At the Hotel Investment Conference organised by IE University in Madrid this week, the real estate industry shared its optimism about the Spanish hotel sector.

The conference was opened by César Escribano, regional manager, Southern EU, at STR, who highlighted the recovery of the sector in Europe and Spain.

“The European hotel sector is experiencing a remarkable recovery of the [revenue per available room] that was lost during the years of the pandemic. To achieve this, they have implemented optimal pricing strategies that, on the one hand, have allowed them to cushion the impact of inflation and, on the other hand, take advantage of the increasing demand in the recovery process.”

Between January and May 2022, the occupancy levels in Europe have experienced rapid growth, going from minus 40% to minus 10% compared with the same period in 2019, and matching the RevPAR achieved that year. Over the past 12 months, RevPAR has continued to improve, reaching a 28% rise compared with 2019, thanks to the increase in rates and occupancy levels that are just 1% below 2019.

Diving into the Spanish market, hotel performance in 2023 so far has been robust and the outlook for the summer is positive despite the global context of uncertainty and lower economic growth.

Revenue per room is above pre-pandemic levels across the different hotel segments, ranging from 13% in the case of upper midscale class hotels to 25% in the luxury class.

The luxury sector is outperforming especially in coastal destination like Marbella, where the revenue per room is 45% higher than in 2019.

Business on books data is positive and running 3% above pre-pandemic levels. The summer is expected to be strong with RevPAR up 21% compared to 2019.

Laura Hernando, managing director, hotels, at Colliers, announced that hotel investment volumes were over €1 billion during the first six months of the year, exceeding 2019 level. The Spanish sector is still attracting capital despite rising financing costs which are slowing investment decisions.

So far, players have been especially active in the luxury segment with five-star hotels representing 40% of the hotels transacted.

Antonio Pan de Soraluce, founder of Blasson Property Investment, confirmed the interest of investors and hotel operators in the Spanish market, especially the luxury sector.

In April, his company, in joint venture with AXA IM Alts, acquired the five-star Hotel Sofia in Barcelona.

Next year, Blasson Property Investments will deliver the luxury Hotel Punta Negra in Mallorca that will be managed by Mandarin Oriental. It marks the first resort property in Europe from the prestigious Mandarin Oriental brand.

Maria Zarraluqui, global development vice-president at Meliá Hotels International, pointed to the sophistication of the hotel business model in Spain. The Spanish market has evolved from a lease model to a management agreement model and now the franchise model is starting to develop.

The sophistication also comes from the development of new product niches that already exist and perform well in other countries but that are incipient in Spain.

As an example, Victor Iborra, partner at Meridia Capital, explained it is entering the serviced appartements sector and the camping sector which are not consolidated in Spain. Meridia has partnered with the operator Wecamp to create a single branded glamping platform. With the latest acquisition in March, they currently have a portfolio of 9 campsites with an investment of €140 million.

Spain is among the three most visited countries in the world with over 70 million of international tourists v in 2022.

As a global tourist destination, Spain is still lagging behind in terms of supply, despite a pipeline of 35,834 beds according to STR data.

All panelists agreed that the range of products, services and quality offered in Spain need to increase to keep competing globally which brings opportunities for both operators and investors.