Tag: Hotel Villamagna

Irea: What Led to Last Year’s Record Inv’t in Spain’s Hotel Sector?

12 January 2018 – Hosteltur

Last year saw investment in the Spanish hotel sector break all records, with investors spending €3.907 billion on transactions involving existing hotels, properties for conversion into hotels and land for the construction of hotels. That figure represents an increase of almost 80% with respect to 2016, according to Miguel Vázquez, Managing Partner of the Hotels Division at Irea; and was the result of the sale of 182 establishments comprising 28,813 rooms, with an average price per room of €119,000, compared with an average price per room of €92,000 in 2016 and of €85,000 in 2015, which represents an increase of 40% in just two years (…).

According to the Irea Director, this investment boom was driven “not only by the greater number of operations but also by the fact that the prices of the assets sold were higher as they were coming onto the market after being repositioned in recent years. The types of investors have also changed, as have their demands in terms of returns: around 5-6% in the urban segment and around 6-7% in the holiday segment, given that we are no longer seeing as many opportunistic funds entering the market (…)”.

In fact, he has quantified that “more than 2,000 holiday hotels still need to be renovated and repositioned. There is a wide range of opportunities that the funds are focusing on, in search of agreements with small chains at times of generational changes and when they are interested in selling…or not, because the strong buyer pressure is continuing to motivate owners who are not typically sellers to put their assets on the market, especially independent operators. And that is leading to the entry into the market of large holiday hotel portfolios, which is what investors are backing Spain for, as well as independent hotels”.

Forecasts for 2018

And after “the stratospheric data of 2017”, in the words of Vázquez, “the inertia with respect to 2018 is very positive, the year is starting off very well”, although he thinks that hotel investment will moderate and “the effect of the uncertainty in Cataluña will make it very difficult for us to see a repeat of last year’s figures”.

Nevertheless, he cites three operations that should be resolved during the first few months of this year: the completion of the purchase of the Alua portfolio by Hispania (…); the sale of a portion of the Ayre hotel portfolio, which is currently on the market; and the launch of a hotel Socimi by a financial entity with 15 establishments, which could take place soon.

Vázquez estimates that the investments already committed for the first few months of the year identified by Irea amount to €4 billion, comprising mainly new build projects, taking advantage of the increase recorded in the purchase of land for the construction of hotels, with operations in Bilbao, San Sebastián, the south of Tenerife, Barcelona and Sevilla.

In terms of the strengths in the market, besides the repositioning of hotels that is leading to an improvement in competitiveness and the appeal of Spain as a destination, the Director highlighted “the magnet effect of qualified investors such as Blackstone, which are reinforcing Spain as a destination for hotel investment” (…).

Weaknesses: overheating

Vázquez highlighted the overheating of prices that is happening in destinations such as the Canary Islands, where the average (sales) price per room has increased to €152,000, compared to the national average of €119,000, although, it should also be taken into account that “the operation that carried the most weight in terms of those figures was Sabadell’s sale of HI Partners to Blackstone (…), involving high quality, repositioned hotels, which increased prices”.

In fact, the most expensive prices were recorded in Barcelona and Madrid, which holds the record for the sale of the most expensive room with Operación Canalejas, for approximately €1.4 million, whereby exceeding the figure of €1.2 million recorded during the sale of Hotel Villa Magna (…).

In the Balearic Islands, as the director acknowledges, “there is still more margin because there are a lot of hotels there that still need repositioning and, although there is price inflation, it is not as marked as in the Canary Islands, which benefit from having year-round demand and five years of high occupancy rates, which drives up prices”.

Original story: Hosteltur

Translation: Carmel Drake

Madrid Gets Ready for the Opening of 2,000 Luxury Hotel Rooms

7 January 2018 – Expansión

The hotel market in Madrid is enjoying a happy time. After years as the ugly ducking of Europe’s capitals, with barely any major luxury brands operating in the city, 2,000 luxury rooms are scheduled to open in the city centre over the next two years. “Spain had a very moderate number of five-star hotels in comparison with other global capital cities. Nevertheless, the Town Hall of Madrid implemented a strategic plan for tourism, which boosted the image of the city as a global destination and that attracted international companies, which are taking the city to their own tourist clients”, says Javier García-Mateo, Partner in Financial Advisory at Deloitte.

“The existing luxury hotel stock comprises around 5,000 rooms and over the next few years, another 2,000 rooms will be added, of which 1,000 will be new and the rest will be in renovated properties”, adds Félix Villaverde, Manager at Deloitte Financial Advisory.

The first hotel already opened over Christmas: the US hotel chain Hyatt Hotels has returned to Madrid, specifically, to the heart of the city with the opening of Centric Gran Vía Madrid, a five-star establishment with 159 rooms – including 16 suites (…). With an investment of €30 million, Hyatt has returned to Madrid, after leaving the management of another five-star hotel in the capital in 2009: the Villamagna.

During the first quarter of 2018, another five-star establishment is expected to open. In this case, it will be the chain VP in Plaza de España. It will contain 214 rooms, spread over 17 storeys, following an investment of €90 million (…).

Projects on the lookout for a brand

Some of the other new projects planned for this year in the luxury hotel market in Madrid have not yet been defined. They involve plans for the former Hotel Velázquez and the property owned by the fund KKH in Plaza de las Descalzas.

Last May, the Salazar family sold the Gran Hotel Velázquez for around €60 million. Now, the new owner, the real estate group Didra, is looking for a hotel partner to operate the renovated property. In the case of KKH’s property in Madrid, the negotiations are more advanced. The former headquarters of the Monte de Piedad de Madrid is being renovated to open a five-star hotel and a dozen brands have expressed their interest in operating it. The Park Hyatt, The Peninsula and Saint Regis, from the Starwood group, are the favourites in the running, according to sources in the sector (…).

In addition to these projects that still need to be defined, in 2019, several luxury establishments are due to open, including, the first Four Seasons Hotel in Spain, which will open in the Canalejas complex with more than 200 rooms.

Moreover, a four-star, but nevertheless high-profile, hotel is being created by the Mallorcan chain RIU, which will restore Edificio España, in disuse for a decade, to open a modern urban hotel with 650 rooms.

Meanwhile, Marriott Starwood, the largest hotel chain in the world, has teamed up with the Indian investor Harry Mohiani to open a five-star hotel in the former Hotel Asturias, in the same square as the Four Seasons (Canalejas). That property will have 160 rooms (…).

Prices

The opening of these new luxury hotels will have an impact on room rates, which already saw a significant increase in this niche last year.

“Revenue per room (RevPar) in the five-star segment in Madrid has grown by 6.4% p.a. in recent years, almost four times more than the average in other European centres, due not only to the increase in rates but also the better performance in terms of occupancy rates”, say sources at Deloitte.

“The arrival of new luxury operators in Madrid will drive up the price of five-star hotels in the city. In fact, after carrying out comprehensive renovations, we have already seen examples of hotels that have increased their rates by 50%. The most exclusive hotels will charge €750 per night during certain periods of the year”, they add.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

JLL: RE Inv’t Amounted To €8,757M In 2016

13 January 2017 – Expansión

Between January and December, investors spent €8,757 million buying tertiary assets, according to data from the real estate consultancy JLL. This figure is the second highest in the last decade, and is €650 million below the volume of sales and purchases recorded in 2015. That was the year when the invasion of international funds into Spain and the consolidation of the Socimis took the real estate market to figures never seen before, with a volume of investment upwards of €9,400 million.

But, unlike the previous year, 2016 saw the rise of commercial assets (primarily, shopping centres and high street premises) to lead the ranking in terms of real estate investment by segment, accounting for almost €3,000 million (€2,977 million, according to JLL) compared to €2,806 million spent on offices.

Two operations, the purchase of Torre Foster by Amancio Ortega, for €490 million and Merlin’s acquisition of Parque Adequa for €380 million, boosted the investment figure in the office segment, which, although hasn’t completely lost its appeal for buyers, has been relegated to second place due to a shortage of available prime space. (…).

Funds are selling off assets

The opposite is happening in the case of large commercial establishments. International funds’ interest in selling the properties that they bought during the crisis led to a boom in major operations last year, including the sale of the Diagonal Mar shopping centre by Northwood, which was acquired by one of Deutsche Bank’s real estate funds for €493 million; and the sale of Gran Vía de Vigo, for which the Socimi Lar España paid the fund Oaktree €145 million. (…).

In the case of hotels, despite significant one-off sales, such as the operation involving Hotel Villamagna, which was acquired by the Turkish group Dogus for €180 million, overall the investment volume fell from €2,739 million in 2015 to €2,155 million last year. Even so, the figure for 2016 exceeds the investment volume recorded in 2006, which previously held the record, when hotel sales amounted to €1,600 million (out of a total non-residential investment volume of €8,482 million).

Although commercial properties led the ranking as the preferred asset for investors, logistics assets also performed very well. Between January and December, €819 million was invested in logistics warehouses, platforms and centres, according to JLL. This figure practically doubles the purchases completed in 2015, when investors disbursed €434 million on these types of properties, according to the consultancy.

The key behind this success is due to the fact that logistics assets still offer high returns, compared with other properties, such as offices and shopping centres, which have lost some of their investment appeal, due to the high degree of interest in these assets in Spain.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

Irea: Hotel RevPAR rose by 12.7% In Madrid In 2015

14 July 2016 – Expansión

Tourism in Madrid is booming and recording some good results, both in terms of demand and the operating profit of hotels in a destination that was particularly affected by the crisis. In this way, the upwards trend in hotel profitability, which began in 2014, is expected to continue for the next few months. According to a report prepared by Irea, the city of Madrid, which recorded a 12.7% YoY increase in average revenue per available room (RevPAR) in 2015, to €59.70, may see room rates return to their pre-crisis levels within the next twelve months.

The profitability of the hotel market in the capital, which closed 2008 with a RevPAR of €66, suffered from a decrease of almost 30% since the start of the crisis, but has been gradually recovering over the last two years.

In this vein, RevPAR grew by 2.8% during the first five months of this year to amount to €62.40.

In terms of demand, although occupancy rates continue to rise, the cumulative growth during the five months to May was 2.3%, compared with more accelerated growth during 2015. The main reason for this moderation (in growth) is that the International EAU Meeting has not been held in Madrid this year, since it is a bi-annual event.

Looking ahead to the next few months, hotel operators estimate growth of around 10% in terms of overnight stays during the summer season compared with last year.

Investor interest

The recovery of the hotel market in Madrid since 2013 is appealing to investors, who expect the recovery to continue into the medium term. The entry of new international hotel chains, such as Four Seasons, W and Hilton, as well as initiatives being carried out by the Town Hall to regenerate and pedestrianize the city centre, will continue to boost the recovery of this destination, according to Irea.

As a result, Madrid, unlike Barcelona, is continuing to generate interest amongst international investors, as evidenced by operations such as the purchase of Hotel Villamagna by the Turkish conglomerate Dogus Group and the sale of Hotel Suecia.

The shortage of products in Barcelona – Madrid’s main competitor – and the moratorium in the Cataluñan capital mean that Madrid is the most active investment market at the moment and the preferred target for domestic and international funds and family offices.

During 2015, investment in the hotel market in Madrid amounted to €582 million, compared with €163 million in 2014.

Original story: Expansión (by R.Arroyo)

Translation: Carmel Drake

Irea: Hotel Inv’t May Reach €2,000M This Year

20 June 2016 – Expansión

Hotel investment in Spain may reach €2,000 million this year, according to estimates made in a study compiled by the real estate consultancy Irea.

Between January and May this year, based on provisional data, investment in the purchase of hotel assets in Spain amounted to €611 million, down by 14% compared to the same period in 2015.

Nevertheless, this investment level is very significant for the real estate consultancy, in comparison with the trend seen during the first five months of the year over the last ten years.

In terms of the volume of hotel assets sold, the figure is very similar to the same period in 2015. During the five months to 31 May 2016, 39 hotels have been bought and sold (compared with 42 last year), nevertheless the number of rooms transacted has decreased by 42.2% from 8,673 to 4,993 so far in 2016.

Increase in the average price paid per room

According to Irea, this implies a considerable increase in the average price per room from €81,000 during the period from January to May 2015 to €122,000 during the same period this year.

For the consultancy firm, this increase is primarily explained by the sale of Villamagna in Madrid (in Q1 2016), at a price of €1.2 million per room, which represents the highest price ever paid per hotel room in Spain.

In addition, the study shows that no hotel portfolios have been sold so far during the five months to May, compared with four that had been sold during the same period in 2015.

It is worth noting the Socimis’ commitment to the hotel sector in the short and medium term, a formula that is currently accounting for all of the operations associated with repositioning assets and adapting them to suit the premium segment.

Experts in the hotel sector agree that the level of growth in this industry may continue in Spain if the hotel supply is renewed and updated in line with the expectations of international tourists, in addition to the investment in technology and the search for customer loyalty.

Original story: Expansión

Translation: Carmel Drake