Lisbon among the most attractive cities to open new hotels in Iberia

Lisbon among the most attractive cities to open new hotels in Iberia

Iberia continues to establish itself as an attractive destination for national and international hotel operators, and Lisbon is the fourth most attractive city to open new hotels in the region. This is the conclusion of the "Hotel Operator Beat" study carried out by Cushman & Wakefield Hospitality.

The report interviewed 42 hotel company directors representing more than 1,100 hotels in Portugal and Spain. Lisbon comes in with a score of 3.9 (out of 5) on the list led by the Málaga hotel market, considered the most attractive in the region, with a score of 4.3, followed by Madrid, with 4.2, and Barcelona, with 4.

Compared to last year, the two cities that grew the most in terms of attractiveness for hotel operators were Andorra and San Sebastián, with an increase of 7 per cent (2.5 and 3.7 respectively).

For Gonçalo Garcia, Head of Hospitality at Cushman & Wakefield Portugal, "the results obtained confirm, above all, the Iberian Peninsula's appetite for tourism, which is reflected in the desire of operators and investors to increase their exposure to different markets. The diversity of leisure, resort and urban offers complement each other and create competitive advantages over other tourist destinations."

Mallorca leads the way in holiday destinations

Sun and sea lead the way when it comes to holiday destinations, and Mallorca is the favourite for hotel investment. The Algarve is considered as interesting as Tenerife, Gran Canaria or the Costa Brava, and it is on the Spanish islands that hotel investors find the greatest advantages for resort assets.

Hybrid contracts gain momentum with the pandemic

While before the pandemic the trend towards variable weighted leases, which reduce the risk for tenants and increase the chances of higher rents for owners, was gaining more favour, today 33% of hotel operators offer more hybrid contracts, with fixed and variable rents. The number of variable rental contracts increased by 31 per cent, and the fixed contract (which used to be the most traditional), grew by just 7 per cent.

Operators are willing to pay more for more sustainable hotels

Another trend highlighted by this report is that the majority (56 per cent) of hotel operators would accept paying higher rents for hotels that met stricter environmental and sustainability criteria. 65 per cent would be willing to consider forgoing fees for technical support services if the property was more sustainable. This sector is also considering reducing fees or increasing key money to incentivise ESG management.

Costs and the economic context have delayed some projects

The huge rise in project costs, greater financing difficulties and the uncertain economic context were the three main reasons for cancelling or postponing new hotel projects on the Iberian Peninsula, namely for 62%, 45% and 38% of those surveyed, respectively.

Even so, 36 per cent did not register any delay in the development of their new projects, which, according to C&W, demonstrates the recovery of activity on the Iberian Peninsula, since most projects were interrupted or suffered significant delays during the pandemic.

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