Investment groups have given the hotel sector visibility and have demystified issues such as cycles and seasonality, which has favoured capital inflows.
The hotel sector has become professionalised, and is undergoing major change in Spain. The entry of investment funds and the separation of brick and mortar from hotel operations allows for a combination of efforts between hotel developers such as METCUB, institutional investors and family offices, international brands and/or hotel chains.
The sector faces structural challenges that threaten a loss of competitiveness, such as cost pressure from the effect of inflation, high supply costs and rising interest rates. There are new challenges such as renovating existing hotels, increasing green areas, advancing in energy efficiency and sustainability, and boosting digital transformation.
Spain has consolidated airports and good air and rail links, allowing the development of competitive hubs in the future to facilitate the arrival of international tourists.
In 2022, international investors have been confident in the Spanish hotel market, with hotel transactions worth €2.3 billion (72% hotel investment) in 2022. This year has been relevant for the entry of new institutional funds and approximately one third of the total investment has been directed to 5* hotels. Of particular note is the US fund Cerberus, with the purchase of the Ferrer Hoteles chain; the Swiss fund Pictet, with the acquisition of the Kympton Aysla Mallorca and the Hotel Expo Valencia; the US fund Fortress, which has acquired a portfolio of assets (REOs) and loans with tourist collateral from Sareb, as well as Banco Santander in alliance with Signal Capital, which has launched a new fund to invest in hotels, such as the Sheraton La Caleta hotel in the south of Tenerife.
Until the macroeconomic situation stabilises, some investors will adopt a wait & see position in the short term. Investors with investment capacity will focus on prime, core or obsolete assets with high Capex needs, urban centres or first line in consolidated markets, which, due to their high liquidity and lower sensitivity to uncertainty, will maintain their valuation in the short term.
Spain is the second most visited country in the world thanks to a stable and competitive quality tourism industry
In 2022, Spain has positioned itself as the second most visited country in the world by number of international tourists, registering a total of 71.6 million tourist arrivals, which places the national tourism industry among the most competitive in the world.
Historically, the tourism sector in Spain has been the country’s main economic engine even in economic downturns. The profitability and resilience of the Spanish tourism industry attracts hotel investors from all over the world.
Maintaining the competitiveness of tourism in Spain implies improving the quality of supply through the reform, repositioning and professionalisation of an atomised hotel property that is showing signs of wear and tear
Spanish hotel ownership has historically been in the hands of families. Currently, many of these owners are discouraged to continue, between the absence of a generational replacement and the need for recurring investment to maintain the quality of the establishments, in an increasingly professionalised and competitive sector.
METCUB offers investment in independent hotels or hotel chains (Portfolio) to carry out the CAPEX work and reposition in the market, with a 5-year exit commitment. Including Sale&Leaseback with current owners or forward purchase of hotel projects.
The strategy allows aligning interests with the owners and hotel chains, offering to refurbish the hotel with the best quality standards and participate in the capital gain.
International hotel chains consolidate their position in the hotel sector, given the continuous growth of international tourist arrivals in Spain
The growth in international demand and the professionalisation of the sector have been key factors for international hotel brands to include Spain as a strategic market.
Between 2019 and 2022, 122 hotel openings were registered with 22,640 rooms managed by international brands, 23 Upscale and 6 oriented towards the economy and midscale segments. In 2022, Spain has seen a shift towards management and franchise models (+31%), compared to the 2015-2019 period.
Hotel investment in Spain has become a safe haven for professional international investors
Investors have confidence in the Spanish hotel market, + €3 billion euros of hotel investment (Christie&Co), considering hotels in operation, assets for conversion to hotel use and land for development.
Hotel investment represents more than more than 20% of real estate investment in Spain.
The demand for hotel investment and the difficulty in finding profitable opportunities, leads international investors to seek alliances with expert local partners, who collaborate to identify and manage the investment and/or hotel project, in order to minimise risk and guarantee the success of the operations
National and foreign investors demand local teams with experience and contacts in the market, to identify new opportunities and speed up the process.
METCUB by Fernández Molina, as a local development partner, participates with investment in the hotel projects and assumes responsibility for delivering the works on time and on budget. It avoids uncertainty about the increase in supplier costs and allows coordination of the opening with the hotel chain, retail and rooftop F&B.