MADRID—Madrid’s beleaguered hotel industry has yet to follow the rest of the country into recovery, although hoteliers say they remain optimistic after putting another lost year behind them.
The city has borne the brunt of Spain’s ongoing economic woes, characterized most notably by the 26% unemployment rate as of 31 December.
Whereas the broader Spain market recorded a 4.9% increase in revenue per available room during 2013 in euro terms, Madrid limped into the new year having recorded a 7.8% decrease. That performance was spread equally over occupancy and average daily rate, which declined 4% and 3.9%, respectively, according to data from STR Global, sister company of Hotel News Now.
During January, Madrid’s occupancy was up 1.1%; its ADR was down 4.9%; and its RevPAR was down 3.8% in euro terms, according to STR Global.
“The main problem that hotels in Madrid are encountering is that the demand of the city has dropped drastically. Just before 2008, over 60% of the city demand was business travelers and mainly Spanish,” said Charo García Silgo, director of the Apartosuites Jardines de Sabatini. “Madrid´s (source) markets have gone down with the crisis as the traditional visitors of the city have declined precipitously.”
Madrid also lost two highly publicized projects in the latter half of 2013.
Most recently American casino tycoon Sheldon Adelson pulled his proposed $30-billion, mixed-use project dubbed EuroVegas by the local press.
A few months before Adelson’s announcement, the International Olympic Committee awarded the 2020 Summer Games to Tokyo, adding to Madrid’s string of failed bids in 1972, 2012 and 2016.
“I think they didn’t focus on gaining tourism because they were focused on winning the Olympic Games. That was going to be the source for us to get tourism, but we didn’t get them. That’s why 2013 was a very difficult year,” said Janet Cortés Guasch, GM of Room Mate Laura and Mario hotels.
While the properties target savvy, worldly travelers looking to explore Madrid’s vast cultural offerings, the GM has expanded her net to drive more bookings. Today, the hotels see a healthy number of families looking to leverage the hotels’ larger room sizes, she said.
The lack of demand and government-sponsored promotional outreach are but a few of Madrid’s many challenges, explained Reinhard Wall, director of asset management services in Madrid for Horwath HTL. Others include:
- lack of low-cost air carriers;
- lack of city-wide events;
- “provincial and narrow-minded city management”; and
- inadequate operators.
“At this stage there is no project on the horizon, and the debt level of Madrid makes it difficult. There is also no vision regarding themed and varied event planning and yet, no segmented promotion to demographic and geographic feeder markets,” he said.
Better things to come
The city’s hoteliers say they remain optimistic in the face of opposition.
“Madrid has many things to succeed as a main European destination because of the wide variety of things we have to offer,” García said.
“Madrid is a very lively and safe city, with a wide cultural offer and an excellent gastronomy, very interesting architectural buildings, with the finest art museums of the world, a big night life to offer and a city where you can shop throughout the year,” she added. “It is also remarkable, the people; even being a big city we are usually very open and friendly.”
García expects the same of her staff, noting that “friendly and welcoming” service is one of the Apartosuites’ defining traits. Others include the property’s in-room kitchenettes, rooftop plaza and class car museum, which is housed on site.
Cortés shared that same sense of optimism.
“If we focus on the resources of regaining tourism, I think we’re going to do it very well,” she said.
Extra promotional muscle will come in the form of uniform government outreach, Wall said. Whereas the market was represented by two separate entities to promote tourism in the past—the capital city Madrid and the surrounding province “comunidad de Madrid”—soon efforts could be overseen by a single agency working with private and public funding, if mayor Ana Botella’s vision comes to fruition.
A new promotional agency would have plenty to work with. Madrid is not only the capital and financial center of Spain, but it also serves as a key gateway into the country for visitors from Latin America traveling into Europe, Wall said.
However, opportunities will not come unannounced, García said.
“I think that we will have to fight for our own opportunities as I do not think there is a big opportunity coming in the early future.
“Maybe our city will start being attractive to investment because of the low prices or maybe Madrid becomes interesting to certain markets like conferences and meetings because of our good value for money in hotels and infrastructures,” she said.
García, for one, is proactive in outreach for her property.
“As a small hotel, we could not afford to pay Internet-first positions (in search engine marketing campaigns) as a big hotel or a chain can, so we use social media tools and specially building a good reputation online so the customers can find and choose our hotel,” she said.
Such efforts are generating strong word of mouth and bookings among the Apartosuites’ primarily international clientele from the United States, Great Britain, Russia and Brazil, García said.
Madrid as a destination has the same effect as well, Cortés said. Once travelers experience the city firsthand and realize all it has to offer, they fall in love and add it among their favorite locations in Europe.
“To be in the top five cities in Europe, that is the aim of Madrid,” she said.