Spanish hospitality group Bluesea Hotels has set the scene for further growth, after attracting a new investment partner to take its business to the next level.
Swiss investment group Partners has opted to invest in Bluesea, acquiring a majority stake in the business and its 25 hotels, on behalf of clients. Partners will work alongside mid-market private equity firm Portobello Capital, which has supported Bluesea in its growth to date.
Fresh investment for growth
Portobello Capital acquired Bluesea in 2017, with the aim of helping the management team build the hotel business around key pillars such as expansion, standardisation of the hotels in the portfolio, and digitisation of the business. Since then, success has meant the Bluesea business has trebled in size.
Bluesea’s core business is in the three and four star hotel spaces, operating tourist hotels across Spain’s many popular destinations such as the Balearic and Canary island, the coastal hotspots of the Costa Brava and Costa del Sol, and city break destinations such as Madrid. In total, the portfolio currently extends to around 5,100 rooms.
A key part of the next phase of Bluesea’s expansion will be acquiring more hotels, and refurbishing existing properties, said Geoffrey Bonnefoy-Cudraz of Partners Group‘s real estate team. “Bluesea’s established hotels are located across some of Spain’s most popular holiday destinations, with established operating track records and consistent occupancy levels. A key part of our value creation plan will be making strategic acquisitions to build Bluesea’s platform, capitalizing on the highly fragmented three- to four-star hotel segment in Spain, which represents the majority of the country’s hospitality market.”
One reason why private equity investors are showing an interest in the Spanish hotel sector is the opportunity they see to drive up quality and returns. Hotels in Spain are more likely to be privately owned and therefore unbranded, compared with other country markets, presenting an opportunity to link up with major international branded players such as Marriott, Hilton, Hyatt and IHG.
A fundamental opportunity
Thanks to the pandemic and the consequential rise in inflation and interest rates, the construction of new hotels has died back, with the number of new hotel rooms under construction reckoned to have fallen nearly 8.5% from a peak in 2019. On the flip side, demand from guests for a stay in a Spanish hotel has returned strongly following the pandemic, creating a tailwind for those holding existing, trading assets.
Partners is no stranger to investing in the hospitality sector. Earlier in 2024, it acquired a stake in Trinity Investments, a US-based real estate investment group that has recently acquired the 266 room Standard boutique hotel in London. Partners also has interests in a Ritz-Carlton resort in the US, a hotel and wellness resort in the Alps, and a portfolio of Accor hotels with Ibis branding in Australia.
