• This figure reflects a reduction of 47% in regard to the previous financial year, which is explained by the extraordinary volume reached in 2018, almost 5,000 million euros, an unprecedented figure in the history of the hotel sector in Spain.
• Land transactions for the development of new hotels increased by 141.6%, along with operations to convert buildings into hotels, which recorded a growth of almost 60%.
• The Balearic and Canary Islands are the destinations which received most investment last year, with 389 and 380 million euros, respectively.
Hotel investment in Spain reached 2,518 million euros in 2019 (considering hotels in operation, buildings converted into hotels and land for hotel use), according to the Hotel Investment Report presented by Colliers International at a press conference.
Last year, transactions were carried out in Spain on a total of 99 hotels and 16,314 rooms, against the 273 hotels and 36,189 rooms of 2018. In addition, a further 29 asset transactions were conducted between land for hotel development and buildings for conversion into hotels. The reduction in the number of assets and rooms, explained by the non-existence of operations as unusual as Blackstone’s takeover bid on Hispania (which represented 40% of the total hotel investment in 2018), was not reflected, however, in the average price per room, which rose by 2.1% from €126,800/room to €129,500/room. As in the last financial year, this growth is a consequence of the high purchasing pressure which continues to drive up sale prices, although at lower levels than in previous years.
As regards the types of hotels involved in transactions, in 2019 investment in holiday hotels again exceeded the urban segment (59% against 41%), making it clear that interest in this type of assets is growing thanks to the professionalisation of the sector and the incorporation of holiday hotels into the strategies of a greater number of investors.
At the geographical level, the Balearic and Canary archipelagos were the destinations which received most investment, with 389 and 380 million euros, respectively, concentrating 36% of the total (€769m). Madrid maintains its leading position (€337m), beating Barcelona (€187m), which is beginning to show signs of recovery. Destinations like Malaga, Huelva or Valencia each reached levels of investment close to €150m.
In 2019, operations on individual assets registered a total volume of €1,325m, amply exceeding portfolio transactions, which reached €787m, a strong contrast with the previous year, in which these types of operations were the principal elements (€3,338m). Transactions were conducted on 13 hotel portfolios with a total of 6,699 rooms, mostly with a potential for repositioning or growth, notably the sale & leaseback operation of a portfolio of 7 hotels of Med Playa, the purchase by Barceló of its hotels in Punta Umbría or the Joint Venture between Azora and Palladium.
As for the origin and profile of the invested capital, there is a break in the trend of the last five financial years. For the first time, national investors became the most significant, accumulating almost 60% of the total registered investment. Among the prime movers on the national stage were REITs like Atom, Millenium and Azora and hotel chains like Barceló and Hotusa.
In the sphere of international investors, notable operators in 2019 were institutional investors like Henderson Park or Partners Group and hotel chains like Leonardo or The Student Hotel.
Prospects of the hotel investment market in 2020
The solid foundations of the tourism industry at the worldwide level and Spain’s extraordinary positioning in the global tourism map continue to be the principal incentives for investors and hotel chains to increase their exposure in the Spanish hotel sector.
In addition, “in the last five years, the sector has faced with decision the challenge of renovating the holiday hotel stock, which was suffering from evident technical obsolescence. The almost 4,200 million euros invested in alterations and improvements since 2015 have brought about a significant improvement in the average quality of the offering, a key factor for favouring a growth in revenues and operative margins” – says Miguel Vázquez, Managing Director of Hotels of Colliers International.
Although the future is not free of risks and uncertainties, the environment of low interest rates, high available liquidity and the growth prospects of the hotels’ medium-term operative results will continue to situate the sector as a preferential investment target in 2020.
The good result of the fundraising and enlargements of capital carried out in recent months by specialised investment vehicles like Atom or Millenium, the important pipeline of hotels currently in a more or less advanced sale process and the appetite for the sector shown by foreign investment funds and institutional investors bear witness to this.
“We are positive with regard to 2020 and in view of the fact that, as a continuation of five years of average volumes of investment of €3,000m, never seen before, the Spanish market has consolidated its cruising speed within the range of 2,000–3,000 million euros per annum,” Miguel Vázquez concludes.
-- End --
Colliers International Spain
In Spain, Colliers International is synonymous with real estate and hotel sector specialisation and knowledge. It offers advice in: Corporate Finance; Capital Markets; Hotels; Residential Sales Advisory; Valuation & Consulting; and REMS & Technical Services. These services are provided with the client proximity of a local firm and the capabilities of a global leader, through a network that extends across 68 countries
Colliers International Inc.
Colliers International (NASDAQ, TSX: CIGI) is a leading global real estate services and investment management company. With operations in 68 countries, our 14,000 enterprising people work collaboratively to provide expert advice and services to maximize the value of property for real estate occupiers, owners and investors. For more than 20 years, our experienced leadership team, owning approximately 40% of our equity, have delivered industry-leading investment returns for shareholders. In 2018, corporate revenues were $2.8 billion ($3.3 billion including affiliates), with more than $26 billion of assets under management.
Learn more about how we accelerate success at corporate.colliers.com, Twitter @Colliers and LinkedIn.
