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Hotels and judicial auctions

Di Antonio Caneva, 9 Febbraio 2017

According to Centro Studi Sogeea’s latest six-monthly report, the number of hotels, bed & breakfasts, motels and campsites sold by judicial auction in the last six months has grown by 21%: in absolute terms, 217 facilities against 179 recorded in July 2016.

In spite of the present booming of tourism initiatives, such as we had not seen in the last few years, there appears to be an increase in distress situations, which is reflected in the figures above.

The toll is heavier on small-sized enterprises – Sandro Simoncini, director of Centro Studi Sogeea explains -: 55% of the tourist and accommodating facilities currently on auction have a price of less than a million euro.

And this statement contains the gist of a possible explanation. The Italian reality, characterised by small and medium-sized and tendentially old facilities, is in serious difficulty trying to respond to the innovation demands of modern tourism, and for this reason its enterprises are often driven out of business.

Unfortunately, in this process, the owners often do not have sufficient resources to invest in improving their facilities, which are obsolete and inadequately sized, and cannot be competitive or generate sufficient margins to invest, and this is a spiralling process – low revenues, obsolete facilities, lower and lower revenues, until the inevitable ending.

It is true that the cost of financing renovations and extensions is currently quite favourable, but, for those who cannot provide significant guarantees, it is difficult (and sometimes impossible) to obtain loans in a credit system such as ours.

Another possible explanation has to do with certain initiatives – not adequately professional – which are undertaken “because I like it; a nice place; seems like a good plan; a talent for homely hospitality; the opportunity to work with a relative” – and these are harbingers of disaster. Like never before, the hospitality industry is complex and requires managerial skills. History is full of examples of hotels and tourist facilities that were created with an emotional approach and large prodigality. History, however, also teaches that, after an initial period, even the most munificent entrepreneurs have to start reckoning with economic results, and they often do precisely what should never be done – from a vision of grandeur they shift to a straitened approach, which nobody is comfortable with any longer (especially customers). And this, too, is the beginning of the end.

If auctions are so busy, you can be sure there is a rational reason.

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