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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