Market monitor: Italy at a glance

Business travel in Italy was worth nearly US$73 billion in 2018. Corporate travel spending is expected to grow 3% a year through 2023. The economy is technically in recession. Italy’s largest airline, Alitalia, is for sale. The hotel market is predicted to expand just 1.8% a year through 2023.

Economic woes weigh on air and hotel suppliers as business travel spending slows.

The market for business travel to, from and within Italy was worth nearly US$73 billion (more than €61 billion) in 2018. Domestic trips accounted for 43% of this amount. The remainder was evenly split between outbound and inbound international trips. From 2013 to 2018, spending on corporate travel increased by 6% a year. Corporate travel spending is expected to grow 3% a year through 2023. While spending on inbound travel is forecast to increase 5% annually, outbound travel will grow just 1% per year.

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Economic environment

Economic growth and business travel spending

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  • Italy is Europe’s fourth-largest economy behind Germany, the United Kingdom and France. It accounts for 15% of the eurozone’s economic output.
  • Italy has the eurozone’s second-largest manufacturing sector, but its companies are small. They struggle to finance innovations needed to be competitive in export markets.
  • Falling confidence, weaker credit flows and rising uncertainty define Italy’s economy, which is technically in recession.
  • The economy is vulnerable because public finances are in poor shape; the country’s political situation is uncertain; and Italian banks are highly exposed to government debt.
  • Growth is unlikely in 2019, and future growth is expected to remain below 1% a year through 2023, according to Oxford Economics.


International travel

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  • Demand for international travel increased by more than a quarter between 2013 and 2018 to 94 million journeys. Arrivals and departures grew at a similar pace, averaging nearly 5% per year. Through 2023, growth in international travel is predicted to slow to 2.2% per year.
  • More than one-fifth of travelers to Italy arrive from Germany; 13% come from France. The U.K. is the third-largest source of demand, with a 9% share.
  • France is the most popular destination for Italian travelers, accounting for 24% of departures in 2018. Spain sits in second place with a 12% share.
  • Alitalia is Italy’s largest airline, with strong positions in the country’s two largest markets—Rome and Milan. But it faces challenges on short-haul routes from low-cost carriers Ryanair and easyJet, and Air Italy could develop into a threat on long-haul routes.
  • Alitalia faces financial challenges brought on by years of poor performance. The government has propped up operations since 2017; it’s seeking a buyer for the airline.


Hotel demand

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  • Between 2013 and 2018, hotel demand in Italy grew over 12%, rising to 286 million room nights. The demand is evenly split between domestic and international travelers. Oxford Economics predicts hotel market growth of 1.8% a year through 2023.
  • Travelers from Germany accounted for more than a quarter (27%) of international demand for hotel rooms in 2018. France, the U.S, the U.K., the Netherlands and Switzerland each contributed shares of 5-6%.
  • The number of hotels in Italy has decreased since 2008. Chains account for just 5% of hotels, although the size of their properties means they control 15% of rooms.
  • Two-thirds of chain supply is dedicated to the upscale and upper-upscale tiers. But midscale-focused Best Western Italy’s largest chain with more than 150 hotels.
  • Gruppo UNA is the largest local chain. In all, 137 domestic chains operate in the Italian market.
  • Average daily rates (ADRs) in Italy in 2018 aligned with BCD Travel’s Industry Forecast prediction of 0-2% growth. ADRs should expand at roughly the same rate in 2019.

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