Chat with this content: Summary, Analysis, News...
Share on Reddit
Covivio Hotels: Europe's Hotel Real Estate Pioneer
I. Introduction & Episode Roadmap
The year is 2005. Across Europe, the hospitality industry operates under an ironclad orthodoxy: hotel companies own their buildings. The largest chains—Accor, Intercontinental, Marriott—sit on massive property portfolios valued in the tens of billions of euros, their balance sheets groaning under the weight of bricks and mortar. These assets generate steady returns, yes, but they consume colossal amounts of capital that could otherwise fuel global expansion.
Then something remarkable happens. A French real estate company, barely known outside the Paris commercial property market, strikes a deal with Accor to purchase 128 hotels across France. The transaction seems straightforward enough—another sale-leaseback arrangement in an industry full of them. But this deal plants the seed for what will become Europe's dominant hotel real estate investor, a company that would amass €6.4 billion in hotel assets across 12 countries and fundamentally reshape how the continent's hospitality industry thinks about property ownership.
Holding a portfolio of 277 hotels in 11 countries valued at €6.6 billion at the end of June 2025, Covivio (through its subsidiary Covivio Hotels) is the leading real estate partner of hotel operators in Europe (Accor, IHG, NH Hotel Group, B&B Hotels, Meininger Hotels, Radisson Hotel Group, etc.).
The central question of this deep dive: How did a French REIT spin-off become Europe's dominant hotel real estate player in just two decades—and why is it now becoming a hotel operator itself?
The story of Covivio Hotels is the story of Europe's hospitality industry transformation from asset-heavy to asset-light. It's a tale of regulatory innovation, partnership-first strategy, and the relentless pursuit of what management calls "critical mass" in each market. "Since 2005, our strategy has been to create long-term partnerships with hotel operators and to position ourselves as their preferred partner in order to create long-term value and support them in their development. In 2016, 10 years after we began investing in hotel leases, we decided to go one step further and expand into business and premises."
We'll trace the company from its origins in France's nascent REIT regime, through the foundational Accor partnership, across a fifteen-year pan-European expansion, into the crucible of COVID-19, and finally to its remarkable 2024 transformation into a hotel operator through the WiZiU platform. Along the way, we'll examine the business model innovations that gave Covivio a structural advantage, the key deals that built continental scale, and the strategic pivot that now positions the company for its next chapter.
II. The Birth of French REITs & Founding Context
A. The SIIC Regime Revolution (2003)
To understand Covivio Hotels, you must first understand a piece of French tax legislation that transformed European real estate: the creation of the SIIC (Société d'Investissement Immobilier Cotée) regime in 2003.
At the end of 2003, the French Government introduced their version of REIT legislation – les Sociétés d'Investissements Immobiliers Cotées (SIIC). The underlying motives for introducing the SIIC regime were several. The listed sector in France wanted to align its competitive position in its domestic market against that of non-resident investors, by adjusting the French tax regime to match the tax flow-through regimes applicable in neighbouring countries.
The French REIT or SIIC regime was introduced in France in 2003. At that time, France was the third country in Europe to follow the US REIT model, after the Netherlands (FBI in 1969) and Belgium (SOCAFI in 2003).
The mechanics were elegant in their simplicity: The SIIC regime provides for a full exemption for corporation tax purposes on profits deriving from real estate investments (rents and capital gains), provided that certain distribution obligations are fulfilled (95 per cent of net rents, 60 per cent of capital gains).
This tax-efficient vehicle unlocked institutional capital for real estate in ways that had been impossible before. Within four years, the regime "became one of the motive forces of the French economic growth." The regime has helped France's listed property sector to grow rapidly, and the number of listed property companies who have opted for the SIIC regime has increased fourfold, from 11 in 2003 to 48 between 2003 and 2008.
For hotel real estate specifically, the timing was fortuitous. Global hotel chains were beginning to question whether owning properties was the best use of their capital. The asset-light revolution was approaching, and France's new SIIC framework provided the perfect vehicle for a dedicated capital partner to emerge.
B. The Parent Company: Foncière des Régions
Covivio (formerly Batibail and Foncière des Régions) is a French real estate company founded in 1998. Batibail was created in 1998 in Metz by Charles Ruggieri. In 2002, the company was renamed Foncière des Régions.
Charles Ruggieri built his company through aggressive acquisition. In 2004, it took control of the property company Bail Investissement, which according to Le Monde has assets worth €1.5 billion. In 2007, it acquired Beni Stabili, a major player in the Italian real estate market, as well as the CB21 Tower.
But the move that would ultimately define the company's future came in 2004 with the creation of a dedicated hotels subsidiary.
C. Creation of Foncière des Murs (2004)
In 2004 the division dealing with hotels, Foncière des Murs was formed. Specialised in investing in hotel properties, Covivio Hotels was established in 2004 and is now Europe's leading hotel property investor.
The strategic logic was clear: create a listed subsidiary focused specifically on operating property walls—murs d'exploitation in French—that could partner with hotel operators seeking to monetize their real estate while retaining operational control.
The business was a conspicuous early mover in hotel investment, in its former guise as Foncière des Régions, a French REIT structured to take advantage of France's new SIIC regime in 2003.
This early positioning would prove decisive. While other REITs focused on traditional office and retail assets, Foncière des Murs was building expertise in an asset class most investors found too specialized or operationally complex. By the time competitors recognized the opportunity, Covivio had already established the relationships and track record that would make it the preferred partner for operators across Europe.
III. The Accor Partnership: Genesis of a Business Model (2005–2010)
A. The Foundational Deal
The story of Covivio Hotels really begins with a phone call—or more likely, a series of meetings in Parisian boardrooms during 2005—between Foncière des Régions executives and leadership at Accor, France's largest hotel company.
Foncière des Régions entered the French hotel market in 2005 through a sale-and-leaseback deal with Accor for 128 hotels, and rapidly expanded in the sector through its listed subsidiary, Foncière des Murs, which became Accor's preferred leasing partner.
This wasn't just a property transaction—it was the template for everything that followed. The story between Accor and Covivio began in 2005, when Covivio acquired 128 hotels from the global operator. Since then, our partnership has grown stronger and evolved continuously, punctuated by a number of major moves (acquisitions, disposals, investment partnerships, rebranding, asset management, etc.) carried out with a view to creating value.
To appreciate why this deal mattered, you need to understand the mechanics of sale-leaseback and why hotel operators were suddenly so eager to shed their properties.
Understanding Sale-Leaseback: A hotel company sells its property to an investor (like Covivio) but immediately signs a long-term lease to continue operating the hotel. The operator gets immediate cash and removes a depreciating asset from its balance sheet; the investor gets a stable income stream backed by a creditworthy tenant. The arrangement typically includes variable rent components indexed to hotel revenue, aligning the interests of both parties.
For Accor, going asset-light meant freeing billions in capital that could fund global expansion without diluting shareholders. For Foncière des Murs, it meant acquiring prime hospitality assets with built-in cash flows and minimal operational risk.
The deal expanded rapidly. In 2006, she capte the walls of 64 hotels from Accor in France and Belgium, for an announced amount of 462 million euros.
B. Becoming the Preferred Partner
Le Lay said Covivio works with approximately 20 hotel operators and 25 brands. AccorHotels is Covivio's largest partner, with some €1.7 billion ($2 billion) invested in the company.
The Accor relationship taught Foncière des Murs how to structure partnerships that created value for both sides. Long-term variable rent leases indexed to hotel revenue meant the property company's interests aligned with the operator's: better hotel performance meant higher rents for Covivio.
Covivio Hotels was also joint shareholder and asset manager for a further 60 hotels let to AccorInvest and held via two joint ventures, established in 2010 and 2014 respectively: one is 80% held by Crédit Agricole Assurances and 20% by Covivio Hotels, while the other is held by la Caisse des Dépôts, Société Générale Assurances and Covivio Hotels.
These joint ventures with major French insurers—Crédit Agricole Assurances, Société Générale Assurances, Caisse des Dépôts—added substantial firepower to the hospitality platform. Insurance companies seeking long-duration assets with stable yields found hotel real estate, structured correctly, to be an attractive alternative to bonds. Covivio brought the expertise and relationships; the insurers brought patient capital.
In December 2014, Foncière des Régions created FDM Management through Foncière des Murs, to expand its hotel development business still further. This partnership with insurer Assurances du Crédit Mutuel Vie and bank BNP Paribas added considerable firepower to the hospitality platform, enabling it to expand in the German budget hotel sector and strengthen its French holdings in successive years.
The Accor relationship wasn't just transactional—it was educational. By working closely with Europe's largest hotel operator for nearly two decades, Covivio's team developed deep expertise in hotel operations, asset management, and the economics of hospitality. This knowledge would prove invaluable when the company eventually decided to become an operator itself.
IV. European Expansion: Building Continental Scale (2010–2018)
A. The B&B Hotels Expansion
If the Accor partnership demonstrated Covivio could work with established players, the B&B Hotels deals showed the company could spot and nurture emerging champions.
Key deals with French chain B&B hotels boosted its business. In 2012, the firm acquired 165 two-star hotels in France from B&B Hotels for €508 million, adding another 22 B&B properties in 2015 for €128 million.
The €508 million deal in 2012 was transformative—165 budget hotels in a single transaction, positioning Covivio as a dominant player in the economy segment. The €128 million follow-on in 2015 deepened the partnership. Unlike the luxury assets that would come later, these budget hotels offered lower individual yields but exceptional geographic diversification and reliable occupancy.
Strategic positioning across economy and midscale segments created a balanced portfolio: economy hotels provided stability (travelers still need affordable accommodation in recessions), while upscale properties offered growth potential and higher absolute returns.
B. Spanish Market Entry (2017)
The following year, in 2017, Foncière des Murs established itself further in Spain through the acquisition of 17 hotels valued at 542 million euros.
The Spanish expansion marked Covivio's first significant move beyond its Franco-German core. Spain offered compelling fundamentals: Europe's second-most-visited country, rapidly professionalizing hotel industry, and attractive yields compared to Northern European markets.
Building geographic diversification across Southern Europe addressed a key portfolio risk—over-concentration in markets with similar economic cycles. When Germany sneezed, France often caught cold. But Spain's tourism-driven economy danced to a different rhythm, providing natural diversification.
C. The UK Market Entry (2018)
The United Kingdom deal in 2018 represented perhaps the most dramatic expansion in Covivio's history—and introduced a new partnership that would become the company's second-largest.
The news comes in the same month the REIT entered the United Kingdom with a purchase of 14 hotels from Starwood Capital Group, a portfolio that included 10 properties under the Principal Hotel Company that was created by Starwood Capital. At the same time, Covivio's hotel division—or Foncière des Murs as it was known then—signed a long-term lease agreement with InterContinental Hotels Group, who will take over the management of the assets.
Covivio unit Covivio Hotels completed the acquisition of nine hotel properties with 1,698 rooms in the U.K. from Starwood Capital Group for ÂŁ671 million. The four- and five-star hotels are part of the unit's ÂŁ858 million, 14-property portfolio transaction with Starwood.
The transaction was notable for several reasons. First, Starwood Capital had invested heavily in renovating these formerly tired properties—Principal Edinburgh, Principal Manchester, Principal York—transforming them into vibrant destinations. Covivio was acquiring quality assets at fair value rather than troubled properties requiring significant investment.
Second, the IHG partnership opened new brand possibilities. "Several assets will be rebranded as Kimpton Hotels, thus enabling the launch of the lifestyle IHG brand into the U.K. Other hotels will be split between IHG brands and some may remain under the Principal brand, operated by IHG."
"IHG has become Covivio's second-largest partner following the Starwood Capital deal," Le Lay said.
IHG to become largest luxury hotel operator in the UK, deal to include first UK properties for Kimpton Hotels & Restaurants. IHG has entered into a conditional agreement with Foncière des Régions to rebrand and operate 12 high quality open hotels (2.2k rooms) and one pipeline hotel (185 rooms) into its portfolio across the UK. This deal will establish IHG as the leading luxury hotel operator in the UK.
D. The Rebrand: From Foncière des Murs to Covivio Hotels (2018)
Between 2017 and 2018, in the context of Foncière des Régions reorganizing as Covivio, its subsidiaries (Foncière des Murs and FDM Management) merged and renamed as Covivio Hotels.
The rebrand was more than cosmetic. "Covivio" evoked vibrancy and living—co-vivere—while "Hotels" clearly communicated the company's specialized focus. The parent company shed its provincial French name for something with pan-European appeal, signaling ambitions beyond its Gallic roots.
"France represents 35% of the portfolio, Germany represents 26%, the U.K. comprises 18% and Spain makes up 11%. The strategy is to consolidate these four markets, markets we strongly believe in, but also to look at other markets such as Italy," Le Lay said.
By 2018, Covivio Hotels had evolved from a French hotel property company into a genuine pan-European platform. Covivio has almost 500 hotels in Europe on its books.
V. Portfolio Evolution & Strategic Refocus (2019–2020)
A. Concentration on Hotels
By 2019, Covivio Hotels had accumulated a grab-bag of operating properties inherited from earlier acquisitions—garden centers, leisure villages, care homes. The company made a decisive choice: focus exclusively on hotels.
In 2019, Covivio Hotels divested nearly 500 million of assets and concentrated its investments on the hotel sector. It acquired hotels from Accor and Meininger brands. Furthermore, it invested one billion euros in British hotels with InterContinental.
The divestiture of non-core assets sharpened the company's value proposition: Covivio Hotels would be the partner of choice for hotel operators across Europe, full stop. No distractions, no divided attention, no confused messaging to the market.
B. Luxury Hotel Acquisitions (2020)
Timing is everything in real estate. In January 2020, as COVID-19 was still a mysterious illness confined largely to Wuhan, Covivio announced one of its most ambitious acquisitions: a portfolio of eight luxury hotels from Värde Partners.
In 2020, it made the acquisition of upscale hotels for a finalized amount of 573 million euros. It notably acquired the Palazzo Naiadi (Rome) and the New York Palace (Budapest) and established presence in Italy, Hungary, and Czech Republic.
This portfolio of high-end establishments in prime locations includes several emblematic hotels such as the Palazzo Naiadi in Rome, the Carlo IV in Prague, the Plaza in Nice and the NY Palace in Budapest.
"This agreement reinforces the collaboration between Covivio and NH Hotel Group, which dates back to 2014 and has since unlocked advantageous deals for both parties in the Netherlands and Germany." Adding 1,115 rooms to the group's burgeoning line-up of luxury properties, the portfolio includes former Boscolo hotels in Rome, Florence, Venice, Nice, Prague and Budapest. Centrally located in coveted destinations, the collection of six 5-star and two 4-star hotels is notable for its flagship properties.
The transaction structure mirrored the UK deal: Covivio acquired the properties and simultaneously signed long-term leases with NH Hotel Group, which would operate them under its NH Collection and Anantara brands. Offering a total of 1,115 rooms, these hotels are operated by NH Hotel Group under long-term triple-net leases for a firm term of 15 years, subject to a minimum guaranteed variable rent producing a minimum yield of 4.7%.
This deal moved Covivio upmarket to balance its economy/midscale portfolio, adding iconic properties in key tourist destinations. It also expanded the company's geographic footprint into Central Europe—Hungary, Czech Republic—and strengthened its presence in Italy.
C. Understanding the Two Business Models
By 2020, Covivio Hotels operated two distinct business models, each with different risk-return profiles:
Covivio manages its hotel portfolio via two main management methods: leaseholds and premises and business. Leased hotels account for 59% of the portfolio, with an average residual lease term of 11 years. The portfolio is mainly leased to NH Hotels, B&B, Accor.
Leased Hotels (59% of portfolio): Fixed or variable rent leases with major operators. Lower risk—Covivio receives rent regardless of hotel performance (for fixed leases) or indexed to revenue (for variable). The operator handles all operational headaches; Covivio simply owns the real estate.
Operating Properties (41% of portfolio): Covivio owns both the real estate and the hotel business, capturing the full economic upside (and downside) of hotel operations. Higher risk but higher potential returns. These properties are concentrated in Germany (especially Berlin) and France.
The blend provided resilience through long-term lease contracts while offering upside through direct hotel ownership. This two-pronged approach would prove remarkably prescient when crisis struck.
VI. The COVID Crisis: Stress Test of the Model (2020–2022)
A. The Impact
COVID-19 arrived like a asteroid strike on European hospitality. Hotels that had been printing money in January were empty shells by April.
This business is currently under pressure as most Schengen governments are closing their borders and imposing total containment on their populations. While the hotel business accounted for 121 million euros last year, 2020 revenues are now threatened by the Covid-19 crisis, which is having a major impact on the hotel industry in Europe. For the moment, the crisis has had a "direct impact on the variable part" at the rate of 9% of total revenues.
About 80% of Covivio hotels closed during lockdowns across Europe aimed at delaying the spread of COVID-19. Revenue per average room fell by about 65% on Covivio variable leases and management contracts. By the end of June, 65% of hotels were open, but occupancy remained low at 10% to 20%.
"Hotels are facing a steep crisis, but people will always want to travel and to meet," said Kullmann.
The differentiated impact across portfolio segments told a revealing story:
Covivio's hotels that operate under variable leases, which are mostly in France and make up 4% of the company's total property portfolio value, saw a 67% fall in rental income in the first half of the year compared to the same period in 2019. The company's hotels that operate under management contracts, mostly in Germany and comprising 3% of its total property portfolio value, experienced a 78% drop in rental income.
Yet the fixed lease structure protected against the worst. The hotel business lost 10% of its hotel rental revenues in the first quarter. Nevertheless, the Group has a positive balance sheet that will enable it to remain solid in the European market.
B. Navigating the Crisis
Covivio's response demonstrated why long-term partnerships matter. Rather than playing hardball with struggling tenants—demanding full rent while hotels sat empty—management worked collaboratively with operators to weather the storm.
Covivio has helped operators with short-term liquidity, such as switching to monthly payments and granting rent-free periods. In return, Covivio has secured future cashflows by agreeing to lease extensions with hotel operators that have seen its hotels' firm lease length increase by four years. Firm lease length on average for hotels in lease now stands at 14.7 years.
The firm lease duration reached a record high at 14.2 years (+0.5 year vs end-2019), thanks to agreements reached with 95% of fixed-lease tenants.
This was financial ju-jitsu: Covivio converted short-term rent concessions into extended lease commitments worth far more over time. Operators got breathing room; Covivio locked in long-term relationships. Both parties emerged from the crisis with stronger ties than before.
Tugdual Millet: "Despite 5 complicated years between the Covid crisis and changes in interest rates, the sector has demonstrated its resilience. For 20 years, we had been convinced that the hotel industry was an asset class whose fundamentals offered excellent growth prospects."
C. The Recovery and Lessons Learned
The hotel industry's recovery from COVID revealed an important dynamic that validated Covivio's strategic direction:
"Despite some volatility in revenues, there is a very strong resilience in hotel values. For the past 10-15 years, hotel values have resisted both bubbles and depressive effects, whatever the crisis. In contrast to offices, for example, hotel assets have been able to hold their own: In the hotel industry, we are always hooked on the economic fundamentals."
Urban, city-center locations proved particularly resilient as leisure travel roared back and corporate travel gradually recovered. The luxury segment, counterintuitively, rebounded fastest—wealthy travelers were eager to spend accumulated pandemic savings on premium experiences.
"For 20 years, we had been convinced that the hotel industry was an asset class whose fundamentals offered excellent growth prospects. The 2020-2025 sequence and the exceptional rebound that followed have reinforced this conviction."
VII. The 2024 Transformation: From Investor to Operator
A. The AccorInvest Consolidation Deal
If COVID-19 was the crucible, 2024 was the metamorphosis. The year marked Covivio Hotels' most significant strategic shift since its founding: the transformation from pure property investor to integrated hotel operator.
The catalyst was a landmark deal with AccorInvest—the same partner that started the relationship nineteen years earlier.
Covivio has announced the completion of the process of consolidating the ownership of jointly owned hotel operating and property companies with AccorInvest. At the end of this operation, initiated at the end of 2023, Covivio holds full ownership of 43 hotels located in France, Belgium and Germany, and sells to AccorInvest 16 hotels in the same regions.
At the end of November, the Group signed the transaction to consolidate the ownership of operating and property companies of hotels held jointly with AccorInvest, for a total exchange value of nearly €800 million.
To understand the significance: For nearly two decades, Covivio owned hotel properties that were leased to AccorInvest, which in turn operated them under Accor brands. The arrangement worked well but created split economics—Covivio captured real estate returns while AccorInvest captured operational profits. The 2024 deal collapsed this structure.
The first significant event is obviously the deal signed with AccorInvest. As a result, we are transforming 43 hotels that we had leased from AccorInvest into 43 hotels that we now own outright. We are taking back full ownership of each hotel and implementing targeted renovation and transformation plans to reposition the hotels and create value. It's a major change that is changing the mix of our portfolio: we're going from 25% to 40% of assets under business and premises.
B. The Launch of WiZiU
With 43 new operating properties joining the portfolio, Covivio needed an operational platform to manage them. Enter WiZiU.
The year 2024 marks a significant step forward in Covivio's drive to strengthen its position in the hotel sector. The Group is now entering a new phase in the development of its hotel management platform: the consolidation of the assets held jointly with AccorInvest, scheduled for the end of November, will trigger a change of scale in terms of size and growth momentum. This is an opportunity for Covivio to acknowledge the new dimension of its platform and give it a new identity: WiZiU.
"A pioneer in hotel real estate in Europe since 2005, Covivio is strengthening its presence in this sector by evolving its unique profile for a property company: historically a real estate investor and asset manager, Covivio has also gradually become a hotel operator."
WiZiU's ambition is to support the repositioning of these hotels through rebranding and a targeted investment program. By the end of 2024, WiZiU will manage 24 hotels, with a total of 3,090 rooms and a value of around €500 million.
Through its new identity, WiZiU, which will have 1,000 employees by the end of 2024, intends to emphasize the human nature of the hotel business, at a time when the sector is facing major challenges in attracting and retaining talent.
The naming itself tells a story—"WiZiU" evokes a personal, service-oriented approach ("We see you") rather than the corporate anonymity typical of property companies. Management clearly wanted to signal that this wasn't just a real estate play dressed up as hospitality; it was a genuine commitment to the hotel business.
"With this platform, we will master all the levers for optimizing hotel performance, and therefore value creation. WiZiU's aim is to be able to manage more hotels in the medium and long term. Our priority over the next two years will be to reposition the hotels joining the portfolio this year."
C. The Strategic Vision
The operator pivot wasn't a sudden inspiration—it was the logical culmination of two decades of learning.
"Since 2005, our strategy has been to create long-term partnerships with hotel operators and to position ourselves as their preferred partner in order to create long-term value and support them in their development. In 2016, 10 years after we began investing in hotel leases, we decided to go one step further and expand into business and premises, based on the principle that we had control over the underlying assets and access to quality managers to support us in running them. At that time, we bought the SLIH portfolio of 12 hotels, mainly in France, which laid the foundations for the transition we made in 2024 with the creation of WiZiU."
"This is why we are going to continue to increase the proportion of hotels in Covivio's portfolio. A few years ago, it represented 15%; today it represents 20%, and the aim is to reach 1/3 of the Group's assets in the medium term."
The economics favor vertical integration: by controlling both property and operations, Covivio captures the full value chain. "Initially an investor and real estate owner, we are now a hotel operator, with 40% of the assets in our portfolio held in business and premises. This gives us control of both property and hotel operations."
D. Geographic Rebalancing
Alongside the operational transformation, 2024 also saw a strategic geographic shift.
"The second key moment in 2024 is the rotation of our assets, with the aim of rebalancing our portfolio geographically between Northern Europe (30% of assets today) and Southern Europe (17% of assets today)."
"This first significant acquisition in Southern Europe marks Covivio Hotels' desire to strengthen its presence in the main tourist destinations in Southern Europe (Spain, Italy and Portugal)."
Covivio, through its subsidiary Covivio Hotels, recently announced the acquisition of the property of the 4-star Iberostar Las Dalias hotel in Tenerife for €81 million. This transaction, completed with a company controlled by Starwood Capital.
Southern Europe offered compelling fundamentals: "The European hotel sector benefited from a good momentum in 2024, with the continued increase in RevPAR, by 4% on average. Southern Europe contributed to this performance and in particular Spain, with a +13% increase in RevPAR."
VIII. Current State & Financial Profile
A. Portfolio Composition
At the end of December 2024, Covivio Hotels held a portfolio worth €5,818 million (€6,439 million at 100%), characterized by: high-quality locations: the average grade given for "location" by customers on Booking.com is 8.9/10; a diversified portfolio, in terms of countries (12 countries), segments (66% of economy and mid-range hotels and 34% of high-end hotels) and partner operators (17 including leaders in Europe such as Accor, Marriott, IHG, NH and B&B).
Covivio owns a high-quality hotel portfolio (283 hotels / 39,477 rooms) worth €6.4 billion (€5.8 billion in Group share), focused on major European cities and let or operated by 17 major hotel operators such as Accor, B&B, IHG, NH Hotels, Mariott, etc.
The portfolio breakdown reveals a well-balanced business: - Segment mix: 66% economy/midscale, 34% upscale - Geographic spread: 12 countries, with no single country exceeding 33% - Management mix: 59% leased, 41% operating properties - Lease duration: Average residual lease term of 11 years
B. Financial Metrics
The hotel portfolio has an average yield excluding transfer taxes of 6.4% (+50 bps over one year), of which 6% on the lease portfolio and 7% on the operating properties portfolio.
Covivio Hotels had €891 million liquidity (including undrawn credit lines) as of 31 December 2024. As part of its annual review, S&P Global Ratings confirmed Covivio Hotels' BBB+ stable outlook rating, in line with the overall Covivio rating.
"The good results of the hotel market and our hotels over the year resulted in revenue growth of +4.1% on a current basis and +7.2% on a like-for-like basis, to €334.6 million compared to €317.3 million as of 31 December 2023."
The company's debt structure reflects conservative financial management. Net debt stood at €2,119 million at year-end 2024, with an average cost of 2.33% and average maturity of 4.8 years. Three new financings for an amount of €880 million were arranged in 2024, making it possible to refinance future maturities. In particular, in May 2024 Covivio Hotels carried out a €500 million Green Bond issue with a nine-year maturity.
"At the 15 April 2025 General Meeting, Covivio Hotels will propose a dividend of €1.50 per share, up +15% (€1.30 per share in 2023), putting the pay-out ratio at 86%. In order to support its development, Covivio Hotels will offer its shareholders the possibility of opting for the payment of this dividend in shares."
C. Ownership Structure
Covivio Hotels, a 52.5%-owned subsidiary of Covivio as of 31 December 2024, is a listed property investment company (SIIC) and leading hotel real-estate player in Europe.
Covivio Hotels' equity increased by €183 million in the first half of 2025, following the payment of the dividend in shares, which was subscribed by 82.3% of shareholders, at an issue price of €18.57/share. 9,848,860 new shares were issued, increasing the total number of shares comprising the share capital to 157,990,312. This transaction, which reflects the renewed confidence of shareholders in Covivio Hotels' strategy, strengthens the Company's resources to continue its development.
The institutional shareholder base includes major French insurers and financial institutions—exactly the type of patient, long-term capital suited to hospitality real estate's extended investment horizons.
IX. Playbook: Business & Investing Lessons
A. The Partnership Model
If there's one phrase that captures Covivio's DNA, it's "preferred partner." Every strategic presentation, every investor call, every interview returns to this concept.
"Our DNA is to develop partnerships. When we do a strategic deal with the right operator in a country, as with IHG in the U.K., we like to duplicate the same scheme on a larger scale."
The partnership model creates powerful network effects. Each successful relationship generates referrals, demonstrates capability, and builds institutional knowledge. When B&B Hotels considers expanding in Poland, they call Covivio. When NH Hotels needs a capital partner for a renovation program, they know who to approach. When a private equity firm wants to exit a hotel portfolio, Covivio's reputation precedes it.
"Today, we are very agile on the market because we are able to do lease, management and franchise agreements, which, for a French REIT, is not always the natural way."
B. Flexibility as Competitive Advantage
Traditional REITs are lease-collecting machines: buy property, sign tenant, collect rent. Covivio evolved into something more versatile—a full-service platform capable of structuring transactions however operators prefer.
"In 2018, Gaël Le Lay, also deputy CEO at Covivio, said the three-prong approach was to be agile, with the ability to have lease, management and franchise agreements; to grow in the most attractive of Europe's cities and gain critical size across the continent to better attract development partners and operators; and to increase its exposure in the upscale segment to better balance its portfolio."
This flexibility proved essential as hotel operators' preferences evolved. Some wanted pure sale-leasebacks; others preferred management contracts; still others sought joint ventures. Covivio's ability to accommodate multiple structures meant it could participate in deals competitors had to pass on.
C. Evolution from Pure REIT to Operator
The 2024 transformation didn't happen overnight—it was the culmination of nearly a decade of deliberate capability-building.
"We are indeed a long-term investor, adopting a test & learn approach. We tested investing in hotels. We learnt from the operators and wanted to do things ourselves and take more risk. We are increasingly bringing our expertise in-house so that we can master all the elements involved in creating value."
The lesson here is instructive: rather than making a single dramatic leap, Covivio incrementally built operational capability through small acquisitions and joint ventures. By the time WiZiU launched, the company had years of operational experience under its belt.
D. Long-term Lease Structure Benefits
The COVID crisis validated a key structural choice: long-term leases with creditworthy counterparties provide remarkable stability.
When variable revenue collapsed, fixed leases continued to generate income. When tenants needed breathing room, Covivio converted concessions into extended lease terms. The result: firm lease duration actually increased during the pandemic.
The occupancy rate remained at 100% on the hotels in leases.
This 100% occupancy figure is remarkable—even in a pandemic, every leased hotel had an operator paying rent (however reduced). Compare this to office buildings with vacant space or retail centers with bankrupt tenants.
X. Porter's Five Forces & Hamilton's 7 Powers Analysis
A. Porter's Five Forces
Threat of New Entrants: LOW
Building a €6.5 billion hotel portfolio took two decades of patient capital deployment. New entrants face formidable barriers: - Capital intensity: Hotel real estate requires billions in equity - Relationship networks: Operators prefer working with proven partners - Market knowledge: Understanding local regulations, development pipelines, and tenant creditworthiness requires years of experience - Tax efficiency: SIIC status provides structural advantages difficult to replicate
"A pioneer in hotel real estate in Europe since 2005, Covivio benefits from 20 years of relationships and €6.5B in assets."
Supplier Power: MODERATE
Hotel operators (Accor, IHG, NH, etc.) are large, sophisticated counterparties with multiple capital sources. However, "The real estate ecosystem needs players like Covivio to move into the leisure sector to provide liquidity to the market. All those private equity owners that have flooded into resorts need to offload their properties to someone."
Covivio's scale and reputation give it negotiating leverage, but operators can—and do—access capital from insurance companies, sovereign wealth funds, and private equity directly.
Buyer Power: MODERATE
The "buyers" in Covivio's business are hotel operators seeking capital partners. Their alternatives include direct ownership (increasingly unfashionable), private equity (shorter-term horizon), or insurance company capital (often less flexible). Covivio's combination of long-term orientation and operational flexibility makes it an attractive partner, but operators retain meaningful bargaining power.
Threat of Substitutes: LOW-MODERATE
Alternative capital sources exist—PE firms, insurance companies, sovereign wealth funds—but none offer Covivio's combination of hospitality expertise, pan-European presence, and operational flexibility. The partnership model creates switching costs that pure financial investors cannot replicate.
Competitive Rivalry: MODERATE
The P/Earnings NTM ratio of Covivio Hotels SCA is significantly lower than the median of its peer group: around 21.00. The company valuation of Covivio Hotels SCA according to these metrics is way below the market valuation of its peer group.
Competition exists from other hotel REITs and institutional investors, but Covivio's first-mover advantage, scale, and operator relationships create meaningful differentiation. The European hotel REIT market remains fragmented, with Covivio as the clear leader in dedicated hotel property investment.
B. Hamilton's 7 Powers Analysis
Scale Economies: Covivio's €6.5 billion portfolio generates economies in debt financing (BBB+ rating enables cheaper borrowing), asset management (shared platform costs), and market intelligence. Each additional hotel marginally reduces per-property overhead.
Network Effects: Limited in traditional sense, but partnership network creates similar dynamics. Each successful operator relationship generates referrals and market intelligence. The more operators Covivio works with, the more attractive it becomes as a partner.
Counter-Positioning: Covivio's willingness to become a hotel operator creates counter-positioning against pure property investors. Traditional REITs face organizational resistance to operational complexity; Covivio embraces it. This creates opportunities competitors cannot easily replicate without fundamental business model changes.
Switching Costs: Long-term leases (average 11 years firm duration) create substantial switching costs. Once signed, operators are committed for a decade or more. The relationship-intensive nature of hotel partnerships further increases the friction of changing capital partners.
Branding: The Covivio brand carries weight with hotel operators as a trusted, long-term partner. This reputation, built over two decades, cannot be easily replicated. The WiZiU brand is nascent but signals commitment to operational excellence.
Cornered Resource: Covivio's "cornered resource" is its accumulated expertise in European hotel real estate—understanding local markets, operator economics, development regulations, and financing structures across 12 countries. This institutional knowledge represents a durable competitive advantage.
Process Power: The company's ability to structure transactions flexibly—lease, management, franchise, joint venture—represents process power. Covivio's organizational capabilities enable it to execute deals that competitors cannot match.
XI. Bull & Bear Cases
Bull Case
European Tourism Tailwinds: Europe remains the world's most visited region, with structural growth in international arrivals. Southern European destinations continue gaining share from troubled markets elsewhere. Covivio's geographic expansion positions it to capture this growth.
Operational Upside from WiZiU: The transition to operator creates significant value-creation potential. "Post-renovation, we cut our CO2 emissions by more than 40%. We also went from an average price per room of €120 to €160." If Covivio can replicate this playbook across its 43 operating properties, the earnings accretion could be substantial.
Interest Rate Relief: The European Central Bank's rate-cutting cycle should benefit real estate valuations broadly. Covivio's conservative financing (LTV around 30%, average debt cost 2.33%) positions it to benefit from lower rates without excessive leverage risk.
Valuation Disconnect: The P/Earnings NTM ratio of Covivio Hotels SCA is significantly lower than the average of its sector (Hotel & Lodging REITs). If the market recognizes Covivio's operational transformation and competitive position, multiple expansion could drive significant returns independent of earnings growth.
Partnership Moat: Twenty years of operator relationships create a sustainable competitive advantage. As industry consolidation continues, surviving operators will concentrate their capital partnerships with proven players.
Bear Case
Operational Risk: The transition from landlord to operator fundamentally changes Covivio's risk profile. Operating hotels requires competencies—revenue management, labor relations, customer service—that differ from property ownership. Execution risk is meaningful.
Interest Rate Sensitivity: While rates are declining, any inflation resurgence could pressure real estate valuations. Covivio's debt hedging mitigates but doesn't eliminate this risk.
Geographic Concentration: Despite diversification, France and Germany still represent majority of assets. Economic weakness in either market would disproportionately impact results.
Parent Company Dependence: Covivio (the parent) owns 52.5% of Covivio Hotels, creating potential governance complexities and raising questions about minority shareholder interests.
Structural Shift in Travel: Remote work has permanently altered business travel patterns. While leisure travel has recovered strongly, corporate travel—particularly midweek business trips that fill urban hotels—may never fully return to pre-pandemic levels.
XII. Key Performance Indicators to Watch
For investors tracking Covivio Hotels' performance, three metrics matter most:
1. Like-for-Like Revenue Growth
This measures underlying portfolio performance stripped of acquisition/disposition effects. Revenue growth reached +7.2% on a like-for-like basis in 2024. Sustained high-single-digit growth would validate the operational transformation; deceleration below inflation would signal trouble.
2. Operating Property EBITDA Yield
With 40% of assets now in operating properties, this metric captures Covivio's success (or failure) as a hotel operator. The current 7% yield on operating properties exceeds the 6% lease portfolio yield—maintaining or expanding this spread demonstrates value creation.
3. Lease Duration
Average residual lease term (currently 11 years) reflects portfolio stability and operator relationships. Declining duration would indicate tenant attrition or difficulty renewing contracts; extending duration validates the partnership model's sustainability.
XIII. Conclusion: The Evolution Continues
Standing back to assess two decades of Covivio Hotels' development, the pattern is clear: patient capital deployment, relentless partnership cultivation, and opportunistic capability building have created Europe's dominant hotel property investor.
The 2024 transformation represents the next logical evolution. Having mastered the art of hotel property ownership, Covivio is now learning to master hotel operations. The WiZiU platform gives the company full control over value creation—from property acquisition to renovation to brand positioning to daily operations.
"Completed by the end of November, it will enable us to continue to develop our profile in the hotel sector, gradually moving from that of an investor to that of a hotel operator."
The risks are real. Operating hotels requires different skills than owning them. But Covivio's track record of careful, incremental capability building suggests management understands the challenges ahead.
For investors, Covivio Hotels offers exposure to European tourism recovery, real estate value creation, and operational transformation—all wrapped in a tax-efficient SIIC structure with investment-grade credit ratings. The valuation discount to peers may persist if markets remain skeptical of the operational pivot, but successful execution could generate both earnings growth and multiple expansion.
"We tested investing in hotels. We learnt from the operators and wanted to do things ourselves and take more risk. We are increasingly bringing our expertise in-house so that we can master all the elements involved in creating value."
Twenty years ago, Foncière des Murs was an obscure French property company buying hotels from Accor. Today, Covivio Hotels stands as Europe's leading hotel real estate platform—and it's just getting started with its next chapter as an operator. The story continues.
Myth vs. Reality Box:
| Consensus Narrative | Reality Check |
|---|---|
| "REITs are boring, low-growth vehicles" | Covivio Hotels has delivered 7%+ like-for-like revenue growth and is actively transforming into an operator with higher return potential |
| "COVID permanently damaged hotel real estate" | Portfolio values have stabilized; operating metrics exceed pre-pandemic levels in most markets |
| "Hotel ownership is operationally complex for property companies" | Covivio spent a decade building operational capabilities before launching WiZiU; the transition was deliberate, not opportunistic |
| "Southern Europe is a risky bet" | Spain delivered +13% RevPAR growth in 2024; geographic rebalancing toward tourism-driven markets reduces dependence on business travel |
Spotify
Apple Podcasts
Amazon Music
Audible
YouTube
Castbox
Pocket Casts