Hotel Financing: Sabadell’s Market Share Rises To 31%

26 January 2017 – Expansión

Sabadell was the only Spanish bank to have its own stand at Fitur. The entity’s decision to physically attend the tourism sector’s major annual meeting reflects its desire to consolidate its position as the key player in this business segment, which is so strategic for the Spanish economy.

Two years ago, the bank chaired by Josep Oliu decided to launch Sabadell Negocio Turístico, a specialist division that has allowed it to secure a market share of 31% and increase the volume of financing it has granted to the sector to €4,500 million.

Over the last two years, the granting of loans to tourism companies has grown by €1,500 million, according to José María Martín Rigueiro, Director General of this business unit.

According to the executive, 90% of this volume is used to finance hotel purchases and the remaining 10% corresponds to loans used for renovation projects and energy efficiency improvement plans in tourist establishments. Nevertheless, in terms of the number of transactions, the proportion is inverse, in other words, 90% of the loans (by number) are granted for renovations and 10% for acquisitions.

More than 13,500 clients

“We have positioned ourselves as a key player in the whole sector, given that we are the only bank to offer a specific value proposition for financing tourist services and products. Moreover, it is suitable for large hotel chains, as well as the smallest of rural hotels”, said Martín Rigueiro.

Thanks to its specialist agents, Banco Sabadell is growing its client portfolio by 7% per annum and is now collaborating with 13,500 companies, including hotel groups, campsites, travel agents and tour operators. Moreover, its net investment balance is increasing at an annual rate of more than 10% and the volume of client resources managed is growing by more than 25% each year. The objective for this year is to grow its client portfolio by 8% and to increase its credit investment by 10%.

“At Fitur, we were breathing an environment of maximum optimism; the hotel sector is expected to grow this year, in terms of both occupancy rates, as well as average room rates”, explained the Director of Sabadell Negocio Turístico.

The banker also attested to the strong interest from international funds keen to invest in hotel assets in Spain. Investors are managing returns of between 9% and 18%, said Martín Rigueiro. (…). The greatest interest is being seen in the vacation hotel segment, as well as in the urban segment, in major capital cities.

Financing for hotel purchases is being provided across the board: to investment funds, Spanish family offices, individual investors, as well as hotel chains. 90% of the sectors largest players are clients of Banco Sabadell, and the bank now also has a market share of 45% in the SME tourism segment.

According to Sabadell, the default rate of new loans granted to hotels since the crisis is very low, given that operations are no longer being leveraged on the basis of the value of the underlying real estate assets, but rather on the basis of the business plans and income statements of the establishments. (…).

In parallel to this specialist business unit, Sabadell also operates in the hotel sector through HI Partners, a hotel investment and management company.

Original story: Expansión (by Sergi Saborit)

Translation: Carmel Drake

Hoteliers At FITUR Stand United Against Airbnb

25 January 2017 – Expansión

Same rules of the game / Directors of several major hotel chains are accusing the collaborative economy platform of unfair competition. They are also demanding more regulation and control by the authorities regarding homes made available for tourist use.

Fitur – the major tourism fair – brought together the main players in the tourism sector once again: airlines, hotel groups, transport companies, tour operators, travel agencies and purchasing centres, amongst others. One group of player, who did not attend but who were omnipresent at all the meetings, were online platforms, such as Airbnb. Even the definition of the collaborative economy was generating controversy.

Sources at Madrid’s Hotel Business Association (AEHM), the capital’s hotel trade association, emphasised that the boom in tourist homes is not only a phenomenon that is affecting cities such as Barcelona, although that city is hitting the headlines the most.

“Madrid has seen spectacular growth, increasing from 10,000 to 20,000 homes in one year and from 37,000 to 74,000 beds, although most of those have not been registered”, said the AEHM’s President, Gabriel García. “It constitutes unfair competition for the sector and it must be addressed”, he said.

Gabriel Escarrer, Vice-President and CEO at Meliá, was equally convinced. “There is a lack of regulation in the poorly-named collaborative economy. Meliá spends almost €18 per room in order to comply with regulations, not just in terms of taxes and licences, but also to comply with specific measures such as fire-proofing, security, occupational health and safety. That generates a disadvantage for us with respect to any individual who decides to rent out their apartment; what’s more, in most cases, those apartments do not have a licence or pay VAT”, he said.

For Escarrer, the person responsible “should not only be the owner of the home, but also parties that include such properties on their websites when they do not have operating licences”.

The Director General at the Palladium Group, Abel Matutes Prats, is aware that “we cannot buck the trends”, but, he emphasises that “it is unfair that there is so much regulation for hoteliers and yet a complete lack of regulation, both fiscal and normative, for everyone else. To illustrate the situation, he says that one segment has five referees watching over it, whilst the other has none”.

Antonio Catalán, President of AC by Marriott expresses the same sentiment. He considers that it is essential that the authorities act.

Sources at Airbnb say that they are not opposed to regulation but rather that they require it to “allow people to share their own homes”, in other words, they want “a single legal framework for individuals, distinct from the one applicable to professionals”. And they add: “The existing framework favours professional operators and harms those middle class people and families who want to open up their habitual residence. The collaborative economy needs clear legislation and Airbnb has always been open to working with cities to identify specific solutions”.

Property conversions

(…). “In many urban centres, residential assets are being converted into tourist properties and many cities are just not ready for the change, from the point of view of infrastructure or services. This results in problems for people living together”, explains Escarrer.

For Catalán, the key resides in “what type of city we want, Paris or Cancun, and what we have to do to achieve it”.

“In Ibiza, a type of tourism-phobia is started to emerge, which is hitting hoteliers. We have fewer rooms there than before. We bring fewer tourists than before, with higher quality but less volume. Why are there more tourists? Because of the collaborative economy. We need specific laws, like in New York, to limit the duration of stays and to require tourist apartments to comply with certain minimum health and safety requirements, and moreover, for tax fraud to be prosecuted”, said Matutes.

Airbnb’s sources reiterate that they are “part of the solution” to the challenges that cities are facing: “Airbnb complements the traditional tourist industry and helps to redistribute economic benefits from tourism amongst citizens, communities and neighbourhoods”.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake