Starwood, Owner Of Spain’s Top Hotels, Is Up For Sale

2 November 2015 – Expansión

Whatever is decided in Stamford (USA), where Starwood Hotels & Resorts has its headquarters, will have a knock-on effect on some of Spain’s top hotels. The world’s eighth largest hotel group is up for sale and whoever acquires it will enter the Spanish market in style.

Starwood Hotels & Resorts is not the largest hotel chain in Spain. Its 17 properties are a far cry from the 164 owned by Meliá, the 141 owned by NH and the 93 owned by Accord, the overseas company with the most hotels in the country. Nevertheless, Starwood’s portfolio is special because it contains historical hotels such as the Palace in Madrid, the María Cristina in San Sebastián and the Alfonso XIII in Sevilla (pictured above), as well as individual assets such as the W Barcelona, also known as Hotel Vela, and 43 rooms at the complex designed by the architect Frank Gehry in the Marqués de Riscal winery.

None of the properties are actually owned by Starwood and therein lies much of their value: since the group does not own any of these real estate assets, it does not run any of their significant risks. “Starwood has a very valuable hotel portfolio in a complicated market for international brands that work with management contracts; until now, this has made it more difficult for these brands to enter Spain, where the owners of properties prefer a rental contract”, says Miguel Vázquez, Managing Partner of Irea Hotels.

Starwood only operates three of its 17 hotels in Spain under a lease contract – W Barcelona, María Cristina y Alfonso XIII -. The rest are management and franchise contracts. This is the model used by other foreign hotel giants, such as Hyatt, one Starwood’s potential suitors. The US firm was left without any presence in Spain when the Queiroz Pereira family decided to take over the management of the Hotel Villa Magna after it was re-opened in 2009. Since then, and especially following the announcement that the Four Seasons and Mandarin will soon be operating in the Canalejas complex and at the Ritz in Madrid, Hyatt, Hilton and Marriott have shown a great deal of interest in Spain.

Several Asian candidates are also in the running to take over Starwood. They include the sovereign fund China Investment Corporation, the local chain Jin Jiang and the airline Hainan, owned by HNA.

Two of the three already have links with Spain. Jin Jiang is one of Melía’s partners in China and, after purchasing Louvre Hotels in 2014, it has a dozen lower-cost establishments in Spain. HNA’s links are even greater still: it is the largest shareholder of NH – with a 29.5% stake -, it renders support services to 11 airports after it acquired Swissport and it is negotiating the purchase of a stake in the tourism group Globalia.

Luxurious – all but one of Starwood’s hotels are five-star establishments –, well-located and well-maintained. The group invested €20 million in Hotel Alfonso XIII, which is owned by the Sevilla Town Hall, between 2011 and 2012; it spent the same on the refurbishment of María Cristina. Others, such as the Marqués de Riscal Hotel and the Hotel Vela, are not even ten years old yet.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

Tourist Sector Hits Back At Airbnb, HomeAway & Niumba

18 May 2015 – Expansión

The sector is demanding a stronger institutional fight against the intermediaries. The Government says that each region is responsible for its own response.

The main Spanish tourism companies have teamed up in an offensive with the aim of limiting the power of the proliferation of unregulated tourist rental accommodation, which do not pay taxes and do not meet the safety, hygiene and space requirements and other guarantees offered by legal accommodation. The sector wants to curb the platforms (websites such as Airbnb, 9flats, Wimdu, Rentalia, Niumba and HomeAway, amongst others) that make money by acting as intermediaries. And to that end, it has been pressuring the Spanish Government for some time to prohibit them, since they think that the autonomous communities are not fulfilling their regulatory duties.

Over the last few months, the tourism association Exceltur, whose members include prestigious companies such as NH, Melia, Iberia, American Express, Hotusa and Globalia, has been holding conversations with the Secretary of State for Tourism (who reports into the Ministry for Industry, Energy and Tourism). Exceltur thinks that the Executive “could do a lot more” to regulate the operations of these rental companies, which it considers are unfair competition and which threaten its business. The main trade association for Spanish hoteliers, Cehat, estimates that between 2010 and 2013, the number of customers staying at these establishments increased by 300%, and it calculates that the number of foreign tourists who use them represents more than 20% of the total.

To support its position, Exceltur has commission the consultancy firm EY (Ernst & Young) to conduct a study analysing the impact that this illegal rental accommodation is having on the tourism sector as a whole, not just on the hotel segment. To date, EY has prepared a report about the consequences for the Balearic Islands if this rental accommodation continues to grow at its current rate over the next ten years. According to its calculations, the hotel sector would lose between 5,000 and 13,000 jobs and forgo a gross added value of between €211 million and €529 million.

Regional jurisdiction

The Government says that tourism is a regional jurisdiction, and so the Central Administration cannot do much beyond trying to standardise the regional regulations as much as possible. Moreover, the upcoming regional and general elections are likely to scupper any attempt at reform.

To date, the regions that have endeavoured to do the most to regulate tourist rental accommodation are Madrid and Cataluña, although the former received a blow from the National Competition and Markets Commission (CNMC) in March when it ruled that the Madrid law (which only allows accommodation to be rented provided the minimum stay is five days) is a barrier to free competition.

Meanwhile, the Catalan Generalitat requires intermediary websites to ensure that each property offered for rent has a kind of identification number plate to accredit it as accommodation with its license in order. Last summer, Cataluña imposed a fine of €300,000 on the web portal Airbnb for allegedly failing to comply with that standard.

On an international level, cities are taking a variety of decisions. Thus, for example, New York has declared war on tourist rental accommodation, with coordinated teams of tax inspectors, police and lawyers; and the town hall of Amsterdam has just approved an agreement with Airbnb, which requries the platform to coordinate the collection of the tourist tax that is applicable to the activities of its users.

The so-called “collaborative economy” represents a real headache for legislators, both in Spain and across Europe. In Spain, Article 16 of the Law for Information Society Services (2002) states that intermediaries (such as Airbnb, Uber and others) are not liable for the possible unlawfulness of the people they host, unless they have specific knowledge thereof. Meanwhile, the European Commission is drafting a directive that may ease restrictions on the European market and facilitate the activity of these platforms.

Original story: Expansión (by Yago González)

Translation: Carmel Drake

Barceló Doubled Its Profit In 2014 To Generate c. €50m

12 February 2015 – Expansión

Barceló recorded a profit of c. €50 million in 2014, whereby doubling its result from the previous year. The co-chairman of the hotel chain, Simón Pedro Barceló announced the result yesterday (the group’s definitive results for the year are still pending) and attributed the increase to “a significant increase in EBITDA (from €183 million to €215 million) and the incorporation of ten new hotels in Mexico and the Dominican Republic. Moreover, 2014 was the first full year to include the results of its new travel division.

Turnover exceeded €2,000 million, of which €1,100 million was generated by the travel sector and €900 million from hotels. The total figure amounted to €1,800 million in 2013. The co-chairman of Barceló said that it is too soon to say how the tourism sector will evolve over the course of the year, but he noted that “the Caribbean and Mexico have had a strong start to the year and although we do not know what will happen during the summer months, we believe that we will outperform the results recorded in 2014 by 10%”.

According to the latest information released by the Mallorcan company, Barceló has 140 hotels in 17 countries containing 37,380 rooms. Half of them are located in Europe and the remainder are in America, primarily in the US and the Caribbean. It also has 400 travel agencies operating in 22 countries.

New acquisitions

The group, which returned to the travel agency segment last year through its acquisition of Orizonia, together with Globalia, has not ruled out growth through further acquisitions. Yesterday, Simon Pedro Barceló confirmed that “new corporate transactions have not been ruled out” in the travel agency sector.

The family business owns 39% of its hotels outright, and leases or manages the remainder. Its goal is to be “a great hotel company”, said Barceló yesterday, which is why the company is continually adding new hotels to its portfolio. “We have just signed an agreement to lease a new 4 star hotel with 250 rooms in Berlin”, he said.

Barceló, who was giving a lecture at ESADE, was very optimistic about the future of the economy and the tourism sector in particular and encouraged employers to work together with entities that are independent and able.

Original story: Expansión (by Marisa Ángeles)

Translation: Carmel Drake