The hotel industry in Spain is booming. Proof of this is that the country has become the most attractive destination in Europe for investors in this segment, surpassing the United Kingdom. This is one of the main conclusions of the 2024 European Hotel Investor Intentions Survey, conducted by the consultancy CBRE, which places Italy in third position, followed by France, Greece, and the Netherlands.
The consultancy’s report also confirms that the growing interest in Spain is also reflected at the city level. In fact, Madrid has surpassed Paris to become the second most favorable city for this type of investment, second only to London.
Spain’s capital is becoming increasingly attractive to international capital, with significant interest from investors from Latin America. Barcelona is also among the top 10 most attractive cities in Europe for the sector. Athens, ranked ninth, emerges as an opportunity among key tourist cities.
Interest in these key markets is supported by forecasts of sustained growth in the number of travelers and overnight stays. According to CBRE’s projections, in 2024 the number of travelers and overnight stays in Spain will increase, albeit at a more moderate pace, by 1.6% and 1.5%, respectively. Foreign tourism is expected to show the greatest dynamism. In monetary terms, the pace of bookings will continue to be good, and both ADR and RevPAR will continue to increase in 2024, but at a more modest level.
The Spanish hotel sector had an excellent performance in 2023. It was the only segment that recorded increases in investment volumes compared to the previous year, and last year was the second-highest year of hotel investment in historical series, second only to 2018. The sector led investment last year, accounting for a volume of 4.1 billion euros, 36% of the total.
Jorge Ruiz, CBRE’s Hotels Director for Iberia, highlights that the Spanish hotel sector is in the spotlight of European investors, driven by record tourist data and positive evolution of the industry’s operating results: “Our outlook points to a favorable context for the coming months driven by stable operating results, expected good pace of bookings for the next few months, and foreseeable stabilization of rates. We expect an increased flow of opportunities in the market as the financing environment improves.”
The CBRE survey reflects the optimism of hotel investors in the evolution of the sector in Europe, which is expected to be highly dynamic this year. The continued expansion of the tourism sector and the stabilizing interest rates have supported renewed investor confidence in the hotel market. 70% of investors plan to increase capital allocations to the sector.
“Hotels have always proven to be a great hedge against inflation. After the expected interest rate cuts later in the year, investors are very interested in investing in the sector. They see many value-added opportunities and, fundamentally, long-term forecasts on the number of tourists in Europe suggest that projected supply levels will be insufficient to meet this demand,” explains Kenneth Hatton, CBRE’s Hotels Director for Europe.
Luxury and ultra luxury
Regarding which market segment is most attractive for investment, luxury and ultra-luxury products are at the forefront with 51% and 45% respectively. Both have quickly recovered after the pandemic and have outperformed the overall hotel market, driven by pent-up demand.
The report also points to a renewed focus of investors on urban products, especially in European gateway cities, with 57% of respondents choosing central business districts as their preferred location.
Resort complexes, a segment that has historically proven resilient to inflation, ranked second, with 36%. The growing demand for leisure and the shortage of new supply suggest strong prospects for well-located resort complexes.
