What’s on the horizon in the Spanish hotel market? Overview of H1 2024 market trends

For the first time in recent years, the volume of investment in urban properties has exceeded the holiday segment (53% vs. 47%). Other factors that stand out this year from previous investment years in Spain, is that: (i) the profile of investors is different - on 2024, 57% of the hotel investors are national investors (hotel groups, family offices, private investors and REITs), whereas in previous years investors, international investors and private equity funds were more heavily represented, and (ii) the volume of portfolio sales has decreased – this year representing 21% of overall sales volume versus the 62% of the previous year (lead by the ADIA and GIC portfolios acquisitions).

• The Balearic Islands led in investment during H1 2024 with 30% of the total sales volume. Standing above all other transactions was the purchase of the Six Senses Ibiza (5-star, 116 rooms) by Gruppo Statuto, which broke all price records in Spain by exceeding €1.5 million per room. Ibiza, and specially the northern area of Portinatx, was a hotpot for transactions, with two other deals of note: (i) BG, a Balearic hotel chain, sold the Beach Club Hotel Portinatx for €60 million to a Spanish family with international hotel investments (which hotel will become a “Nomad” branded hotel upon completion of refurbishment works, expected by the end of 2024); and (ii) the acquisition by Meridia Capital of the “Hotel Presidente” (previously owned by Oak Hill Advisors), in which it intends to invest €70 million to reposition the hotel in the market.
• Barcelona is in second place in terms of transaction volume, with a total of 13 transactions and €300 million. Of relevance was the purchase by the REIT, Atom, of a portfolio of two 5-star grand luxury hotels: the Hotel Miramar and the Gran Hotel la Florida, which have a total of 145 rooms and were acquired for 50 million euros (€344,000/room). Both hotels will be refurbished to adapt them to the new brand standards of the new managers, Hyatt and Sunset Hospitality, respectively.
• Madrid continues to suffer from a shortage of available sale inventory, with a reduction to only eight transactions in 1H 2024. The most significant deal in H1 2024 was the purchase of the 4-star, 200-room Hotel Mayorazgo in Gran Vía by the Mallorcan hotel group Grupotel.
• Additionally, transactions have taken place in regional capitals such as Málaga, with 5 transactions valuing c. €100 million, the most notable being the sale by ASG of the Hotel Palacio de Solecio (4-star, 118 rooms) for €51 million euros (€432,000/room).

In summary, tourist demand and hotel inventory will both increase in 2024 in Spain, although inventory will grow more slowly (especially in the holiday segment). Slowing inflation should continue to give a boost to tourist demand, with lowering interest rates having a similar positive effect on new investments in the Spanish hotel sector – with investment forecast to reach around €3 billion in H2 2024.

Source: Colliers – Report on the first semester of 2024