Brands continue to move into Spanish hotel market

Seville, Spain. Image © Henrique Ferreira / Unsplash
Luxury hotel brands have been growing their presence in the Spanish hotel market, and are now being joined by midscale and economy brands, as locally owned and family run hotels decline.

Spain’s hotel market will continue to prove an attractive destination for international hotel brands. With strong consumer demand, the country’s largely unbranded hotel inventory is expected to continue to shift, following a trend seen globally and led by development in the USA.

A report from Global Asset Solutions points out that interest from the brands, and from international investors, has been boosted by a recovery in both domestic and international traveller demand within the Spanish market. Room rates in 2023 moved above those charged prior to the upheaval of the pandemic in 2019, a record year of performance in the Spanish hotel market. Levels of occupancy in 2023 were, however, below those of 2019, leading to an expectation that performance in 2024 and into 2025 still has strong potential for further upside.

Booming investment activity

Hotel investment volume in the Spanish market grew to EUR4.2bn in 2023, report the consultants, with 205 assets bought and sold. Of the total, 171 were existing hotels, a further 20 deals saw properties sold for conversion, and 14 transactions covered development land. And from that total, 83 deals involved urban hotels, with 122 being leisure-oriented hotels.

The deal volume was dominated by high end and luxury hotels, with four and five star hotels accounting for 88% of transactions. International investors dominated the deal landscape, notably funds from Saudi Arabia, the UAE and Singapore. Arriving brands include Four Seasons, Rosewood and Radisson, opening in Madrid, Seville, Barcelona, and Bilbao. The report suggests economy and midscale brands, such as Ibis, Holiday Inn Express and B&B are now eyeing opportunities across Spain. While the major cities are always of interest, these brands will also look for opportunities to open in smaller cities and towns such as Lugo, Girona, Logrono, Mataro, and Sant Cugat.

A shift in ownership

Spanish hotels have traditionally been family owned, and therefore often owner operated, and such hotels still account for more than half of the Spanish market. But change is happening, with the growth of brands and a shift to the splitting of ownership from operations. That has led to an increase in the use of management contracts and franchise arrangements, more suited to the style of international investors and global brands.

Spain’s home-grown hotel groups include Melia, Iberostar, Barcelo and Riu – and these continue to drive forward, often with a more international focus, in the hands of second and third generation family leaders. Melia, for example, has several Spanish projects in development, including the 273 room Innside Madrid Valdebebas, Zel Costa Brava and the Hotel Madre de Dios which will convert a convent in Seville, opening in 2026.

Barcelo, meanwhile, is planning major international expansion, with openings this year in the UAE, Saudi Arabia, Bahrain, Oman, Qatar, and Turkey. It is also continuing to expand in Spain, with pipeline projects such as a 180 room hotel at Cadiz rail station.

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