Investment in hotels reactivated in 2021

Investment in hotels reactivated in 2021

Between purchases of already existing hotels, rehabilitation and conversions into hotels and terrains to develop hotels, a total of 52 operations were concluded. Within the first semester, the months of May and June kickstarted a race which will probably continue until the second semester of 2022.

«With the Spanish hotel investment market, a combination of different elements generated a perfect storm», explained Laura Hernando, managing director of Colliers hotel division. «The historically high levels of liquidity available, together with the great pressure to invest from pension funds, after 15 months of draught, and the absolute need many hotel chains had of divesting assets as a way of covering the significant liquidity gaps generated by Covid-19».

She further added that «all this is taking place within a context of limited financing for acquisitions, which makes us forecast that the investing activity will multiply as soon as financing starts to flow again».

It was not in vain, that approximately 60% of investment during 2021’s first semester was focused on holiday assets, and the remaining 40% was directed towards the urban segment, with many of these assets being traded in eminently touristic areas.

The other reason is that, unlike the asset light strategy followed by the main international chains, creating a clear separation between ownership and management, a good part of the Spanish hotels (especially the ones conceived for holidays) remain property of the hotel chains.

This situation explains the fact that selling decisions taken by national operators accelerated in 2021 due to the enormous pressure in terms of revenues they have been experiencing, whereas for hotels not owned by hotel operators (investment funds, private equities, family offices, etc) the strategy has been to renegotiate rents or recapitalisation, but not divestment.

Prospects for the second half of the year are very positive. The month of July started with a pipeline of ongoing operations of approximately 2 billion euro, of which around half correspond to already agreed upon or very advanced negotiations. Amongst them, the highlight goes to the sale of the Barcelona’s Gran Hotel Central by Único Hotels to Schroeders, announced during the first days of July; Riu Hotels & Resorts’ move to acquire the majority shareholder position (49%) TUI had on their joint venture (which includes 21 hotels, of which eight are located in Spain) and which will be signed soon; the sale of Barcelona’s Tryp Apolo and the sale of Selenta Hotel Group’s hotel portfolio.

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