Italian rules—this helps avoid short-let caps and keeps compliance simple. Choose the operating deal that matches your risk: a master lease to an A-credit operator for bond-like income, or a management agreement with clear KPIs if you want upside. Invest in the basics that matter to long-stays: quiet rooms, good desks, laundry, and bulletproof Wi-Fi.
Example 3: Branded residences trade convenience for premium pricing.
This is the turnkey luxury play. Buyers - often UHNW and international - want a top location, hotel-level service and zero hassle. Italy trails Spain and the UK on true branded inventory, but the direction is set. Six Senses Antognolla (Umbria, 79 residences) shows the template: resort homes tied to a castle hotel, wellness and golf, all managed under a trusted flag (Six Senses news; Antognolla site).
Brand power matters here. Across markets, branded homes can command ~20–35% price premiums and often sell faster than comparable stock (Knight Frank, Global Branded Residences 2023 PDF / landing page). Developers that pair the right brand with the right site can see healthy margins. Add Italy’s flat-tax regime for new residents and the international draw of Como, Tuscany, the Amalfi Coast and you have a clear demand story (Agenzia delle Entrate – official English guidance).
Two cautions. First, most buyers value lifestyle over yield. Net cash returns can sit below 2% once fees and owner use are factored in; the payoff is status, service, and simplicity. Second, Italy’s permits and heritage rules stretch timelines. Pre-sell 30–40% before major capex, lock brand terms early, and model HOA fees and rental-pool splits with care. The win is faster velocity and global reach, if the service promise is real.
Summary & Takeaways
Investors are attracted by the supply-demand economics of the italian real estate market and many are looking to enter the market.
Here are the key takaways:
Convert, don’t build: Italy’s timelines favor adaptive reuse; target assets that can open in 12–18 months. (Market momentum overview: HospitalityNet/EY Italy 2024)
Pick the right operating model: Lease for stability; HMA for upside. Back tech-mature operators (self check-in, revenue management). (Extended-stay performance context: HVS 2024)
De-risk the pipeline: For serviced apartments, line up corporate accounts; for hostels, secure event calendars; for branded residences, bank pre-sales before heavy spend. (Branded premiums/trends: Knight Frank 2023)
That’s all for today.
See you next week.
— Carlo
Founder and Managing Director Benigni
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This post is sponsored by Benigni a specialist development manager working with international investors to realise long-term value through optimised development strategies. To learn more click this link to our website.
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