Investments in the hotel sector are concentrated in popular tourist regions and the elite segment

Investments in the hotel sector are concentrated in popular tourist regions and the elite segment

The Spanish hotel real estate market continues to attract great interest from both national and international investors. The current situation in the sector drew the attention of the specialists of Cushman & Wakefield, which recently held another annual conference for investors in hotel real estate — «Investments as the basis of the strategy for the development of the hotel sector».

The event was held at the Intercontinental Madrid Hotel, with the support of IHG Hotels & Resorts and Vignette Collection, and brought together more than 250 industry professionals. One of the speakers was Albert Grau, partner and co-head of the Spanish branch of Cushman & Wakefield. In his presentation, Grau noted that one of the key factors of the high attractiveness of the market among investors was the extremely active post-pandemic recovery of both the market itself and the tourism industry as a whole.

However, the growth of the sector and the growth in the number of investments turned out to be so high that at the moment few people have clear development strategies taking into account the existing factors. The conditions are favorable, but not enough efforts, until recently, were made to establish the strongest sides of the market, the most attractive directions. Today it becomes clear that the greatest attention should be focused on the Mediterranean coast, the archipelagos of the country and large coastal resort cities.

John Hubbard, head of Cushman & Wakefield Hospitality, recalled that Spain is one of the key European markets for investment in the hotel sector. He notes that it was the right choice in favor of Spain that allowed Cushman & Wakefield to reach the heights of growth that the company has reached today.

Albert Grau and Bruno Halle, who is also a partner and co-head of the Spanish Cushman & Wakefield, indicated during the presentation they provided data from a survey of investors themselves about their interest in the market. Up to 38% of respondents indicated that they are going to increase the share of capital invested in the hotel sector, compared with the amounts they invested before the pandemic. Another 41% expressed their intention to maintain the current volumes. Only 14% plan to reduce the volume of investments.

Halle reports that the attractiveness of hotel assets is also explained by a fairly high profitability. However, there are also certain risks of overestimating the state of the market, when active post-pandemic growth creates a more positive picture for investors than it may actually be. On the other hand, at the moment the market is largely not occupied by large investors and Halle believes that now is a great time to enter it. There are a lot of proposals, there are no established «rules of the game», assets are fragmented and the situation encourages creativity on the part of both asset owners and investors.

At the moment, two pronounced trends are being formed: the search for the most luxurious offers or the search for the cheapest assets. Little interaction is observed in the intermediate categories of hotel real estate. According to the types of objects, a large share is occupied either by resort facilities or serviced apartments. Geographically, Madrid and Barcelona dominate, which do not leave the top five most popular cities in Europe among investors.

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