Meliá Finalises Sale & Leaseback of Palacio de Congresos Hotel in Valencia

20 July 2018 – Las Provincias

The tallest skyscraper in Valencia is on the verge of changing hands. The sale of Meliá’s Palacio de Congresos Hotel, located on Avenida de las Cortes Valencianas, number 52, is being finalised for €50 million, according to sources speaking to Las Provincias. The operation is expected to be signed in September and several investors have expressed their interest in acquiring the former Hilton Hotel.

The owner of the iconic property, the fund Colony Capital, took just two months to put it on the market after acquiring it in February when it purchased the fund Continental Property Investments (CPI), the former owner of the hotel. According to the same sources, the candidates to acquire the building now include Socimis, institutional investors and family offices, such as the Valencian Zriser group, the firm owned by Pablo Serratosa. Another interested player is AXA Real Estate, the company that acquired the Hilton Hotel Diagonal Mar in Barcelona last year.

Despite the change of owner, the management of the hotel will continue to be entrusted to Meliá, which signed an extendable 10-year operating contract in 2011. It is a strategic asset for the hotel group, given its location next to the Palacio de Congresos, which makes it the best-positioned accommodation on the market for business people and guests of events organised in the Valencian enclave.

A yield of 5%

According to sources familiar with the operation, the asking price for the hotel was €45 million, which was the “minimum to make an offer”. Nevertheless, the market was pricing it at around 10% more, approximately €50 million and some even think that it will be sold more than that. “Socimis and institutional investors look for yields of 5% per year”, they reveal.

In addition, the sale price per room will range between €165,000 and €175,000. In terms of the price per overnight stay, hotels of this kind with an occupancy rate of 80% typically range between €90 and €95 per room. The expectation is that the former Hilton will cost around €100 per night in five years time.

The former Hilton is a 5-star hotel that opened its doors to the public in May 2007. It stands 117 m tall and has 29 storeys, with 269 rooms, 33 suites and two presidential suites. Moreover, it has a convention room and 18 meeting rooms. The building was constructed between 2002 and 2006 at a cost of €110 million, double the price at which the owners want to sell it for now. It was in 2010 when the owner company, the firm Hotel Palacio de Congresos SL, sold the property to CPI to avoid its definitive closure after that company filed for voluntary creditor bankruptcy.

Original story: Las Provincias (by Elísabeth Rodríguez)

Translation: Carmel Drake

INE: Overnight Hotel Stays Rose By 7.4% YoY In July

24 August 2016 – Expansión

The Balearic Islands, Canary Islands and Valencia recorded the highest occupancy rates during the month. There was no “Brexit effect”: the British market grew by 15%. The sector believes that it has recorded from the losses of the crisis.

The tourism sector has moved full steam ahead during the first half of the year and, above all, so far this summer. In July, there were 42.8 million overnight hotel stays (28.1 million foreigners and 14.6 million Spaniards), up by 7.4% compared with the same month in 2015, when the figure had risen by 6% YoY. There are two main drivers of this acceleration: overseas tourists, whose stays increased by 8.2%, and Spain’s own residents, whose stays rose by 5.7% in July compared with last year, according to data published yesterday by INE. Sources in the sector consider that the problems of the crisis, above all in terms of the domestic market, are now behind us.

The autonomous regions with the highest occupancy rates during the seventh month of the year were the Balearic Islands (91%), the Canary Islands (84.9%), Valencia (77.9%) and Cataluña (75.8%). The most successful area in terms of the number of beds occupied was the island of Mallorca, with a 92.1% occupancy rate and Palma-Calvià, which achieved a higher occupancy rate on the weekends (90.9%). In terms of total overnight stays, the most popular area was the Costa del Sol, with more than 2.3 million overnight stays during the month.

And not only did the number of overnight stays rise, hotel prices also increased in July: by 7.5% compared with a year ago, which represents an increase of 1.5 points over the rate obtained then (6%). Again, the autonomous regions that contributed the most to this increase were the Balearic Islands (with a YoY increase of 10%), Andalucía (8.9%), the Canary Islands (8%) and Cataluña (5%).

In addition, the average revenue per room occupied stood at €93.20, up by 6.3% YoY. By hotel category, the average income was €208.40 for five-star properties; €102.40 for four-star hotels and €79.40 for three-star establishments (…).

In addition to the economic recovery, which has relaunched domestic demand after it was significantly depressed during the crisis, one reason that explains the strong tourism figures in Spain is the difficulties that competing countries are facing, such as Turkey, whose tourist market is experiencing decreases of 30% following the terrorist attacks in recent months, and Egypt, with a decline of almost 70%, following five years of political and social instability since the outbreak of the Arab spring (…).

For the time being, the figures do not reflect any negative effect from Brexit in terms of the arrival of British visitors. Quite the opposite: in July, Brits recorded 1.28 million overnight stays in Spain, up by 15% compared with the same month in 2015. “So far in 2016, the British market has grown by 20%”, said Juan Molas, Chairman of the Spanish Confederation of Hotels and Tourist Accommodation (CEHAT), who revealed that reservations made by tour operators for the winter season (November-April) already reflect an increase of 16% compared with the same period last year.

Despite the general recovery in terms of overnight hotel stays, sector representatives are still warning about the increase in the use of unregulated establishments through platforms such as Airbnb, Homeaway and Niumba, amongst others. “The use of these services unbalances the tourist model”, said Inmaculada Benito, Chairwoman of the Hotel Business Federation in Mallorca. A war has been declared on these types of businesses in cities such as Barcelona.

Original story: Expansión (by Yago González)

Translation: Carmel Drake

Hotel Sector Returns To 2008 Profitability Levels

20 November 2015 – Expansión

The end of the crisis is in sight for the hotel sector, not only in terms of the number of tourists, but also in terms of revenues. “We are not only talking about record numbers in terms of visitors (foreigners), now the records in terms of overnight stays and occupancy rates are also important”, said Juan Molas, the President of the Spanish Confederation of Hotels and Tourist Accommodation (‘Confederación Española de Hoteles y Alojamientos Turísticos’ or Cehat) yesterday, as he presented the latest edition of the “Observatory for the Spanish Hotel Industry”, prepared in conjunction with PwC. This report shows that the profitability of the hotel sector has soared in the last year, in terms of both the average occupancy rate of each hotel and the price per room.

Specifically, hotel room rates rose by 6.1% during the first nine months of 2015, with respect to the same period a year earlier, up to an average of €71.50 per day, taking it to levels very close to those last seen in 2008. Moreover, the number of days that each room is occupied for each year also grew, by 3.4%. Therefore, profitability, which reflects the combination of both indicators, has grown by 9.7% in the last year and has accumulated growth of 18.7% since 2013. It is now exceeding levels last seen before the crisis.

Looking ahead to the winter season, hoteliers are more optimistic than they ever have been since the report was first prepared in 2012. Specifically, the index that analyses the expectations of the sector has risen by 35.4%, from 52.5 points in 2014 to 71.1 points now. This indicator is based on a scale of 0 to 100, where numbers above 50 points indicate an improvement in the situation with respect to previous years. Moreover, the values rise significantly in the case of average prices, where the index reaches 81.8 points, a strong increase of 44% with respect to the 56.8 points recorded in 2014. Álvaro Klecker, Partner for Tourism at PwC, says that this increase in prices has been due to an “increase in complementary services, as well as in petrol, which contains the cost of transport”, giving hotels a greater margin to raise prices.

France

On the other hand, Molas rejected the idea that the massacre in France (last Friday) would have any effect on tourism in Spain. He gave the example of the Smart City Expo World Congress, which is taking place in Barcelona at the moment. He also added that this weekend, hotels in the Spanish capital are “almost all full” because of the Madrid-Barça Classico match.

Original story: Expansión

Translation: Carmel Drake

Hotels: Overnight Stays Rose By 2.9% In 2014 And Prices Rose By 1.4%

23 January 2015 – Expansión

Overnight stays at Spanish hotels amounted to 294.4 million in 2014, an increase of 2.9% compared with 2013, whilst prices rose by 1.4%, according to the National Institute of Statistics (INE).

This increase in overnight stays was driven both by Spanish residents, whose overnight stays increased by 3.5%, to account for 50.8% of the total, as well as by overseas visitors, who accounted for 35.4% of the total and whose overnight stays rose by 2.6%. The year-on-year increase in overnight stays was 1 percentage point higher than last year (1.9%), and 67.6% of all overnight stays were concentrated in the May to October period.

These annual figures were calculated after Spanish hotels recorded 13.9 million overnight stays during the month of December, up 2.9% on the same month in 2013, with an increase of 6.2% in Spanish resident guests and a 0.6% increase in overseas visitors.

Andalucia (+4.8%), Valencia (+0.2%), Cataluña (+8.1%) and Madrid (+12.9%) were the main destinations for Spanish resident travellers in 2014. By contrast, the main destination chosen by visitors from overseas were the Canary Islands, which accounted for 28.9% of all overnight stays, an increase of 7.9% on the previous year. The next most popular destinations were the Balearic Islands (25.4% of the total) and Cataluña (18.9% of the total), however the number of overnight stays in these regions decreased by 3.3% and 0.9%, respectively.

During 2014, the average occupancy rate was 54.8%, an increase of 3.3% with respect to 2013; this figure increased to 60% on weekends, up by 3.4%.

The Balearic Islands recorded the highest occupancy rate during the year (74.2%), followed by the Canary Islands (73.7%) and Cataluña (56.2%). The main tourist areas, by number of overnight stays, were the islands of Majorca and Tenerife, with 40.4 million and 23.9 million overnight stays, respectively, and the area of Barcelona, with 18.3 million.

Visitors from the UK and Germany accounted for more than 94 million of the overnight hotel stays last year, which represents half of all of the overnight stays by overseas visitors.

The number of overnight stays by visitors from France, Russia and Italy (the next most important source countries) recorded year-on-year growth rates of 7.8%, -15% and 5.4%, respectively. The source countries with the highest growth rates in terms of overnight stays were Portugal, Finland, Poland, Greece and the Czech Republic, whilst the source countries that recorded the lowest growth rates were Russia, Luxembourg, Japan, Sweden and the Netherlands.

The annual Hotel Price Index (HPI) amounted to 1.4% in 2014, which was 1.7 points higher than in 2013, after prices rose by 0.7% in December, i.e. by 0.4 points less than in previous months, but by 0.6 points more than a year ago.

The autonomous regions that experienced the highest price increases last year were the Canary Islands (2.9%), Valencia (2.6) and Andalucía (2.2%). At the opposite end, Asturias (-2.3%) and Castilla-La Mancha (-1.4%) recorded the greatest price decreases.

Average daily revenue per occupied hotel room (ADR) was €74.50 and the average daily revenue per available room (RevPAR), which depends on the occupancy rates recorded in hotels, was €44.10.

By hotel category, the average daily revenue per room was €163.20 for 5-star hotels, €81.10 for 4-star hotels and €60 for 3-star hotels. Revenue per available room for these same categories amounted to €106.20, €55.50 and €38.50, respectively.

 Original story: Expansión

Translation: Carmel Drake