How Spain’s hoteliers are navigating myriad pressures
How Spain’s hoteliers are navigating myriad pressures
17 DECEMBER 2018 9:36 AM

As most of Europe enjoyed a very warm summer and 64 World Cup soccer matches, Spain’s hoteliers juggled moratoriums, licensing headaches and flatter numbers. But demand remains, lending is fully back, and niches and repositioning are bringing new life to many markets.

REPORT FROM SPAIN— Spain is continuing to go through a period of hotel repositioning buoyed by owners and developers devising new concepts and markets in a land where still 75% of hotels specifically are geared to vacations.

But a major obstacle is government interference in response to many city residents complaining about societal ills as a result of tourism.

Barcelona is the Spanish city where such pushback is most evident, according to sources, but even there development has not stopped, although it is not evident in the very center of the city.

Bruno Hallé, founding partner of Barcelona-based Magma Hospitality Consulting, pointed to a 204-room EasyHotel that opened in summer 2018 in the city’s L’Hospitalet de Llobregat district, on the border of the area of Barcelona to which the moratorium has been applied. The hotel is EasyHotel’s first owned property outside of the United Kingdom.

Politicians in Spain’s capital Madrid and the popular Andalusian destination of Sevilla might also impose a moratorium on development, Hallé said.

Elsewhere in the country, the onus is on the continued repositioning of assets and the development of secondary cities.

Málaga, also in Andalusia and which has Spain’s third-busiest mainland airport, is seeing much development activity and travel demand, while secondary cities such as Valencia and Zaragoza are doing very well, too, according to Hallé.

“The demand for Spain is ready for new developments and concepts,” said Hallé, who pointed at new trends such as hostels and poshtels in the country.

Glamping and amusement-park hotels are two accommodations niches seen to have risen in popularity by Helena Murano, director of hotels and tourism at Palma de Mallorca-based CaixaBank.

“The Spanish hotel industry had a very good year in 2017,” Hallé said.

“The numbers were good. Spain is a country in great demand, in good health. There is more investment spend, a second or third round (in the current cycle), and there are a lot of opportunistic investors. Hotels have been sold, and what is being sold is now more and more different, so we are also seeing some development,” he said.

Targeted spend
Buyers remain interested in Spain.

Angel Palomino, director of ownership company Azora, which owns the Hispania real estate investment trust, said Hispania’s latest focus is on leisure-market hotels in Europe.

In May, Azora, which owns 51 hotels in six European countries, cancelled its listing on the Spanish Stock Exchange, citing uncertainty over a Blackstone bid for Hispania.

Palomino said he thought it unlikely that a fund such as Hispania would be developed again in the current cycle.

Hispania is not developing, with the exception of secondary cities and certain budget-hotel opportunities for distinct products such as along the Camino de Santiago pilgrimage route, a long-distance walk attracting many secular adherents, Palomino said.

While five years ago, banks mostly looked only at Barcelona, now they are targeting resorts, Palomino said.

“Even with attention in the rest of Europe perhaps having this summer been diverted by great weather and the soccer World Cup, Spain had dipped only 1% in terms of occupancy,” Murano said.

“This should be seen as a wonderful result,” she said, adding that CaixaBank has started lending on resort development and that others have done likewise.

“Banks have started developing specialist departments,” Murano said.

Palomino added: “We now talk about investing in hospitality, not hotels.”

The Spanish islands—the Balearics and the Canaries—continue to act differently, sources said.

“These have been in the market for some while. Now, development is the only way to get a return,” Palomino said.

There is more outside interference here, with CaixaBank’s Murano saying hotel development restrictions exist on the Balearic island of Menorca.

“What (the Balearic Islands need) is a unique niche product, or specialized tour operators,” she said. “After all, a week in Mykonos (Greece) is now priced at half the cost of a week in Ibiza.”

Additional strain
Palomino said one of Barcelona’s biggest gripes is the allegation that the presence of Airbnb properties is raising rents and forcing hotel and hospitality staff out of their traditional homes because of increased costs.

Murano said she is seeing a trend in which summer resorts and winter ski resorts are sharing employees—one way of securing incomes, staffing and clean operations.

One problem in all of this, Murano said, is that tourism policy is relegated to regional authorities, which are not coordinated.

“Local authorities are getting more and more frustrated, so they are opposing new development at the licensing level,” she said.

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