The tourism sector in Spain has always been one of the essential engines of the national economy. In terms of GDP it has accounted for up to 13% of the market. So much so that the number of travellers in 2023 is expected to reach a record 263.9 million people and increase by 6.6 percentage points compared to 2022, according to a study by the European University.
It is important to note that cities such as Madrid and Barcelona are among the top ten European cities attracting the highest number of tourists.
In the north of Spain, cities such as Bilbao and San Sebastian increase national and international tourist demand every year. Bilbao airport is particularly important as, in addition to being the first airport in northern Spain in terms of the number of international tourists, it has been chosen as the second best airport in Spain and Europe by the annual AirHelp Score 2022 ranking. San Sebastian, for its part, breaks records annually and according to the latest data from 2022-23 obtained the highest ADR in Spain, exceeding the average price of 288 euros, according to the STR Report.
The positive data in the Spanish tourism market have triggered international institutional investors and family office to invest in the Spanish hotel sector, and have made Spain the leader in hotel investment in Europe with 30% of the volume transacted until June 2023, as shown in the latest report The Hotel Property Telescopemade by the real estate team of EY’s Strategy and Transactions practice.
With the aim of adding value to international investors and hotel chains, METCUB, a real estate company specialising in the investment and development of hotels in prime locations, has analysed some of the advantages of investing in hotels:
National, regional and local aid programme (CAPEX): Next Generation EU funds are aimed at entities aligned with the concepts of digitalisation, sustainable development, energy efficiency and the environment. In the case of hotel refurbishment, those hotels that comply with the philosophy and objectives of the Recovery, Transformation and Resilience Plan can benefit, which will allow a reduction in costs, beneficial for investors and hotel chains. In the case of METCUB, there is a strong commitment to ESG, energy efficiency and sustainability, as the projects it is working on together with the construction company Fernández Molina maintain the essence of the historic buildings while improving the asset and generating added value through its commitment to the environment.
Property revaluation (VALUE ADD): Investments in improvements and renovations improve asset quality and upgrade CompSET. Such renovations will also allow hotel chains to charge higher rates (ADR) in a more attractive and comfortable environment.
High returns on investment (Yield & IRR): Hotels are businesses that generate revenue on an ongoing basis through room occupancy, catering, events and other associated services. This profitability increases when the management is in the hands of companies specialising in areas such as hotel, catering (F&B), coworking, spa-wellness and/or parking. In historic buildings, the property appreciates in good locations and, despite the higher investment, the benefits of giving a second life to an asset of historic value increase the appreciation. METCUB invests in AAA properties and buildings with historical value, with specialised tenants by area, generating an annual return (6% Yield) and a 5-year capital gain (+15% IRR).
Tax benefits & financial strategy (TAX & DEBT): Investing in hotels can entail significant tax advantages where depreciation of assets can be deducted or specific special exemptions can be taken advantage of, among others. As a result of these deductions, net profitability increases. Financial institutions such as Banca March, Caixabank and Bankinter have a short-term strategy to grow in the Spanish hotel sector, and are therefore needed to build and reposition hotels.
Brand positioning and reputation (BRAND + OPERATOR): Investing in a hotel with a prestigious international brand increases demand. In addition, it is important to note that the independent chain operator will allow for an optimal cost and staffing structure.
However, investing in hotels requires analysis and a technical approach to financial, operational and market aspects.
METCUB invests in all hotel projects, and accompanies investors through the entire property cycle, coordinating the search for hotel opportunities, business plan development, renovation plan (CAPEX), selection of operators and financiers, hotel management and exit of the investment. In addition, METCUB has an in-house team of professionals including expansion, development, finance and asset management, key figures to manage the entire property cycle in the most optimal way.
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