Despite ongoing global economic challenges, Castleforge, the prominent property investment firm, foresees a promising landscape for the European hospitality market in the year 2024.

Castleforge was notably active in the hotel market last year, undertaking significant projects that reflect its commitment to the industry. In July, the firm completed an extensive £2 million renovation of the 4-star Royal Terrace Hotel in Edinburgh, subsequently rebranded as a voco by IHG hotel. Following this, a comprehensive £9 million refurbishment of the Hilton Cardiff was finalised in late November 2023, marking Castleforge’s most substantial hotel project of the year. December saw the completion of a £3 million renovation, adding 15 rooms to the Abbey Hotel in Bath.

Positive Outlook for Hospitality in 2024

Building on the successes of 2023, Castleforge remains optimistic about the European hospitality market in 2024. The anticipated return of Chinese tourism to Europe post-lockdown is identified as a significant driver for increased hotel demand. Oxford Economics projects an 82% surge in arrivals from China, translating to over 33 million bookings. Castleforge also predicts sustained strength in domestic European tourism despite prevailing economic challenges, with local government crackdowns on short-term private rental services benefiting traditional hotels.

While hotel investment volumes were subdued in 2023, Castleforge envisions a more conducive financing environment, providing enhanced investment opportunities. The firm anticipates a fall in the cost of financing, paving the way for increased investment and greater opportunities in stressed and distressed assets. Castleforge aims to leverage these factors by investing in existing hotels in major British and European tourist destinations. The focus will be on enhancing operational efficiency, rebranding, and repositioning to maximise value.

Targeted Opportunities in City Centres

Michael Kovacs, Founding Partner of Castleforge, expresses confidence in the forthcoming opportunities, stating, “Our research has identified multiple trends, which we expect to power a strong 2024 for European hospitality. The return of Chinese tourism after the Covid lockdown is fuelling hotel demand, combined with the fact that many Europeans are also returning to travel within the continent, despite economic pressures.”

Castleforge identifies city centre locations as the most lucrative opportunities, emphasising destinations that attract both international and domestic tourism. The firm sees cities with a balanced mix of leisure and business travel as particularly promising. Cities exhibiting strong hotel supply-demand dynamics, historical high occupancy levels, and a limited supply pipeline are earmarked for potential investment growth in the hotel market.