The hotel sector in Spain received an investment of 400 million euros through 12 transactions during the first three months of the year, which represents 14% of the total invested in the country. This is demonstrated by data provided by CBRE, which points out that this figure represents, however, a 59% drop in investment compared to the same period last year, which was a record year, and a 22% decrease compared to the average for the first quarters of the last five years.
During the first quarter of this year, 12 hotel asset transactions were completed, totalling 1,826 rooms (compared to 39 properties and 5,475 rooms in the same period last year). Luxury hotels continued to lead investment, with 5-star hotels accounting for more than 70% of the total transacted (three hotels), followed by 3-star hotels (15%) and 4-star hotels (14%). According to CBRE, during this first quarter of 2023, the entire investment volume was allocated to individual assets.
Institutional funds and French investors, leading players in the hotel market in the first quarter
Institutional funds have emerged as the main players in the market, accounting for 80% of the total volume of transactions. In terms of investment origin, the French dominated the market, accounting for 61% of the total volume. In terms of transactions, the sale of the Dolce Sitges hotel and the Sofia Barcelona hotel accounted for more than 60% of the total investment in the hotel sector during the quarter.
Aerial View of Barcelona
In terms of destinations, Catalonia consolidated its position as the favourite destination for investors during the quarter, accounting for 63% of the total volume (€252 million through 3 transactions), followed by the Canary Islands and the Balearic Islands, with 14% of the investment each, through 3 and 2 hotel transactions, respectively.
Around 300 hotels are expected to be opened in Spain by 2024, 25% of which will be high-end assets
Prime rental yields remained stable at 4.75% in Madrid and Barcelona and 5.75% in the Islands. In terms of the project pipeline, around 300 hotels are expected to be opened in Spain by 2024, equivalent to some 32,000 rooms. Of this total, 25% will be high-end hotels (5-star and 5-star GL), 50% of which will be concentrated in Madrid, Malaga, Valencia and the Islands.
During the quarter, the ADR (average price per occupied room) stood at 98.19 euros, an increase of 12% compared to the first quarter of 2022. Meanwhile, RevPAR (average revenue per available room) reached 58.24 euros, representing an increase of 35% compared to the same period last year. Among the markets that stood out for their good performance in this regard were the Canary Islands, Barcelona and Madrid.
International performance of the hotel sector
According to the CBRE Global Hotel Outlook 2023 report, the hotel sector has experienced a good performance in operating results during the beginning of the year. Most regions have seen a recovery in RevPAR and it is expected to continue to grow in 2023, thanks to pent-up demand, the return of travellers from Asia and the normalisation of corporate travel. In Europe, RevPAR growth has been driven mainly by the increase in average price per occupied room (ADR), especially in the luxury segment.
CBRE forecasts that the rising cost of debt and slowing economic growth will dampen hotel investment activity in Europe and lower yields in the first half of the year, although the recovery is expected to consolidate in the second half.