Spanish Hotels Change Hands As Tourism Booms

16 August 2018

Spain is a tourist country par excellence: beaches, sun, good weather and hotels. It is a country where tourists can find a comfortable place to spend their holidays, while at the same time, investors see an interesting potential for profits. In this manner are the parallel tales of the splendour of Spain’s tourism interwoven with the non-stop action in the local hotel sector real estate market.

Last year, investments reached 3.750 billion euros, according to real estate consultancy CBRE, a record figure that gives an idea of the market’s momentum. The frenetic pace of acquisitions didn’t stop for a rest this summer either, as the sector awaits the result of the Thai International’s takeover bid for NH Hoteles.

The hotel scene is undergoing a paradigm shift and the business model that has been used since the 1980s, where the property owner and hotel operator were the same, is moving towards a more Anglo-Saxon profile, where the owner is an investor, and lifelong hotel sector professionals are primarily responsible for management. The sector is still highly fragmented and dominated by individual owners and independent managers (55%), although their relative participation is decreasing. Funds, socimis and family offices have gained prominence in recent years and are responsible for most of the operations currently being executed, to the detriment of traditional groups. Consequently, 57% of the total invested in the year up to June corresponded to that group of investors, compared to 40% for the traditional hotel chains.

The reason for the change is, again, the bursting of the real estate bubble. Many hotel owners experienced difficulties and, in some cases, were unable to cope with their debts to banks, which in many cases took over the assets; then came the venture capital funds that, honouring their nickname – vultures –, took advantage of the situation to snap up those hotels at firesale prices. The funds then follow a familiar path after that, and the same story is repeated in other segments of the real estate market: the funds invest in the completion of moribund projects or to upgrade older assets, run the businesses at a good profit until they find an opportunity to unload their investment, obtaining attractive returns in the process.

“[The funds] obtain annual yields of around 6.5-7% and aim to achieve between 12% and 15% with an eventual sale of the asset,” says Bruno Hallé Boix, founding partner of the consultancy Magma Hospitality Consulting.

Divestment will be the next phase of the current cycle, but for now, market players are focusing on repositioning the businesses and their subsequent consolidation. Investment forecasts for 2018 are positive, although they are not expected to return to the highs of last year. In the first semester of this year, the total volume invested shrank by 55%, to 960 million euros. In that same period, 70 hotel assets were transacted, 8,500 rooms were built, together with another 1,800 in as yet incomplete buildings, lots and projects sold.

“It is becoming harder every day to find good assets, that’s why it’s a good time for skilled opportunity seekers,” Mr Hallé Boix stated.

Mergers and acquisitions

One of the most important transactions this year starred Blackstone, which has established itself as Spain’s hotel giant after finalising its takeover bid for Hispania. The US fund already owned more than a dozen assets stemming from a previous real estate transaction with Banco Santander and HI Partners. With its acquisition of Hispania, Blackstone added another 46 hotels and more than 13,100 rooms to its portfolio.

With that operation over, all eyes are now on NH Hoteles. The chain has been on the block for months after an unsuccessful attempted merger with Barceló, and so far, Minor International seems likely to take the prize. The Thai company, also planning on creating a hotel sector behemoth, is offering 6.4 euros per share the Spanish chain, which had a relatively cool reception.

While awaiting the outcome of this latest page-turner, almost no one is ruling out additional transactions in the coming months. 83% of Spanish and international chains surveyed for Magma Hospitality’s Hospitality Hotel Management 2018 study demonstrated an interest in moving ahead with possible mergers or acquisitions with other hotel groups in Spain during 2018 and beyond. At the same time, the growth of specialised socimis will continue to add dynamism to the sector.

For investors, including both socimis and the traditional operators, holiday resorts are seen as the next big bet, accounting for 78% of investments in the first half of the year, compared to the 22% that went to urban hotels. Baleares (27%), Canarias (26%) and Andalucía (9%) were the main targets of regional investment, with others such as Madrid (5%) and Barcelona (4%) following far behind, according to CBRE.

In 43% of the cases, the average sale price for the assets valued the hotels at between 60,000 and 120,000 euros per room, according to the report. At the same time, there was an increase in acquisitions where buyers paid more than €120,000/room, another example of the boom in the sector.

Original Story: El Mundo – María Hernández

Translation: Richard Turner

 

CaixaBank and Sabadell Lend €1.4 Billion to Hotels

10 August 2018

The tourism sector, where both banks operate through specialised units, is one of the principal motors of loan investment.

The growth of Spain’s tourism sector has become one of the main levers for loan-based investments. CaixaBank and Banco Sabadell have found a powerful platform for increasing their turnover in the renovation of the country’s hotels and the continuous buying and selling of establishments in an industry that has made Spain the second most visited country in the world after France.

During the first half of the year, CaixaBank and Sabadell extended a total of 1.446 billion euros in loans to the hotel sector. The bank headed by Gonzalo Gortázar lent €942.5 million to the hospitality industry between January and June, a growth of 36% over the same period of the previous year (€692 million). The figure easily exceeded the bank’s target growth of 20%.

CaixaBank’s financing included 1,618 operations that went primarily to the Balearic Islands (€400 million), Catalonia (€109 million) and Madrid (€164 million). Madrid, where the bank saw the greatest growth in its concession of loans, increasing by 250%, compared to growth of 16% and 43% in the Balearic Islands and Catalonia.

In total, Caixabank saw a business volume of €4.542 billion from the tourism sector, where it has a portfolio of 8,927 customers. In 2017, the bank created a specialised division of 30 professionals to manage its business in the sector, called CaixaBank Hoteles & Tourism, which has since signed 20 agreements with Spanish hotel associations and federations.

For its part, Sabadell was a pioneer in creating its Sabadell Tourism Business division in 2014, which allowed it to grow by double digits ever since. During the first quarter of this year, the bank managed by Jaume Guardiola provided 504 million euros in financing to hotels, an 8.5% increase. Similarly, it has increased spending by 16% to manage a volume of business for the sector of €3.55 billion. According to the bank, the division’s total number of clients has risen to 14,582.

CaixaBank has increased its concession of loans to hotels by 36%, to €942 million in the year to June

Sabadell saw growth of 8.5% in its loans, extending credit worth €504 million

Although it foresees “a moderate slowdown” in growth, CaixaBank Research forecasts an increase of 3.4% in tourism-based GDP growth in 2018, higher than that of the Spanish economy as a whole, which is estimated at 2.8%. According to the research centre, the average hotel occupancy in Spain stood at 53% between January and May, compared to 53.3% during the previous year, due to a moderation in the rate of arrival of foreign tourists. Even so, the bank expects international visitors to increase by 3% in 2018 and 1% in 2019, reaching 85 million, compared to 81.8 million in 2017. Investment by the sector to improve hotel quality has resulted in the fact that these days, four- and five-star hotels account for 51.7% of beds in Spain, compared to 48.6% in May 2014.

Original Story: Expansión

Translation: Richard Turner

Christie & Co: Europe is Still the World’s Most Visited Region

9 January 2018 – Press Release

Europe was still the most appealing destination and most visited region in the world in 2017, despite some disruptions faced in recent years, according to a report published by Christie & Co.

The report, launched by Christie & Co’s Hotel Consultancy team and entitled ‘European Travel Trends and Hotel Investment Hot Spots’ identifies future investment opportunities in the European hotel market by highlighting areas for increasing the value of visitation in the European market, reviewing the growth opportunities of feeder markets in Europe, analysing issues surrounding accessibility and airport capacity and highlighting which markets are expected to achieve strong RevPAR increases in the coming years making them ideal candidates for investment.

Despite other reports detailing the impact of Brexit, to date, the impact on European tourism remains unseen and Christie & Co predict the general positive outlook for tourism in Europe will translate into increased demand for accommodation. European travellers remain the key source for European destinations with domestic and other European travellers accounting for almost 90% of demand. The established feeder markets including the US, Canada, Japan and Australia continue to generate visitation growth for the European market. India and China are expected to experience healthy GDP growth over the next five years and both have populations over four times the US and affluence continues to rise. Thus, creating tremendous visitation potential for the old continent.

Christie & Co have identified two opportunities for increasing the value of visitation in the European market; firstly, Spain and Greece lag behind Western and Northern Europe in terms of value of visitation per international arrival. Christie & Co sees a real opportunity to boost the value of visitation by improving the quality of the hotel stock. Secondly, there are good branding opportunities across the European market as the hotel stock in the majority of European markets remains currently heavily unbranded and in need of investment.

Airport capacity remains a key challenge as accessibility is one of the key drivers for tourism. Christie & Co have analysed eleven major airports in this report and the findings reveal that seasonality concerns can be mitigated through providing additional flights during the shoulder season, making seasonal destinations more attractive outside of their peak times. If airport capacity is addressed promptly it will create wider development opportunities for hotels and further infrastructure.

Anna Eck, from the hotels consultancy team at Christie & Co comments, “The findings of the report show quite clearly that whilst Europe as a destination remains extremely popular, there is huge opportunity for international brands to grow in the region. Markets such as Iceland, Poland, Demark, Portugal and Sweden provide options for hotel chains whilst Ireland, Spain, Portugal Poland and Sweden would be ideal for opportunistic investors willing to take more risk. These markets are all expected to achieve strong RevPAR increases in the coming years as well as demand growth in excess of supply.”

Carine Bonnejean, Head of Consultancy – Hotels at Christie & Co comments, “We have worked closely with our European colleagues to develop this report and as a pan-European team we are able to offer strategic advice to maximise the potential of our clients’ business and investments. The report finds that certain countries are ideal for different types of investor and we are able to identify which cities in those countries are worth prioritising. Whatever the situation, we help to formulate a strategy to generate the best outcome.”

Original story: Press Release

Edited by: Carmel Drake

CBRE: Hotel Inv’t Reached Record Figure of €3.75bn in 2017

29 December 2017 – Europa Press

Investment in the hotel sector in Spain grew by 83% in 2017 compared to the previous year, to reach a total transaction volume of €3.75 billion, according to data from the consultancy firm CBRE Hotels.

The cumulative figure represents a historical record in the Spanish market, exceeding the previous record set in 2015. The increase is primarily due to strong demand from investors to buy and capitalise hotel assets, whereby taking advantage of the economic and real estate recovery in Spain.

According to CBRE Hotels, 190 hotel assets were sold in Spain in 2017, up by 23% compared to 2016, which represented an increase of 25% in terms of the number of rooms sold (28,000). Moreover, a further 2,200 future rooms were also sold last year in buildings and projects still under construction.

The most sought-after hotel assets were 4-star establishments, accounting for 42% of all investments.

The Canary Islands and the Balearic Islands accounted for almost 40% of all investments

In terms of the main investment destinations in the hotel sector, the Canary Islands (21%) and the Balearic Islands (18%), together with Madrid (17%) led the ranking, followed by Barcelona and Málaga. The most significant changes compared to 2016 were seen in Barcelona and the two island regions, which went from accounting for 36% to 15% in the case of the former and from 24% (combined) to 39% in the case of the latter.

In terms of the type of properties, holiday hotels accounted for 60% of the total compared with 40% urban properties. On the other hand, buyers invested in individual assets in 60% of cases, rather than in portfolios (40%).

Regarding the type of buyers or investors that acquired the most hotel assets last year, including not only hotels but also tourist apartments, aparthotels and land and buildings destined for hotel use, institutional investors participated in 55% of operations, followed by private entities and family offices, with 22% of transactions, and other hotel chains, with 21%.

Main operations

The largest operation of the year involved HI Partners, the hotel platform that Banco Sabadell recently sold to Blackstone for more than €630 million. The change of owner of Edificio España also hit the headlines – it was acquired by Riu Hotels & Resorts for €272 million. And finally, the Wave portfolio, owned by Starwood Capital and Meliá, comprising 4 hotels in Lanzarote, Ibiza, Torremolinos and Mallorca, was sold in the middle of the year to London & Regional Properties, on advice from CBRE (…).

“The excellent performance of the main tourism markets and the excess liquidity in the capital market have led to a historic year with more than 150 transactions and where institutional players have been the protagonists once again”, explained the National Director of CBRE Hotels, Jorge Ruiz.

Moreover, he added that “the outlook is very positive and we expect to see more concentration in the market in 2018 and a renewed interest in the tourism industry in our country”.

Original story: Europa Press

Translation: Carmel Drake

Idealista: Hotel Inv’t to Reach Record Figure of €3.2bn in 2017

26 December 2017 – Idealista

The year-end forecasts for hotel investment are marking record highs, exceeding the €3.2 billion threshold. This represents an increase of 45% with respect to 2016 and of 25% with respect to 2015, the record year to date when investment amounted to €2.55 billion. The large operations completed during the year include the 14 assets (HI Partners) that Sabadell sold to Blackstone for €630 million and the purchase of the iconic Edificio España building (pictured below) in Madrid by the hotel chain Riu for €380 million.

The hotel segment has risen to prominence in 2017 in terms of real estate investment, accounting for 30% of the total market share, exceeded only by retail. During the first six months of the year, €1.655 billion was invested in hotel purchases.

Madrid and Barcelona are the two cities that recorded the majority of the real estate operations: the Spanish capital accounted for 19% of total investment and the Catalan capital 12%. Nevertheless, markets such as Valencia, Sevilla and Bilbao also started to spark interest amongst investors. Meanwhile, in terms of holiday markets, the Canary Islands, Andalucía and the Balearic Islands led the investment ranking, accounting for 23%, 13% and 9%, of the total investment, respectively.

Between January and November 2017, 94 operations were closed, with 109 hotels changing hands. The most significant operation was completed by Blackstone, with its purchase of the HI Partners portfolio from Sabadell (…).

Another important deal was closed in June with the sale of a portfolio of 3- and 4-star Meliá Hotels, located in Ibiza, Lanzarote, the Balearic Islands and Torremolinos to London & Regional for €230 million.

In 2018, the investment figures in the hotel sector could soar once again if Barceló’s plan goes ahead to take over the NH Hotel Group, worth €2.48 billion. That deal would create a new market leader with more than 600 hotels and 109,000 rooms.

Original story: Idealista 

Translation: Carmel Drake

Deloitte: Hotel Inv’t Will Exceed €3bn in Spain in 2017

28 November 2017 – Expansión

Spain is going set a new record in terms of hotel investment this year, with a forecast figure of more than €3 billion. Moreover, one quarter of that investment is going to be concentrated in the Canary Islands (almost €0.8 billion).

In Las Palmas, this week, Deloitte presented the white book on the sector, together with the Association for Progress and Management, led by Francisco Torres (Renta 4). Javier García and Ignacio Medina, Partners at Deloitte, highlighted the competitive strength of the Spanish tourism sector – the country receives 80 million visitors per year and has a legal and climatological environment that “make it unique”. “We are not able to be a destination for those with the highest purchasing power because the hotel stock is very obsolete. We need to invest just a little, if at all, to meet the requirements of tour operators”.

Nevertheless, Deloitte remains optimistic ahead of the upcoming challenges. “We are facing an exciting cycle because the map of players is changing, with new roles in terms of investors, financiers and hoteliers”.

Average daily rates are experiencing increases of 30%, with occupancy rates of 87%, but Deloitte warns that the “favourable wind is not going to last forever”. “We cannot resign ourselves to being such a cheap place”.

The incidence of falling prices is especially significant in the Canary Islands. The autonomous region has a supply of 350,000 beds, but, with the exception of a few establishments, such as Carlton Ritz Abama (Tenerife), the market is a long way from luxury tourism; its average tariffs range between €60 and €90. “They don’t even come close to the €300 or €700 per night that guests pay for certain hotels on the Costa del Sol”.

Deloitte proposes six axes for the investment challenge over the next few years: innovation, sustainability, digital transformation, renovation, brand enhancement and tailor-made experiences (…).

Javier García places particular emphasis on the role of financing, where entities are boosting hotel activity. Guarantees from the banks are conditioned by the presence of an international operator, the business plans and the ownership of the land.

Deloitte revealed that international operators such as the fund Blackstone have become some of the most capable in terms of proving that a renovation process can result in tariff improvements of up to 40%.

In October, Blackstone acquired the hotel division of Sabadell in Spain (HI Partners) and, in the case of the Canary Islands, it is not the only player. Private equity firms such as KKR and Hispania are very active at participating in the “substitution effects”, as Deloitte defines them. “As Don Emilio Botín always used to say, the best business involves being the first to enter and the first to leave”.

Original story: Expansión (by José Mujica)

Translation: Carmel Drake

Deloitte: Hotel Inv’t Will Exceed €3,000M In 2017

7 November 2017 – Expansión

The extraordinary tourism data in Spain, the interest from investors in real estate assets and the purchase by international funds of hotel portfolios has catapulted investment in the Spanish hotel segment so far this year to €2,600 million. That figure is 21% higher than the total amount recorded in 2016, and is very close to the record figure of €2,700 million recorded in 2015, according to The Hotel Property Handbook report, prepared by Deloitte España.

In this way, the hotel sector now accounts for 35% of total real estate investment in the tertiary sector (non-residential assets) in Spain. The firm forecasts that, by the end of this year, the investment volume figure will have easily surpassed the €3,000 million threshold.

In terms of the main operations of the year, the purchase by the US fund Blackstone of the HI Partners hotel portfolio, comprising 14 establishments, from Sabadell for €630 million and the acquisition by the British fund London & Regional of four Starmel hotels – a joint company formed by Meliá and Starwood Capital in 2015 – for €230 million, have given the investment figure a real boost.

Record operations

These operations have been accompanied by several one-off hotel transactions, such as Edificio España, which was acquired by RIU in June for €272 million (…).

Other noteworthy operations so far this year include the purchase of Hotel Silken in Barcelona by the British fund Benson Elliot for €80 million and the acquisition of 55% of Hotel Diagonal Mar in Barcelona by Axa for €80 million.

For Javier García-Mateo, Partner at Deloitte Financial Advisory, institutional investors are seeing the opportunity to build large portfolios of holiday hotels in Spain, to integrate them into their international platforms in the Caribbean, South America and South-East Asia, developing a direct channel and obtaining greater negotiating power with tour operators. “In the end, Spain is establishing itself as the world’s main tourist market”, he says.

In this sense, we are seeing the natural migration of traditional hotel owners, who are divesting property to focus on management, such as in the case of the Meliá chain, which is making way for overseas investors who have greater financial muscle and so can launch more ambitious projects, explains Patricia Pana at Deloitte Financial Advisory.

In this context, the large tour operators are also participating in the investment fever and are buying assets in order to carry out a vertical integration of their business (…).

Interest from investors is partly driven by the record number of visitor arrivals – more than 84 million international tourists are forecast to visit Spain this year – and the strong evolution of key performance indicators such as the average daily rate (ADR), revenue per available room (RevPAR) and the occupancy rate.

Peak returns

Specifically, the ADR in Spain reached an average of €82.30 in 2016, up by 5% YoY; the occupancy rate rose by four percentage points to 66%; and RevPAR increased by 10% to €53.90.

The challenges for the sector now include improving the hotel portfolio to allow for an increase in prices. “If we compare our hotels with those in other urban and vacation destinations, the price per room of Spanish hotels still has a lot of potential, provided that renovation and transformation projects are carried out with the help of the main operators”, says Ana Granado, Director at Deloitte Financial Advisory (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Hotel Investment Is Thriving In Valencia & Alicante

2 December 2016 – Levante-EMV

Hotel investment has increased by 162% and profitability has soared by 17.5% in Valencia and by 27.5% in Alicante, driven by the tourist boom. According to sources in the hotel and real estate sector, the owners of buildings are aware of the increase in investor demand; and offers for buildings up for sale and rent in Valencia have multiplied. Specifically, three properties in iconic locations have come onto the market in recent weeks for €15 million and another three have been put up for rent. Several operations have also been signed, including the Valencian chain Casual Hotel’s purchase of the former Hotel Londres in the Plaza del Ayuntamiento for €6 million and the acquisition by the chain Myr of the Café Madrid building, in an operation amounting to €12 million.

According to the consultancy firm CBRE, the increase in the number of operations is due to “strong demand from investors to buy and capitalise hotel assets, and benefit from the clear recovery in the real estate sector in Spain and the strengthening of the economy, which is expected record GDP growth of 3.1% this year. Moreover, international tourism in Spain is expected to exceed the 70 million visitor threshold for the first time this year”.

Sources in the sector explained that one of the properties that has been put up for sale (for €6 million) is on one of the streets adjacent to the Plaza del Ayuntamiento; another, located on Calle Ballesteros is on the market for €3.5 million; and another one, next to the Palacio del Marqués de Dos Aguas, is up for sale for €9 million. In addition, the German property developer Ratisbona (linked to the Vice-President of Bayern de Munich, Rudolf Schels) has acquired an office building on Calle María Cristina (next to the Plaza del Ayuntamiento) for €3 million, which it plans to convert into a hotel.

Above all, hotel operators are interested in leasing properties as an alternative to buying them. Real estate sources state that there are three high-profile projects in the rental market at the moment: the property at number 1 on Calle Colón; the former headquarters of CAM on the corner of Pascual y Genís with Martín Cubelles; and the former Telefónica building on Calle Isabela Católica.

The building on Calle Colón 1 was the former headquarters of the Social Security agency. The Dénia-based property developer Enrique Pla and the Valencian-based businessman Enrique Ballester acquired the nine-storey property for €14.2 million a year ago and sold the lower three floors in the summer for €20 million (where a Pull and Bear store is due to be opened). The two businessmen have now decided to generate returns from the rest of the building and are converting it into a hotel with the aim of leasing it to a chain.

The former headquarters of the CAM is an office building belonging to employees of Banco Sabadell through their pension fund. The same real estate sources said that the building is not up for sale, but that the owners are looking for a hotel operator who may be interested in operating it (amongst other options). (…).

The former Iberdrola building on Calle Isabela Católica has been closed for years and its owners are also trying to turn it into a hotel. Iberdrola sold the building to a group of local real estate companies led by Gesfesa for €24 million before the collapse of the real estate market.

Original story: Levante-EMV (by Ramón Ferrando)

Translation: Carmel Drake

Irea: Hotel Inv’t Amounted To €1,363M In YTD Sept 2016

17 October 2016 – Europa Press

Hotel investment in Spain has continued its strong momentum during the first nine months of 2016 to reach €1,363 million, according to a report about hotel investment in the real estate sector prepared by Irea. The report also shows that the figure could rise to €1,800 million by the end of the year. Despite the fact that the investment figure is 16% lower than the level recorded during the same period last year, it is the second best year ever.

Investor interest in hotel assets is still very high and if some of the main operations that are currently on the market are actually closed as a result of the year-end effect then the figure could end up exceeding €1,800 million by the end of 2016. The profile of investors has changed considerably with respect to 2015, when the Socimis (primarily Hispania and Merlin) were the stars and investment involving asset portfolios accounted for half of the total investment volume.

In 2016, operations involving individual assets are clearly dominating the market and are spreading in a general way across the whole country, versus the trend in recent years when there was a higher concentration of investment in traditional destinations.

The increase in the number of hotels sold to date in 2016 has been noteworthy (97 hotels compared to 83 last year), however, the average size per number of rooms has decreased significantly to 142 rooms from 214.

Madrid leads investment with €310 million.

In geographical distribution terms, Madrid leads the investment table for the second year in a row, with €310 million, followed by Barcelona with €302 million (the two regional capital cities account for 45% of total investment). The Balearic and Canary Islands are ranked in third and fourth places with €206 million and €198 million, respectively.

Whilst the figures in the Balearic Islands have remained stable compared to 2015, they have decreased in the Canary Islands after the high volume of investment seen in 2015, when it was the main investment destination in Spain.

Finally, there has been a notable increase in contributions to total investment from secondary destinations. In 2016, hotel investment has been distributed amongst 68 municipalities so far, compared with 44 in 2015 and 25 in 2014, which shows that the hotel investment market is establishing itself in Spain.

Investment is now reaching regional capitals such as Gijón, Oviedo, Orense, Lugo, Granada and Alicante, for example, i.e. places where barely any activity had been recorded in recent years.

The Socimis decrease their level of investment

The profile of investors has also changed markedly since 2015, when the Socimis were the undisputed stars, accounting for almost 50% of total investment volume in the hotel market in Spain.

This year, the Socimis have faded into the background, accounting for approximately €85 million of investment (only 6.2% of total hotel investment), whilst other types of investors have grown.

International investors have invested €585 million to date, almost twice as much as they spent in 2015, led by the Dogus Group, which purchased the Hotel Villa Magna in Madrid and Westmont Hospitality, which acquired a majority stake in Torre Agbar in Barcelona.

In terms of national chains, they invested €276 million in total on the purchase of 32 hotels. Highlights included Hotusa, which was the most active group, purchasing five properties during the first nine months of the year.

Meanwhile, domestic investors spent €304 million on hotels in total. The star of that category was HI Partners, which has acquired seven hotels so far this year, primarily in the vacation segment.

Original story: Europa Press

Translation: Carmel Drake

JLL: Hotel Inv’t Amounted To €1,030M In First 7M 2016

3 August 2016 – Expansión

(…). Hotel investment in Spain amounted to €1,030 million during the 7 months to July 2016, which represents a 41% decrease compared with the same period last year. Nevertheless, it also represents the second highest figure recorded since 2007, according to a report prepared by JLL.

Specifically, as at 31 July this year, 81 (hotel) assets had been sold, for a combined investment volume of €1,030 million through 68 operations, compared with 92 assets sold as at July last year, with a combined investment volume of €1,752 million through 55 operations.

The most noteworthy operations so far this year have featured: Hotel Villa Magna, which was acquired by the Turkish group Dogus for an estimated €180 million; and Hotel Pullman Barcelona Skipper, which was purchased by the Saudí Royal Family for €90 million.

Excluding those two operations, Spanish investors accounted for 80% of the total volume invested in Spain.

In this vein, the most active investors in the hotel market have been the investment fund HI Partners (a subsidiary of Sabadell) and Hispania, which have completed transactions amounting to €110 million and €71 million, respectively.

Meanwhile, on the sell side, hotel groups have accounted for 41% of all hotel assets sold, followed by real estate companies (26%) and private investors (13%).

For Manuel Climent, Vice-President of JLL Hotels & Hospitality Group, the decrease in investment this year reflects, in part, the lower number of hotel portfolio transactions sold this year, after they soared in Spain in 2015.

Specifically, last year, up to eleven portfolios were sold, containing 74 hotels in total, for a combined investment volume of €1,450 million. So far this year, seven portfolios have been sold, containing 21 hotels and a combined investment of €174 million.

Climent forecasts that activity will intensify in terms of hotel portfolio transactions during the second half of the year, with HI Partners and Hispania leading the way.

For Climent, the moratorium in Barcelona has caused lots of investors who had purchased assets with a view to converting them into hotels, to become more cautious again. By contrast, some owners have put their hotel assets up for sale as they think that now is a good time to sell, given the lack of supply, which is raising prices in a space that is still very attractive for tourism.

The Vice-President of JLL Hotels & Hospitality Group considers that, although some important transactions are expected to be closed before year end, total investment volumes will fall below last year’s record of €2,740 million.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake