Tag: price per room

Christie & Co: Hotel Investment Amounted to €4.9bn in Spain in 2018

13 February 2019 – Press Release

According to data available to Christie & Co, total hotel investment in Spain in 2018 amounted to €4,860 million, across a total of 223 transactions (surpassing the 185 transactions registered in 2017). That represents an average price per room of €128,000 and an increase of 24.6% in the total investment volume versus 2017, positioning Spain in second place after the United Kingdom (where investment amounted to £6,500 million), but ahead of Germany for the first time (where €4,000 million was invested).

In terms of investor profile, the report highlights the importance of investment firms as the largest source of capital in 2018, representing 53% of the total investment, with more than €2,560 million (up from 42% in 2017). Hotel companies, with 24% of the total investment figure (vs. 20% in 2017) are in second place, and REIT companies are in third place once again with 15% (vs. 16% in 2017). Furthermore, regarding origin, it is worth noting that investment from domestic players decreased in comparison to the previous year (35% in 2018 vs. 51% in 2017), to be replaced by an increase in US investors (40% in 2018 vs 23% in 2017) and the entrance of new investors from Thailand (8%) and México (4%).

The report also emphasizes how the estimated investment figure was greatly increased by portfolio transactions and significant assets, which represented more than 60% of the investment volume across the whole country. Blackstone, which was the main player in 2017 with the purchase of the HI Partners portfolio (€630 million) was again a protagonist in 2018 with the purchase of 48 hotels from the Hispania REIT portfolio, for €1,900 million.

Likewise, transactions such as the purchase of the Atom Hoteles portfolio, the joining of the Chinese group Gaw Capital and the increase in the stake of Omega Capital in the Hospes hotel chain, the 9 urban hotels in the Silken portfolio acquired by CBRE Global Investment Partners and Pygmalion Capital Advisers LLP, the takeover of NH Hotel Group by Minor International, and the purchase of Hotel Villa Magna by the Mexican REIT RLH Properties for €210m (with a record price per room of €1.4 million) caused the total volume transacted in Spain in 2018 to once again beat all the established standards (…).

Finally, the analysis shows how almost 93% of the transactions carried out in 2018 (vs. 90% in 2017) were concentrated in the same six Spanish regions as in the previous year: the Canary Islands (29.6%), the Balearic Islands (21%), Andalucía (16.5%), the Community of Madrid (12.9%), Cataluña (6.8%) and the Community of Valencia (6.3%). Regarding the average price per room per region, the Canary Islands led the ranking in the resort market, with €140,000 per room, while the Community of Madrid led in the case of urban destinations with an average price of over €200,000 per room.

Original story: Press Release

Translation: Carmel Drake

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

 

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

Irea: Hotel Investment Amounted To €2,470M In 2015

15 January 2016 – Expansión

Hotels are establishing themselves as one of the most sought-after assets in the real estate sector. The historically high RE investment level in 2015 boosted the hotel segment in particular, which accounted for 20% of total commercial real estate investment volumes during the year – excluding residential – compared with 11% in 2014, according to a report about the hotel investment market in 2015, prepared by the consultancy Irea.

Last year, 132 hotels were sold containing 29,081 rooms for €2,470 million, significantly more than the 50 operations that were closed in 2014. Moreover, properties worth €144 million were sold for conversion into hotels. In total, the hotel investment market amounted to €2,614 million in 2015, compared with €1,091 million a year earlier. Spain was the third most active country in Europe, behind the UK and Germany, and accounted for 14% of all European investment, up from 7% a year before.

54% of hotel investment in 2015 was focused on the holiday segment, which reflects “a return to normality for the Spanish market, where more sun and beach properties have traditionally been sold than city hotels”, according to Miguel Vázquez, Managing Partner of Hotels at Irea. This trend will be maintained in 2016.

The Canary Islands was the most sought-after region in 2015, accounting for 28% of total investment. It exceeded Madrid and Barcelona, where political uncertainty put investors on alert. By category of hotel, 62% of investment in the sector was focused on four-star hotels, although unique individual assets, such as the Hotel Ritz in Madrid (pictured above), were also sold.

40 of the 132 hotels sold were transferred through portfolio operations – involving two or more assets – and the Socimis were the main purchasers, together with domestic and international hotel chains, willing to invest in strategic assets.

Another significant milestone in 2015 was the purchase of land in Málaga for the development of new hotels, which was seen for the first time since before the crisis. Nevertheless, Vázquez thinks that, “land purchases will be few and far between in 2016: right now it is more profitable to buy a hotel and renovate it than to construct one from scratch and financial institutions are not ready to provide finance yet”.

Debt portfolios

Nevertheless, the experts do expect that there will be more operations involving the sale of debt portfolios secured by hotels in 2016. They amounted to €466 million in 2015. (…).

Irea expects that 2016 will be a good year, but the firm thinks that it will be difficult for the strong figures recorded last year to be repeated. Madrid will continue to be the preferred investment target and capital inflows there may have exceeded €582 million in 2015. Barcelona, where investors perceive more risk, will remain frozen to investment in new projects. For existing hotels, record figures in terms of price per room may be reached.

Original story: Expansión (by Y. Blanco)

Translation: Carmel Drake