Spanish resort companies have arrived in urban markets
Spanish resort companies have arrived in urban markets
18 SEPTEMBER 2017 7:14 AM

Spain-based hotel companies like Meliá, Barceló, Riu and Iberostar have successfully expanded from their key resort product and entered urban markets globally.

Editor’s note: This is the first in a two-part series on Spanish resort brands entering urban markets.

Over the past 50 years, several major Spanish hotel companies, such as Meliá Hotels International, the Barceló Hotel Group, Riu Hotels & Resorts and Iberostar Hotels & Resorts, have achieved significant global scale and success—but mainly in the resort segment. The tide is turning, however, as they make strategic forays into urban markets.

Many of these companies’ brands first expanded from the island of Mallorca into the Spanish mainland and then the Canary Islands in the late 1970s, followed by international growth to Southeast Asia and the Caribbean in the mid-1980s. Then in the 1990s-2000s, these brands grew throughout the Mediterranean, some to European capitals, and into Mexico and Latin America.

Today, these Spanish hotel companies and their urban brands are following a global trend to internationalize and diversify across markets, sectors, segments and business models, once they have reached critical mass. They are focused on growing in key gateway cities in the U.S., Europe, Middle East and China.

Although they have used different market entry tactics to move into the urban hotel sector, all four of these hotel companies have been opportunistic and put their own capital to work, whether through buying, building, leasing or managing.

Meliá Hotels International
Publicly traded Meliá Hotels International is the largest and most “asset-light” of the prominent Spanish hotel companies, with an existing portfolio of 370 hotels in 43 countries with many urban locations mainly in Europe.

As part of its growth strategy in the Americas, Meliá opened new metropolitan hotels in key gateways like New York City and Miami, whose Latin influence and cosmopolitan atmosphere bode well for the Mediterranean hotel company.

In early 2016, Meliá opened the 312-room Innside NoMad in New York City under a long-term lease agreement. While lease structures are rare in the U.S., Meliá has adopted this model for strategically important projects. Last year, Meliá also opened a 129-room ME by Meliá-branded hotel in downtown Miami under a management agreement, and is now looking toward other U.S. gateway cities for urban growth.

Barceló Hotel Group
Founded in 1931, the Barceló Hotel Group made its first international foray in the mid-1980s into the Dominican Republic. The company remains largely oriented to the vacation resort market.

To solidify its management presence in the U.S., Barceló recently repurchased its outstanding interest in Crestline Hotels & Resorts, and now plans to expand its brand into key urban markets. With the Crestline deal, Barceló now operates 228 hotels in 21 countries.

In terms of principal investments in urban markets, Barceló has been the most active in the Americas by recently acquiring a 500-room—formerly a Krystal Grand-branded and previously a Meliá-branded hotel—property in Mexico City, and a 205-room—formerly Hilton-branded—asset in San Salvador. The latter deal solidified Barceló’s urban presence in Central America, where it is also present through owned or leased hotels in Costa Rica, Nicaragua, Guatemala and Panama.

Besides its strong resort presence, Barceló is growing in other Mexican business centers where there are strong cultural and commercial affinities with Spain through flexible management and lease agreements. In fact, Barceló recently assumed management of smaller urban hotels in Puebla and Querétaro that target corporate travelers.

Beyond the Americas region, Barceló signed a master franchise agreement with the Plateno Hotels Group in 2016 to establish 100 upscale hotels over the next decade across China and in other Asia/Pacific markets by first penetrating the urban segment and then moving into its resorts and leisure core.

By entering China, Barceló follows in the footsteps of other major Spanish chains like Meliá Hotels International and NH Hotels, which have partnerships with Chinese hotel groups Jin Jiang International Hotels and HNA Group, respectively.

Riu Hotels & Resorts
Founded in 1953, Riu Hotels & Resorts focused on resort holiday accommodations for its first 56 years of solid growth. Yet, in 2010, Riu formally entered the urban segment with the opening of Riu Plaza-branded hotels in Panama City, followed by Guadalajara, Miami, New York City, Berlin and Dublin. Today, Riu has over 100 hotels in 19 countries, including the six aforementioned urban hotels.

Riu has recently deployed significant capital into urban hotels in trophy locations. These include acquiring the Edificio España building in Madrid for €272 million ($324.7 million) to introduce a 650-room Riu Plaza property, and developing the $310-million 647-room Riu Plaza in Times Square New York City in early 2016.

Mallorca-based Riu, being one of the largest and most profitable Spanish hotel companies, patiently waited for more than 65 years to enter the Spanish capital with the right strategic purchase opportunity in Madrid.

In regards to its urban expansion plans, Riu is looking for a second hotel in New York City and also has other U.S., Latin American, European and Asian cities on its wish list.

In addition, Riu is also diversifying geographically by expanding its all-inclusive resorts to Asian markets, such as Sri Lanka, the Maldives and Dubai, United Arab Emirates.

Iberostar Hotels & Resorts
Founded in 1986, Iberostar Hotels & Resorts today has more than 100 hotels in 16 countries. In 2016, the company successfully entered the U.S. with its first managed hotel in New York City followed by a boutique property that recently opened in Miami’s South Beach.

Iberostar launched its first hotel in Madrid in 2015 as part of its strategy to move into the urban segment with a focus on gastronomy. The company is working on a second hotel project in the Spanish capital.

In urban markets, Iberostar’s properties are primarily focused on leisure travelers and situated nearby shopping and sightseeing attractions. For example, the new 96-room Iberostar Berkeley Shore is strategically located in the heart of Miami’s South Beach.

Other examples
Other recent examples of strategic forays by Spanish (and Portuguese) hotel companies into the urban hotel sector in the Americas, include:

  • OD Hotels’ acquisition of a historic building and redevelopment into a 169-room hotel in downtown Miami;
  • Catalonia Hotels & Resorts management of a 228-room (formerly a Hilton-branded) hotel in Santo Domingo; and
  • Pestana Hotel Group’s 99-year ground lease to develop a 97-room hotel in midtown New York City.

While all of these hotel companies have utilized different market entry tactics to execute similar urban-focused strategies, the common denominators are patience, the use of their own balance sheets and more flexible and creative deal structures, which mitigate risk and entice certain investors.

In the next installment, I will discuss the benefits of urban expansions for Spanish resort brands, key operational differences between resorts and urban hotels, as well as thoughts on the future of this trend.

Jonathan Kracer is Managing Principal of Sion Capital LLC, a hospitality and real estate consulting and investment firm focused on the North American, Latin American, and Caribbean regions. He is a recognized expert on the hospitality sectors of South Florida, Latin America, and Mexico. His columns primarily cover hotel asset-related subjects, with a specific emphasis on cross-border topics related to the U.S. and Latin America. He has been a columnist with HNN since 2012 and can be reached via email at More information about Sion Capital LLC can be found at

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