The Spanish hotel sector is in the focus of international investors, especially in the high-end segment. One in every five hotel openings planned in Spain until 2025 (22%) will correspond to this segment, according to data from the consulting firm CBRE real estate.
Investment in Spanish hotels
During the first quarter of 2024, the growth path of the previous year has been maintained, reaching 577 million euros transacted in hotels. This figure represents an increase of 12% compared to the same period in 2023 and represents 27% of the national total.
Investment in high-category hotels has accounted for 82% of the total investment made, with 473 million euros: 55% of the volume corresponds to four-star assets and 27% to luxury assets (1% five-star and 26% five stars GL).
This year, the opening of around 260 hotels (approximately 26,000 rooms) is expected in Spain, with 22% being high-end and around 50% concentrated in Malaga, Madrid, Valencia and the Canary Islands.
In the first quarter of this year, a total of 28 hotel assets and more than 3,000 rooms have been transacted in Spain, compared to 19 hotel assets and 2,900 rooms registered in the same period of 2023.
The predominant investor profile was led by institutional investors, with more than 37% of the total volume (highlighting investment vehicles managed by financial entities), followed by hotel chains (36%) and private investors (23%). Regarding the origin of capital, national investors represent 74% of the total properties transacted, according to CBRE data.
Portfolio rotations
Portfolio turnover continued during the quarter, with four portfolio transactions accounting for 47% of the total volume (more than 270 million euros), including the acquisition of part of the Meliá Hotels portfolio by Banco Santander.
Regarding the type of assets, the holiday segment, with 38% of the total, has had less prominence compared to the urban segment during the first months of the year. By location, Barcelona has been the province with the highest amount transacted (33%), followed by the Canary Islands (31%), the Balearic Islands (12%) and Malaga (7%), according to data from the real estate consultancy.
Increase in average rates and dynamic foreign tourism
The good performance of demand together with the increase in the average rate keeps the operating results of the hotel industry at the beginning of 2024 considerably higher than those recorded a year ago.
Thus, the average price per occupied room reached 106.9 euros, 9% above 2023, while the average income per available room stood at 65.3 euros, 12% above above 2023.
CBRE's forecasts are that this year foreign tourism will show greater dynamism and this will consequently lead to increases in both rates and income, although at a more moderate level than in previous years. CBRE data show how prime hotel returns remained stable in the first quarter, standing at 5.25% in Madrid and Barcelona, and 6.25% on the islands.
"The trend for the coming months is stable due to rising hotel operations, good prospects for book reservations and the stabilization of rates," the report states.
Spain, leader in Europe
Spain continues to be one of the most attractive European destinations for international hotel investment, leading hotel investment on the continent last year, with 28% of the total transacted, and is also positioned as the preferred destination for investors in 2024, according to the 2024 European Hotel Investor Intentions Survey prepared by CBRE.
The growing interest in Spain is also reflected at city level. Madrid has overtaken Paris to become the second most favourable city for hotel investment, behind only London.
Spain's capital is becoming increasingly attractive to international capital, with notable interest from Latin America. On the other hand, Barcelona is also in the ranking of the 10 most attractive cities in Europe for the sector.
"Spain will continue to be a focus for hotel investors, who will closely monitor opportunities in the luxury segment and the possibility of acquiring portfolios to increase their footprint in Spain. We also foresee a greater appetite for buying hotel management companies as a result of investors' increased specialisation and their greater willingness to take on operational risk in order to obtain higher returns," said Jorge Ruiz, CBRE's director of hotels in Iberia.
