Spanish hotel executives outline their healthy earnings and rising confidence helped by record tourism arrivals at home and new openings abroad.
MADRID—After years of crisis, Spain’s major hotel groups seem to be on a roll.
Executives speaking at the recent FITUR travel trade fair say the company’s hotel companies have enjoyed a renaissance fueled by soaring income, an improving economy and new ventures in international markets as investments in existing properties are also beginning to pay off.
“We’re extraordinarily optimistic about 2017 as our five-year plan announced in 2013 is showing very positive results and is on target,” said Ramón Aragonés, who took over as CEO of NH hotels on 25 January.
“Over the first three years of the plan, the company has been transformed and significantly improved its capacity to boost income and margins, thanks to the investment in the repositioning of our hotels,” he added.
Since 2013, the group’s average daily rate rose from €78 ($83.87) to €90 ($96.78). Aragonés expects an ADR of €100 ($107.53) by the end of 2017.
Largely focused on urban properties under the brands NH Hotels, NH Collection and nhow, along with the destination brand Hesperia Resorts, the group operates 400 hotels with 60,000 rooms in Europe, the Americas and Africa.
Over the past two years, the group spent €200 million ($215.1 million) upgrading its hotels and now one-fifth of its rooms are classified as “premium” under the NH Collection and nhow brands, double the number of when the effort started.
“We opened 16 new hotels in 2016 and are planning on at least 20 for this year with our expansion focused on premium properties in cities like Marseille, Venice, Santiago de Chile and Mexico City,” Aragonés said.
He believes Spain and the Benelux countries will spur the group’s growth in 2017 helped by rising room rates but growth will be slower in other European markets like Germany and Italy.
There has also been a slow progression with NH’s planned expansion in the China through a joint venture with the company’s largest shareholder HNA Group, created a year ago to develop between 120 and 150 hotels in China by 2020. Aragonés said the lack of progress was due to HNA being busy with its purchase last year of Carlson Rezidor and a deal with Hilton.
Meliá Hotels International
Closer to home, the Spanish chains are riding a wave of increased business thanks in part to record arrivals by tourists, with visitor numbers last year reaching 75.3 million, a 10% jump over 2015 and with another record expected this year.
“We’re certainly betting on Spain while at the same time continuing to roll out new hotels in other destinations with our priorities being Asia, the Caribbean and the Mediterranean,” said Gabriel Escarrer, CEO, Spain’s largest hotel group Meliá Hotels International .
The group will open 23 hotels this year in 15 countries: five in Europe, six in Latin America and the Caribbean, three in the Middle East, three in Africa and six in the Asia-Pacific region, including four in Indonesia alone.
“Our results for 2016 were very positive with all brands reporting higher RevPAR then at the top of the pre-crisis year of 2007 with increases approaching double digits, and that includes our urban properties in Spain,” he said.
Meliá operates the Gran Meliá Hotels & Resorts, Innside by Meliá, Me by Meliá, Sol Hotels & Resorts, Tryp by Wyndham, Paradisus Hotels & Resorts and Circle by Meliá brands, with 350 properties in 40 countries.
Over the long term, the group is consolidating its “asset light” business model to avoid what Escarrer described as “instability and variable economic risks” and concentrating on refurbishing and repositioning its Spanish properties.
Measures include pouring money into upgrading its hotels in already mature markets like certain destinations in the Balearic Islands and on the Costa del Sol, as well as creating sub-brands under its Sol flag.
It is also expanding the urban Innside by Meliá brand in foreign markets like Hamburg, Bogota, Doha, Zhengzhou and Yogyakarta.
Barceló Hotel Group
Continuing expansion is also in the cards for Barceló Hotel Group which last year added 12 new hotels totaling 1,932 rooms to its resort-heavy portfolio of four brands—Barceló Hotels & Resorts, Occidental Hotels & Resorts, Royal Hideaway Playacar and Allegro Playacar.
“In 2016, we were able to reactivate our expansion with a figure close to that of the years before the crisis and further growth is expected this year,” said CEO of EMEA, Raúl González.
“Implementing our new brand architecture has also played a major role as having four differentiated brands allows us to open new hotels at destinations where we were already present, integrate small chains such as MA in, Granada (Spain), and add new destinations such as Panama and El Salvador, expanding our portfolio to 20 countries,” he said.
Although Barceló’s full results for 2016 have yet to be released, the CEO said provisional data indicates total revenue of €2.3 billion euros ($2.5 billion) for a 15% gain over the previous year.
González credited the financial improvement to a 9% rise in the ADR which resulted in an 8% increase in revenue per available room.
“These upward trends have been the logical result of our significant investments in renovations, the economic recovery and the fact that Spain has once again maintained its status as a safe haven due to the continued instability of many Mediterranean nations,” he said
Plans for this year include opening 20 new properties in major European capitals, Spanish provincial cities and Latin American urban destinations, especially in Mexico, as well as at least one hotel in China through its franchise agreement with the Plateno Group.
Signed last year, the deal aims to establish 100 upscale properties over the next decade across China and in other Asia/Pacific markets.
However, González admitted that a contract for the first property had yet to be signed and suggested that the sale of a large number of Plateno shares to Asian investors had delayed implementing the franchise agreement.
Other Spanish hotels groups which reported impressive income increases for 2016 at the travel trade fair included Riu Hotels & Resorts, Iberostar Hotels & Resorts and Palladium Hotels & Resorts.