Investment Trends

In 2022, the hotel transaction activity in Spain reached €3Bn; a level only exceeded in 2017 and 2018 (record years). The total volume was 21% above 2021, despite the economic and political concerns. The rising popularity of resorts within hotel investments, as well as the continued attractiveness of major gateway cities with a strong leisure appeal, contributed to this significant growth.

Investment Trends— Photo by Cushman & WakefieldInvestment Trends— Photo by Cushman & Wakefield
Investment Trends— Photo by Cushman & Wakefield

 

Prime Yields

Yields remained flat in 2022, given the recovery of tourism demand, strong investor appetite, high liquidity in the market, and commercialization of prime assets, contributing to the relaunch of investment activity in Spain. Nevertheless, the pace may slow down in 2023 as record-breaking hotel performances in Q2 and Q3 led to high selling prices, which, adding to increasing financing costs, adds pressure on yields and expands pricing expectations between buyers and sellers.

Nature of Investments— Photo by Cushman & WakefieldNature of Investments— Photo by Cushman & Wakefield
Nature of Investments— Photo by Cushman & Wakefield

  

Market Performance

Overall, the Spanish market has experienced an accelerated recovery during 2022, with a RevPAR 5% above 2019 levels (+€1.5). This was primarily driven by the growing ADR (+16% vs 2019), while the occupancy continues its path to recovery (10% below 2019).

  

Supply

Regardless of the current challenging geopolitical and macroeconomic setting, numerous hotels are expected to open by 2023, following the positive trend of 2022. Examples of major openings include the Barceló Costa Papagayo (720 keys), Gloria Palace Costa Teguise (350 keys) and Ikos Porto Petro (319 keys). The first two are located in the Canary Islands and the latter in Mallorca, reaffirming the investment focus on coastal resorts.

  

Demand

Spain experienced a strong recovery during 2022, primarily driven by domestic demand, while international travellers also started to pick up in April. Although night stays remained lower than in 2019, average spending per guest improved, with an increased demand for premium hotel products (+2.7% overnight stays in 4- and 5-star hotels Jan-Nov 2022 vs 2019), reflecting lower price sensitivity.

  

Sources: C&W, STR, Oxford Economics

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