Christie & Co – Spanish Hotel Market: Urban Destinations

30 September 2019 – Christie & Co has just published a new report, titled “Spanish Hotel Market: Urban Destinations.” The report analyses 14 Spanish city destinations, including Barcelona, ​​San Sebastián, Palma, Málaga, Cádiz, Madrid, Seville, Bilbao, Valencia, Granada, Córdoba, Santander, Alicante and Santiago de Compostela, which the report’s authors selected according to their volume of demand, supply and profitability of the hotel sector.

The 14 cities had a total of 74.3 million overnight stays last year, 21.9% of the total overnight stays in Spain. The cities also registered a 2.9% growth in demand, even as the total number of overnight stays in Spain remained stable (-0.1%).

According to the report, Barcelona continued to have the highest RevPAR (€98.90), despite a year-on-year fall of 2.6%. San Sebastián (€97.20) and Palma (€84.90) were in second and third place, respectively. On the other hand, Seville, Bilbao and Valencia experienced the greatest growth in RevPAR, with increases of +7.2%, +12.2% and +12.1%, respectively. Madrid, after growth of +14.5% in RevPar in 2017, increased by just 1.6% in 2018, reaching €73.50.

Despite registering declines of -2.9% and -3.0%, Santander and Alicante positioned themselves as the tenth and eleventh city in terms of RevPAR, ahead of Córdoba. That city was able to increase its RevPar by +3.4%, despite a fall in the number of overnight stays of 3.1%. Santiago de Compostela had the lowest RevPAR levels (€37.80) of the fourteen selected cities.

Original Story: Christie & Co press release

Adaptation/Translation: Richard D. K. Turner

 

Hotel Sector Sees Continued Strength in Year to June

29 July 2019 – Richard D. K. Turner

According to the Hotel Sector Barometer, Madrid and Barcelona saw RevPAR growth of 15.1% and 12.7%, respectively, in the first half of 2019. The study stems from a partnership between STR, a global benchmarking, analytical and market knowledge provider, and Cushman & Wakefield Spain.Cushman & Wakefield

Continuing a trend that began at the beginning of the year, RevPar in the Canary and Balearic Islands fell by 4% and 3.6%, respectively. Brexit fears and increased competition from countries such as Turkey, Egypt, Tunisia and Israel have weighed on demand.

The average daily rate per occupied room rose by 2.8% in Marbella, 6.5% in Barcelona and by 13.2% in Madrid. Malaga, Seville and Valencia also posted ADR growth above 5%, while the ADR fell by almost 2% in the Balearic and Canary Islands. ADR grew by 5.3% for Spain as a whole.

Original Story: Hosteltur

CBRE: Hotel Investment in the Balearics Doubled in 2018 to c. €1bn

26 March 2019 – Preferente

According to data compiled by CBRE, 47 transactions were closed in the hotel market in the Balearic Islands in 2018, corresponding to a total investment volume of more than €967 million. That figure accounted for 20% of the capital invested in Spain during the year and 32 of the transactions were concentrated in Mallorca, followed by Ibiza with 11 operations and Menorca with just 4.

Most of the operations involved hotel portfolios although two individual asset sales stand out due to their high prices per room: Hospes Maricel & Spa (as part of the Hospes Portfolio) and Belmond La Residencia. Both are 5-star establishments.

Palma (de Mallorca) maintained its position as an attractive urban tourist destination, with the addition of seven new hotel establishments comprising 275 rooms during 2018 alone.

More than 10.3 million visitors travelled to the Balearic Islands during 2018, up by 2.3% YoY, breaking the record the fourth year in a row. Nevertheless, the number of overnight stays fell slightly to 59.3 million (down by 0.4% YoY). Meanwhile, the ADR of the hotels on the islands broke the €100 barrier to reach €104.10 in 2018, up by 5.5% compared to 2017. In addition, RevPAR rose by 3.5% YoY to €80.10.

Original story: Preferente (by R.P.)

Translation/Summary: Carmel Drake

STR & Magma HC: Hotel Investment Continues to Rise in Spain

2 August 2018 – Hosteltur

The Spanish hotel industry has increased its interest in investment due to the strong growth in yields in several markets, and despite the fact that the political scenario in Cataluña has slowed down the performance of the country as a whole. That is according to analysts from STR and Magma HC, who explain that the investment boost has been largely driven by the strength of international demand, even during the financial crisis.

“The increase in holiday tourism, as well as in ‘bleisure’ (business with leisure tourism) has opened the market to numerous development opportunities, with several operators currently working on improving their products and services to satisfy the growing demand”, says Albert Grau, founding partner at Magma HC. Thus, in his words, the Spanish hotel sector “is continuing to boom, despite the challenges ahead”.

In this sense, it is worth remembering that, between March 2015 and March 2018, Spain registered 37 consecutive months of RevPAR (revenue per available room) growth. In recent months, by contrast, there have been marginal decreases, above all due to the slow down in Barcelona, which is home to the largest number of rooms in the country. Even so, according to data from STR, in most of the key domestic markets, including in Madrid, hotel yields are continuing their strong upwards trend.

“Vacation markets, primarily Gran Canaria, have experienced YoY decreases because tourist demand has returned to rival destinations such as Turkey and Egypt”, says Javier Serrano, manager at STR for Spain.

Barcelona

STR’s study shows that, in general, hotels in the Catalan capital have managed to keep their tariffs more or less stable, although there have been more notable decreases in recent times. Following the independence referendum last October, the occupancy rate of establishments in Barcelona fell considerably. During the first half of 2018, they fell by 5.2% with respect to the same period a year earlier, whilst the ADR (average daily rate) fell by 1.4% compared to 2017.

“Although it is still too early to make any kind of prediction about what will happen in the market in the end, it is likely that Barcelona will recover quickly once the situation stabilises”, says Serrano. “Hotels in Barcelona”, he adds “saw constant monthly RevPAR growth rates in the double digits in 2016 and 2017, when the market was still benefitting from strong international demand and demand diverted from destinations such as Turkey and the north of Africa. The recent instability in Barcelona slowed down those previous growth rates, with decreases in occupancy rates driven by the decrease in domestic and international demand, mainly from the USA. Nevertheless, if the market manages to keep tariffs stable, we should see growth to the extent that consumer confidence returns to Barcelona”.

Madrid

Madrid, with the highest RevPAR growth rate in all of Spain in 2017, has benefitted over the last three years from demand due to leisure and corporate business. As well as being one of the main weekend destinations for Europeans, it has also seen an increase in interest from several Asian countries and the USA, especially when it comes to group reservations (…).

The Director-General of STR, Robin Rossman, believes that “there is enormous potential for Madrid’s hotels to continue pushing up rates”. In his opinion, “to the extent that demand continues to grow and the hotel supply market continues to evolve with the arrival of more high-end properties, we can expect to see increases in the ADR”.

Overall, the analysts at STR expect that corporate demand in Madrid will continue to increase thanks to the celebration of international events and the relocation of the headquarters of several companies from Barcelona to the Spanish capital. As such, they forecast ADR growth of close to 3% in Madrid by the end of 2018.

Original story: Hosteltur

Translation: Carmel Drake

Deloitte: 173 New Hotels will Open in Spain Between Now and 2021

9 June 2018 – Expansión

The tourist boom and interest in the real estate sector have boosted the hotel segment. So far this year, operations amounting to €2.4 billion have been closed and an acceleration is forecast for the coming months.

Spanish hotels are standing out as one of the most sought-after assets for investors in the real estate market. The tourism boom in Spain, which recorded its fifth consecutive record year in 2017 with the arrival of 82 million international visitors, coupled with the property boom, caused hotel investment to reach maximums in 2017 of almost €3.1 billion. Moreover, the commitment from investors to these assets will allow that figure to double this year.

According to data from the Hotel Property Handbook, compiled by Deloitte, to which Expansión has had access, €3.1 billion was transacted in the segment last year, which represents an increase of 44% YoY and accounts for 22% of all the investment activity undertaken in Europe, placing Spain at the head of the investment ranking behind only the United Kingdom, which accounted for 29%.

During the first five months of this year, more than €2.4 billion has been invested, which will be added to operations currently under negotiation amounting to around €4.2 billion, which are expected to close over the coming months, according to the study.

“So far this year, we have transacted an investment volume almost as high as that signed during the whole of last year. The private equity funds are proving to be the main stars of the activity, which may even double the figure recorded in 2017”, said Javier García-Mateo, Partner at Deloitte Financial Advisory.

Loans

That is in addition to the strong appetite from traditional Spanish credit institutions to finance hotel properties, due to the momentum of the sector. Their financing spans projects under development, including remodellings, repositionings and developments. In this sense, the most active banks in terms of senior lines of credit for these assets are CaixaBank, Santander and Sabadell.

Investors are betting on mega-operations and the creation of large portfolios, which will allow them to have a diversified business and gain bargaining power over tour operators.

This trend comes in addition to the interest from Asian players in hoisting their flags in Spain. For example, the emergence of the Thai group Minor in NH Hotel Group, which has reached an agreement to purchase HNA’s stake in the Spanish hotel chain and is studying a takeover bid for 100% of the company.

In this context, the large hotel groups have taken advantage of the boom years to invest in improvements in their asset portfolios although there is still a long way to go. The opening and renovation of hotels consolidated itself in 2017, with activity involving 74 hotels and 12,500 rooms, reaching cruising speed following a significant recovery in 2015 and 2016, with projects in 120 hotels and almost 17,300 rooms.

Over the next five years, investment in work to adapt the hotel stock is expected to amount to €2.2 billion.

According to the report, 65% of the hotel stock in Spain is obsolete, with an average age of more than nine years, which makes investment in capex the main priority if operators are to handle the competitive pressures and achieve better margins.

“The strong growth in tourism in Spain contrasts with average rates that are still excessively low in the holiday segment. The renovation of obsolete projects, combined with the arrival of international operators, will allow the repositioning of an offer that ought to compete on quality rather than quantity”, explains Viviana Otero, from Deloitte Financial Advisory.

By region, the Canarian archipelago, Andalucía and the Balearic Islands are the regions that require the greatest capex spending, accounting for almost 68% of the total.

This effort has contributed to an improvement in the main performance ratios of hotels. According to Deloitte, revenues per available room (RevPAR), one of the main profitability indicators, grew by 10% last year.

New openings

The strong performance of the sector also accounts for the new promotions and project renovations underway. Over the next four years, 173 hotels are expected to be opened in Spain containing almost 30,000 rooms. “53% of those will be new projects and 47% will be renovations. It is worth highlighting the importance that rebranding is gaining as a defensive strategy against the alternative destinations of Greece, Turkey and Croatia, said Patricia Plana from Deloitte Financial Advisory.

In terms of challenges facing the sector, the report highlights the saturation of certain destinations in the summer and the problems of co-existence alongside local residents in those regions, as well as the recovery of competitor countries in Southern Europe and the rise of holiday rentals boosted by collaborative economy platforms such as Airbnb.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Meliá to Open 1 New Hotel Every 15 Days During 2018 and 2019

7 June 2018 – Expansión

Meliá is accelerating its growth trajectory and is seeking to continue exporting its brands overseas. The Mallorcan hotel chain is planning to open 50 new hotels around the globe over the next two years. “This means that, on average, and with the exception of force majeure or unexpected events, we will be opening a hotel somewhere in the world almost every two weeks”, said Gabriel Escarrer Jaume, Vice President and CEO of the group at the General Shareholders’ Meeting yesterday.

The company ended last year with 375 hotels and 96,239 rooms in 43 countries. Of the total, 68% of the group’s hotels are located in Europe, the Middle East and Africa (EMEA), 33% in America and 9% in Asia-Pacific.

In this sense, the President of Meliá, Gabriel Escarrer Juliá, highlighted that expansion will continue to be a fundamental “motor” for growth. Escarrer Juliá explained that of the new openings planned until 2019, 20% will be located in EMEA countries, another 20% in the Mediterranean, 27% in America and another 33% in Asia-Pacific.

“Our bet for Asia-Pacific is clear if we consider that since 2013, we have more than quadrupled the number of hotels there to 45, including those that are operational and being opened”, he said.

Escarrer highlighted the operating performance of the company, which last year generated a profit, excluding capital gains, of €128.7 million, up by 27.8%, which allowed it to distribute a dividend of €0.1682 per share, in other words, €38.6 million.

Currently, 31% of the group’s EBTIDA, around €90 million, stems from the management of hotels. “This model allows us to generate high returns with minimal capital requirements since we invest in the acquisition of high-value management contracts and not in real estate assets”.

The CEO of Meliá underlined the effort undertaken in terms of digitalisation and quantified the investment in this area at €100 million over the last three years. That has resulted in the greater role of the corporate website in the business. The director explained that revenues proceeding from melia.com amounted to €520 million in 2017, up by 21%.

The director said that the group’s strategy involves continuing to rotate assets and strengthen their alliances with their partners to grow and improve the hotel portfolio. In 2017, Meliá spent €244 million maintaining and renovating its hotel portfolio.

“We have initiated a new valuation of our portfolio of assets, the global results of which we will have during the third quarter. I trust that the outcome of that valuation exercise will be positive.

Escarrer also referred to the challenges facing the company, including the push from new competitors such as Airbnb and the political instability.

Risk factors

“We feel very comfortable and confident of being able to fulfil the objectives of our strategic plan, although we monitor the main risk factors in our industry very closely, such as the evolution of the so-called collaborative economies and of processes that generate uncertainty, such as Brexit and the complex political situations in countries such as Italy and Spain”.

In any case, he reiterated the forecasts for 2018, with an improvement in RevPAR (average revenue per available room) (…) and an increase in margins of between 100 and 150 basis points.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Christie & Co: There Are Still Plenty of Opportunities for Hoteliers in Spain

22 January 2018 – Press Release

Businesses can look forward to a period of increasing confidence as we head into 2018, according to the latest report by Christie & Co, specialist hotel property adviser in Spain and business property adviser in the United Kingdom. 

In its Business Outlook 2018 report, Christie & Co reviews the most important investment figures in Spain, Europe and the UK, as well as the main hotel indicators for the market in 2017.

According to the data available to Christie & Co, Spanish hoteliers must strengthen their position in the face of the recovery of competing destinations, such as Turkey, Egypt and Greece, which will exert greater pressure on prices and may divert some of the outbound tourism from northern Europe towards other sun and beach destinations.

The report emphasises the increase in investment registered in 2017 in Spain, mostly carried out by investors (51.2%), whose seven largest operations amounted to more than the entire country’s investment figure in 2016. In addition, the proportion of foreign investment represented 56% of total investment and mostly proceeded from the United States, the United Kingdom and France.

Regarding Portugal, the report highlights that only seven deals were known to the market in 2017, involving hotel assets sold individually to hotel operators (MGM Muthu and Hoti Hotels) and investors (Internos). The potential of Portugal in terms of hotel investment is growing, with many investors interested in Porto, Lisbon and the Algarve, mainly due to a remarkable market recovery, which, in the case of Lisbon recorded an increase in occupancy rates and RevPar of 2.8% and 14%, respsectively, during the 9 months to September 2017, with respect to the same period in 2016 (…)

Regarding the UK, where the advisor covers a wider range of sectors, Christie & Co identifies those which benefitted from activity fuelled, in part, by the availability of finance and a surge of investors, many from outside the UK, looking for good opportunities and strong returns.

The continued uncertainty surrounding Brexit has made its impact across all sectors, but the UK has also welcomed a spike in tourism and a surge of foreign capital into the UK market. Asian investors particularly view the UK as an attractive investment opportunity thanks to the country’s stability and relatively low value of the Pound (…).

As a conclusion to the report, Christie & Co believes that the economy is recovering and there are still plenty of growth opportunities, something that they are also embracing, bolstering their teams both in the UK and Europe, to capitalise their expertise to attract and support both new and well-established clients who need help navigating the market, and who want to ensure a high-performing business.

Original story: Press Release

Edited by: Carmel Drake

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

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

Banco Santander Puts Hotel Koral up for Auction

6 December 2017 – Levante EMV

Banco Santander has put Hotel Koral, located on the beachfront in Oropesa del Mar, up for auction for €7 million. The establishment has 210 rooms and a swimming pool. The auction is open until 11 December.

The bank took ownership of the property as the result of a debt that it had granted to the previous owners, amounting to €2,127,677. Moreover, the property has another charge over it in the form of an unpaid loan amounting to €700,000 from Cajamar, according to sources close to the operation. The investor that offers the highest bid will acquire the property free of charges. All of the information about the bid is available on the BOE’s auction website.

The electronic auction opened on 21 November. The value of the auction is €7,082,465 and interested parties must pay a deposit of €354,123. According to information provided yesterday on the BOE’s auction website, no bid has yet been formalised for the property.

The building is located on the new promenade in the Tosalet de Oropesa area. The hotel is a ten-minute walk from the centre of Oropesa. The establishment offers 210 rooms with views of the sea or the pool, which is located in a garden area with sun beds and parasols.

The bank has put the property on the market at a time when there is a great deal of investor interest in hotels. Hotel profitability has grown by 32.5% in Valencia due to the strength of international tourism and the recovery in domestic consumption, according to a report by the consultancy firms STR and Magma Hospitality Consulting.

The growth in hotel profitability in the Community of Valencia is much higher than in Madrid (18.6 %), Málaga (15.38 %), Barcelona (14.6%), Marbella (14.5 %) or Sevilla (14.4 %). The strong performance in terms of profitability is being seen despite competition from tourist apartments, which are being marketed through online platforms such as Airbnb.

The barometer from STR and Magma HC is based on data from 145,000 rooms in more than 800 hotels located all over Spain. Data corresponding to the first half of 2017 shows a very positive trend with double-digit growth for the main indicators in key destinations and a general upward trend in terms of average revenues per available room (RevPAR) and in the average price per occupied room.

The good context for divesting has led other banks to follow the same path. Banco Sabadell has just sold its hotel manager HI Partners for €0.63 billion to the US fund Blackstone. That operation included a portfolio of fourteen hotels worth almost €0.7 billion, including the Abba Acteón in València and the Melià Villaitana in Benidorm (…).

Original story: Levante EMV (by Ramón Ferrando)

Translation: Carmel Drake