What's Happening?
The Milan hotel market experienced a slight increase in profit over the 12 months ending in July 2025, despite a decline in occupancy rates. The Gross Operating Profit per Available Room (GOP PAR) rose by 0.9%, driven by a 0.2% increase in revenue and
a 0.2% decrease in expenses. The revenue growth was primarily attributed to the Rooms department, which saw a 0.9% increase as the Average Daily Rate (ADR) rose by 2.2% to €250. This increase helped offset a 1.3% decline in occupancy, which fell to 68.4%. The Food & Beverage (F&B) revenue decreased slightly, but the revenue per occupied room increased by 0.6%. The market also saw a reduction in costs, with the Cost of Sales and utility expenses both decreasing. The hotel supply in Milan increased by 0.9% due to the opening of 11 new hotels, adding 616 rooms, while one hotel closure slightly offset this growth.
Why It's Important?
The developments in Milan's hotel market are significant as they reflect broader trends in the hospitality industry, particularly in urban centers. The increase in profit despite declining occupancy suggests that hotels are successfully managing costs and optimizing pricing strategies. The rise in ADR indicates a strong demand for quality accommodations, even as new supply enters the market. This could signal a robust recovery in the hospitality sector post-pandemic, with potential implications for employment and economic activity in the region. The increase in hotel supply, particularly in the full-service and luxury segments, suggests confidence in the market's long-term growth prospects. However, the decline in occupancy rates highlights challenges that may arise from increased competition and changing travel patterns.
What's Next?
Looking ahead, the Milan hotel market is expected to continue evolving with the anticipated opening of the New Rocco Forte Hotel in November 2025. This addition will further increase the supply of luxury accommodations in the city center. The market will need to balance this growth with strategies to attract and retain guests, particularly as new hotels enter the scene. Stakeholders in the hospitality industry will likely focus on enhancing service offerings and leveraging technology to improve guest experiences. Additionally, the potential reopening of the Hotel Scala in 2027 could further impact market dynamics. Monitoring occupancy trends and adjusting pricing strategies will be crucial for maintaining profitability in the face of increased competition.
