The year 2023 has witnessed a remarkable success in hotel investment in Spain, which has consolidated its leading position with the highest number of hotel transactions. With just a few days to go before the end of the year, hotel investment is expected to exceed 3 billion euros, according to data from the latest Cushman & Wakefield report.
The positive figures have led investors and operators to have an optimistic outlook for the Spanish hotel sector in 2024 and place the Spanish hotel industry at the top of the global hotel investment market.
METCUB, a real estate company specialising in hotel investment and development, has drawn up an X-ray of the specific trends that will set the tone in this scenario, as well as the challenges that the Spanish market will face in the coming year.
- Artificial intelligence: The hotel industry is undergoing a revolutionary change thanks to artificial intelligence. While it is true that many companies currently use AI to handle some of the customer services, the integration and professionalisation of tools has made AI a transformative trend reshaping the way hotels operate and deliver services. By 2024, hotel chains are expected to continue this process of change to optimise internal processes that can range from inventory management, personalising the customer experience and analysing historical data to forecast occupancy and average hotel price.
- Asset Light strategy: In recent years, hotel chains have shifted from leasing or ownership to management and franchise contracts. This upward trend is expected to continue through 2024. In fact, it has been noted that between 2019 and 2023 there has been a 39% increase in franchised rooms and a 30% increase in management, according to Christie&Co’s Business Models: The New Era report.
- Investment in luxury and budget hotels: 2024 looks set to be a pivotal period of opportunity for hotel industry investors. Budget and luxury hotels are emerging as the big favourites, reflecting the trend towards diversification of categories to suit individual customers. At the Hotel Investment Annual Conference, Cushman & Wakefield partner and co-managing director Bruno Hallé said that, according to the consultancy’s study, the trend for investors will be towards “the holiday segment and the luxury and upper-scale categories, placing special emphasis on the most important hotel operations of the year such as the acquisition of the Mandarin Oriental in Barcelona, the Palacio del Retiro in Madrid, The Standard in Ibiza and the W hotels, all of which are considered trophy assets”.
In the words of METCUB partner Miguel Sambricio, “at METCUB we are committed to investors and focus on building or renovating 4-5 star hotels in prime locations”.
“Thanks to our meticulous focus on quality and exclusivity, at METCUB we redefine the standards of hospitality in prime locations,” he said.
Although there are many opportunities for hotel investors, the sector also faces a number of challenges. In its analysis METCUB highlights:
- Volatile environment: Volatile environment is a challenge facing the hotel industry. Fluctuations in the financial market as well as political events increase uncertainty. It is necessary to adapt to a constantly changing environment and to implement flexible risk management strategies effectively.
- Human talent and professionalisation of the sector: Talent retention and professionalisation of the sector remain a challenge for 2024. This puts additional pressure on operators and investors in the sector. In order to attract and retain talent that will result in ensuring quality service, the tourism sector will need to adopt innovative talent management strategies such as benefits, training and career development programmes.
- Sustainability: ESG criteria occupy an increasingly relevant position in terms of hotel investment. So much so that sustainability is presented as both a challenge and one of the main trends that will mark 2024. Currently, European investors tend to acquire high quality spaces and value-add opportunities with the aim of repositioning assets and adapting them to the requirements of employees and occupants. Meanwhile, 30% of hoteliers have plans to invest in ESG in the coming months and 83% are inclined towards more sustainable practices, according to Booking.com’s 2nd Spanish Accommodation Barometer. Examples are energy efficiency programmes, hotels with green certifications and more accessible hotels. Establishments such as the Gran Hotel Inglés, the Westin Palace or the Madrid Edition hotel, which have been restored by the construction company Fernández Molina, are some of the examples of how a historic building can become an example of sustainability. The integration of sustainable practices is very necessary to meet the expectations of investors and guests and to remain competitive in the market.
The key to the success of the hospitality industry in 2024 will depend on how hotel professionals will strategise innovatively, manage risk and meet changing expectations. With a strategy focused on customer experience and sustainability, the hospitality industry is poised to overcome these challenges and write a successful chapter next year.