Hotel investment in Spain reached 2.5 billion euros in 2019 (considering hotels in operation, buildings converted into hotels and land for hotel use).
Last year, a total of 99 hotels and 16,314 rooms were traded in Spain versus 273 hotels and 36,189 rooms traded in 2018. In addition, other 29 assets were sold such as plots of land for hotel development and buildings for conversion into hotels. The reduction in the number of assets and rooms, explained by the non-existence of operations as unusual as Blackstone’s takeover bid on Hispania (which represented 40% of the total hotel investment in 2018), was not reflected, however, in the average price per room, which rose by 2.1% from €126,800/room to €129,500/room. As in the last year, this growth is a consequence of the high purchasing pressure which continues to drive up sale prices, although at lower levels than in the previous years.
As regards the types of transacted hotels, in 2019 investment in holiday hotels again exceeded the urban segment (59% against 41%), showing the growing interest in this type of assets thanks to the professionalisation of the sector and the incorporation of holiday hotels into the strategies of a greater number of investors.
At the geographical level, the Balearic and Canary archipelagos were the destinations which received most investment, with 389 and 380 million euros, respectively, concentrating 36% of the total (€769m). Madrid maintains its leading position (€337m), beating Barcelona (€187m), which is beginning to show signs of recovery. Destinations like Malaga, Huelva or Valencia each reached levels of investment close to €150m.
In 2019, single assets transactions registered a total volume of €1.3 billion amply exceeding portfolio transactions, which reached €787m, a strong contrast with the previous year, in which these types of operations were the principal elements (€3.3billion). The total of 13 hotel portfolios were transacted with a total of 6,699 rooms, mostly with a potential for repositioning or growth.
The sale & leaseback operation of Med Playa portfolio comprising 7 hotels, the purchase by Barceló of its hotels in Punta Umbría or the Joint Venture between Azora and Palladium were the most outstanding deals of the year.
As for the origin and profile of the invested capital, there is a break in the trend of the last five years. For the first time, the national investors were the most active players, accumulating almost 60% of the total registered investment, among them the REITs like Atom, Millenium and Azora and hotel chains like Barceló and Hotusa were the most active.
As far as the international investors are concerned, the most active in 2019 were the institutional investors such as Henderson Park or Partners Group and hotel companies as Leonardo or the Student Hotel.
In 2019, operations on individual assets registered a total volume of €1,325m, amply exceeding portfolio transactions, which reached €787m, a strong contrast with the previous year, in which these types of operations were the principal elements (€3,338m). Transactions were conducted on 13 hotel portfolios with a total of 6,699 rooms, mostly with a potential for repositioning or growth, notably the sale & leaseback operation of a portfolio of 7 hotels of Med Playa, the purchase by Barceló of its hotels in Punta Umbría or the Joint Venture between Azora and Palladium.
As for the origin and profile of the invested capital, there is a break in the trend of the last five financial years. For the first time, national investors became the most significant, accumulating almost 60% of the total registered investment. Among the prime movers on the national stage were REITs like Atom, Millenium and Azora and hotel chains like Barceló and Hotusa.
In the sphere of international investors, notable operators in 2019 were institutional investors like Henderson Park or Partners Group and hotel chains like Leonardo or The Student Hotel.
In 2019 the hotel product was confirmed as a consolidated asset class in the portfolios of many types of investors: family offices, chains, REITs, fund managers or national and international investment funds.
Prospects of the hotel investment market in 2020
The solid foundations of the tourism industry at the worldwide level and Spain’s extraordinary positioning in the global tourism map continue to be the principal incentives for investors and hotel chains to increase their exposure in the Spanish hotel sector.
In addition, “in the last five years, the sector has faced with decision the challenge of renovating the holiday hotel stock, which was suffering from evident technical obsolescence. The almost 4.2 billion euros invested in refurbishments and improvements since 2015 have brought about a significant improvement in the average quality of the accommodation offer, a key factor for favouring a growth in revenues and operative margins” – says Miguel Vázquez, Managing Director of Hotels of Colliers International.
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Colliers International Spain
In Spain, Colliers International is synonymous with real estate and hotel sector specialisation and knowledge. It offers advice in: Corporate Finance; Capital Markets; Hotels; Residential Sales Advisory; Valuation & Consulting; and REMS & Technical Services. These services are provided with the client proximity of a local firm and the capabilities of a global leader, through a network that extends across 68 countries
Colliers International Inc.
Colliers International(NASDAQ, TSX: CIGI) is a leading real estate professional services and investment management company. With operations in 68 countries, our more than 15,000 enterprising professionals work collaboratively to provide expert advice to maximize the value of property for real estate occupiers, owners and investors. For more than 25 years, our experienced leadership, owning approximately 40% of our equity, has delivered compound annual investment returns of almost 20% for shareholders. In 2019, corporate revenues were more than $3.0 billion ($3.5 billion including affiliates), with $33 billion of assets under management in our investment management segment.