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STR: Spain’s Hotels Are The Most Profitable In The World

7 November 2016 – Hosteltur

Spain’s hotel industry is one of the most profitable in the world, according to Javier Serrano, Director of STR for Spain and Portugal, who was speaking at a conference entitled “Marketing hotels in the digital age”, organised by the ITH (Technological Hotel Institute). Proof of this comes from the double digit increases in RevPar (revenue per available room) seen during the first nine months of 2016 in the main Spanish capitals, with the exception of Barcelona (+8.9%) and Marbella (+8.2%), which are already well established markets.

According to Javier Serrano, behind these significant increases we find “the strong behaviour of groups, both in the vacation and MICE (meetings, incentives, conferences and events) sectors. Certain destinations, such as Zaragoza, are really benefitting from increased demand from groups. Zaragoza saw a RevPar increase of 20.5% during the first nine months of the year, thanks to the city’s initiative to reuse its old pavilions, built for the Expo, to host these meetings”.

Another contributing factor has been a change in strategy by many of the Chinese airlines, which have increased the frequency of their flights to the Peninsula. They are attracted by the safety of Spain as a destination, given that, according to the Head of STR in Spain and Portugal “the US and Chinese markets are more sensitive to security concerns”.

Meanwhile, the two island groups (the Balearic and Canary Islands), which have seen RevPar increases of between 15% and 17% “are also benefitting from higher demand (diverted from competing destinations currently suffering from political instability) and from the recovery in domestic tourism, together with the low price of oil, which is boosting transport”.

STR’s data reveals that during the first nine months of 2016, the RevPar of Spain’s hotels increased by 13.4% to reach €82.21, driven by an increase in the ADR (average daily rate), which rose by 8.5% to €109.38, and by a rise in occupancy rates, which grew by 4.5% with respect to the same period last year – a record high, according to Serrano, of 75.7%.

The recovery of Madrid

In terms of its average occupancy rate, Madrid has managed to surpass the magic number of 70% in 2016 and now has an average occupancy of 70.4%, up by 3.4% compared to last year, according to the Director of STR, “which means that establishments in the city can now play around more with prices”. Not surprisingly, the ADR in Madrid has increased by 7.1% to €97.29 and the RevPar has also increased by 10.7% to €69.46.

In this way, the capital is recovering as a city break destination, with figures returning to their pre-crisis levels, above all in the case of low-end and mid-range hotels, which, together with the luxury segment, are seeing the most activity. In 2015, Madrid surpassed Barcelona as the primary urban destination for hotel investment, although “investors’ interest in Spain has slowed somewhat in recent months due to the absence of a stable Government. As a result, demand has increased whilst supply has remained almost stable, which has benefitted those properties already in operation. (…).

Original story: Hosteltur

Translation: Carmel Drake