Tag: urban segment

Palladium Hotel Group Forecasts Revenues of €600M+ in 2017

4 December 2017 – Expansión

The hotel group Palladium expects to record revenues of more than €600 million this year, although that figure is lower than initially expected due to the renovation of several hotels and the impact on demand of the hurricanes in the Caribbean and the crisis in Cataluña. According to the Director-General of Palladium, Abel Matutes Prats (pictured below), the final result will depend on the firm’s performance during the last stretch of the year, after two strong months in the Caribbean. The hotel chain owned by the Matutues family has registered a good season in Spain, in particular in the urban segment.

Original story: Expansión

Translation: Carmel Drake

CBRE: Hotel Inv’t Will Exceed €3,000M In 2017

10 October 2017 – Observatorio Inmobiliario

The summer holidays led to a slow down in hotel investment in Spain during the third quarter of 2017, after 6 months of euphoria and record-breaking deals, when more than €1,400 million was invested. By contrast, investment volumes reached just €240 million during the months of July, August and September, which represents a 55% decrease compared to the same period in 2016.

Nevertheless, the most significant operations of the quarter took place during the month of September, which, together with the major sale and purchase operations that are in the pipeline, suggests that hotel investment in Spain will accelerate again during the last few months of the year, according to CBRE Hotels. The consultancy predicts that the volume of investment may reach €3,000 million in 2017, which would represent a historical record, exceeding even the figure registered in 2015.

According to data collected by CBRE Hotels, between July and September, investors spent €240 million on the purchase of hotel assets, including not only hotels per se but also tourist apartments, aparthotels and plots of land and buildings dedicated to hotel use. In total, 22 assets were transacted (involving 2,500 rooms), with holiday hotels accounting for the lion’s share (65%) of the total amount invested (and representing 80% of the rooms sold).

In terms of the destination of investments, in the urban sphere, deals were very evenly distributed between Spain’s main cities: Madrid, Barcelona, Málaga, Granada, Valencia and Bilbao. Nevertheless, in the holiday segment, investors spent 45% of their total investment in the two archipelagos (i.e. in the Canary and Balearic Islands).

In terms of the most significant operations, within the holiday perimeter, the acquisitions undertaken by Portobello Capital stand out – it was the most active investor during the third quarter of the year, starring in the purchase of several assets/stakes in hotels managed by Blue Sea Hotels & Resorts. In the urban segment, the most high-profile purchase involved Hotel Parque Central de Valencia by Senator Hotels & Resorts.

In the end, and just like during the first two quarters of the year, CBRE Hotels also brokered two operations during the third quarter. Firstly, it intermediated the sale of Hotel Dolce Sitges (5* and 263 rooms), which also became the most significant transaction of the quarter (in both the hotel and urban segments). On the other hand, the company executed the sale of a plot of land in Bilbao destined for the construction of the first hotel in the city of the Catalonia Hotels & Resorts chain. For Jorge Ruiz, Director of CBRE Hotels in Spain, “the unprecedented performance of the hotel sector during the first half of the year, both in terms of investment and operations, added to the volume transacted during the third quarter and the projects underway, suggest that investment in the sector could reach €3,000 million this year, whereby exceeding the record set in 2015”.

Original story: Observatorio Inmobiliario

Translation: Carmel Drake

Hotel Investors Switch Their Focus To Spain’s Second Cities

20 July 2017 – Expansión

Hotels have become of the star assets of the real estate sector with Socimis and investment funds lining up to buy them. And the forecasts show that these actors are set to consolidate their presence in Spain, gaining ground on the hotel groups – which will continue their commitment to a strategy focused increasingly more on management and less on ownership – and will analyse new secondary locations, in light of price rises and the decreasing yields in prime cities.

According to the Hotel Asset Management 2017 report, prepared by Magma HC, three-star hotels captured the attention of investors last year, given that they represent the most attractive asset for implementing repositioning models and improving prices. Specifically, 38% of the transactions closed in 2016 involved three-star hotels, 28% related to four-star properties, 24% to low-cost establishments and the remaining 9% to five-star hotels.

Albert Grau, Managing Partner at Magma HC, explained yesterday that the transaction market will shift its focus to the holiday segment, over the next few months, due to the (high) value of assets in prime urban destinations, such as Barcelona, Madrid, Málaga, San Sebastián and Palma de Mallorca, which are at levels that compromise their future profitability.

Although in previous years, the urban hotel market was the most sought-after by investors, in 2016, it accounted for just 33% of operations, whereas the holiday segment increased to account for 66% of the total. “Prices in cities such as Madrid and Barcelona have peaked, and purchases to generate wealth or profitability are complicated given the numbers”, said Grau.

By contrast, he considers that Spain’s secondary cities offer “great opportunities” for investors thanks to the significant potential that they hold and the fact that there are well-located assets there at “very attractive” prices.

However, the partner at Magma HC considers that the sector is a long way from a bubble, thanks to the greater professionalisation and the new requirements in terms of indebtedness levels.

Moreover, the report highlights that the Spanish hotel sector can expect to see new operations between hotel groups, such as between Starwood and Marriott, Fairmont and Grupo Accord and the purchase of Sidorme by B&B Hotels.

Commitment to rent

In terms of the business model, the most popular formula is still rental. Grau underlines that, given the strong performance of the market, owners who took the decision to bet on variable rentals are now receiving greater returns. In addition, the partner at Magma HC believes that the period of rent renegotiations, seen in previous years, is now over.

According to Magma HC’s report, hotel groups own 37% of their assets, lease 33% of them, manage 18% and operate 13% as franchises.

Grau explains that “more Anglo-Saxon” operations – management and franchising – are not growing, but continue to have a specific weight in the market and there is a growing trend to adopt them increasingly more, in line with international standards.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Irea: Hotel Inv’t In H1 2017 Amounted To €1,655M

10 July 2017 – Reuters

Attracted by encouraging forecasts in the hotel sector, domestic and international investors alike purchased 79 hotels in Spain during the first six months of 20176, for a combined amount of €1,655 million, according to a report presented on Friday by the consultancy firm Irea.

The consultancy said that the figure for the first half of this year exceeds the volume recorded during the same period a year earlier by more than double and “should allow the sector to break the historical record for investment reached in 2015, when more than €2,600 million was spent”.

The strong interest in the hotel segment is being driven by a significant increase in hotel rates and sustained demand from tourists.

Spain received almost 28 million international tourists during the first five months of 2017, which represents an 11.6% increase compared to the first five months of last year, when foreign visitor numbers exceeded historical records for the second year in a row.

Spain received a record 75.5 million tourist visits in 2016 and Cehat forecasts that this year the figure will exceed the threshold of 80 million visitors.

According to Irea, investment in the hotel sector was split almost equally between the holiday segment (52%) and the urban segment (48%).

Two deals stood out in the urban sector during H1: the purchase of 55% of the Hilton Diagonal (4* – 433 rooms) by Axa Investment Managers and the acquisition of Hotel Silken Diagonal (4* – 240 rooms) by Benson Elliot and Highgate, both of which were closed for prices of more than €300,000 per room, said Irea.

Meanwhile, in the holiday segment, the star buy was London & Regional’s purchase of a portfolio of 4 hotels containing 2,050 rooms in total from Starwood and Melià, for an estimated amount of €240 million.

According to data from Spain’s National Institute of Statistics, there are 15,855 hotels in Spain, with a total of 822,002 rooms.

Of the 31.5 million overnight stays recorded in May (the latest figures available), 71.3% corresponded to foreign guests and the remaining 28.7% related to domestic customers.

The expectations of another record summer have boost hotel rates in recent months. According to the latest report from Trivago, hotel prices in Spain rose by 14% YoY on average in June to reach €134 per night.

Original story: Reuters

Translation: Carmel Drake

Palladium To Invest €450M In New Openings & Renovations

23 January 2017 – Cinco Días

Palladium, the hotel group controlled by the Matutes family, is planning to invest more than €450 million in new openings and renovating its existing establishments, both in Spain as well as in the Caribbean.

The hotel chain, which recorded a turnover of €558 million in 2016, up by 14% compared to the year before, said that it had completed a good year. It also appeared optimistic about the performance of the holiday market in Spain this year, especially in the Balearic Islands, where it has a larger market share.

Abel Matutes Prats, CEO of the company, said that the firm’s growth strategy in terms of number of hotels now involves managing establishments owned by third parties. “We are ready to grow quite a lot in the urban and holiday segments as a hotel manager”, he said.

The company, which has signed an agreement with Hard Rock to bring the hotel brand to mainland Spain – the US firm already has two establishments on the islands, one in Ibiza and another in Tenerife – acknowledges that it has some plans on the table that have not been finalised yet. Not so long ago, Hard Rock was mentioned as the best positioned player to manage the hotel in Edificio España in Madrid.

“There are a couple of hotels in the pipeline, but nothing has been decided yet”, said Matutes Prats, who defends this alliance as “a well-matched marriage”, which is choosing to focus on its latest addition, the opening in Tenerife, at the moment, but which is not ruling out future developments in urban destinations.

The businessman highlights the arrival of Palladium in Asia. “One day we will have to make the jump, but right now it does not form part of our plans. When we move over there, it will be to launch something big”, he said.

Original story: Cinco Días (by L.S.)

Translation: Carmel Drake