Spain has overtaken the United Kingdom to become the most attractive destination in Europe for hotel investment, according to the study "2024 European Hotel Investor Intentions Survey" conducted by CBRE, which evaluates investors' interest and destination preferences, placing Spain in the top position.
At the city level, Madrid has moved ahead of Paris and is now positioned as the second most attractive city for hotel investment in Europe, after London. The Spanish capital has gained popularity especially among Latin American investors. Barcelona is also among the ten most attractive European cities for this industry, while Athens appears as an emerging tourism opportunity, ranking ninth in the ranking.
The increase in interest in these markets is supported by forecasts of a sustained growth in the number of travelers and overnight stays in Spain by 2024, albeit at a moderate pace, with estimated increases of 1.6% and 1.5%, respectively. Foreign tourism is expected to be particularly dynamic. Economically, the good pace of bookings is expected to continue, with increases in both Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR), but also at a moderate rate.
The Spanish hotel sector performed excellently in 2023. It was the only segment that recorded increases in investment volumes versus the previous year and last year ranked as the second year with the second highest hotel investment in the historical series, only behind 2018. The sector led investment last year, posting a volume of 4.1 billion euros, 36% of the total.
Jorge Ruiz, director of Hotels in Iberia at CBRE, highlights that the Spanish hotel sector is in the focus of European investors, thanks to strong tourism data and the positive evolution of the hotel industry's operating results: “Our outlook points to a favorable backdrop for the coming months driven by stable operating results, good bookings expected for the coming months and expected rate stabilization. We expect more opportunities to flow into the market as the funding environment improves".
Investor activity on the rise
The survey conducted by CBRE shows renewed optimism among investors in the European hotel sector, driven by the continued expansion of tourism and stabilizing interest rates. According to the study, 70% of investors plan to increase their capital allocated to the hotel sector.
Kenneth Hatton, director of hotels for Europe at CBRE, commented that hotels have proven to be a good hedge against inflation. With expectations of lower interest rates towards the end of the year, interest in investing in this sector is high, with many value-add opportunities being perceived. In addition, long-term forecasts indicate that the supply of accommodation will be insufficient for the projected demand of tourists in Europe.
In terms of investment preferences, luxury and ultra-luxury assets lead with 51% and 45% preference respectively, both recovering rapidly post-pandemic and outperforming other segments of the hotel market due to pent-up demand. The report also highlights a growing interest in urban spaces, especially in major European cities, where 57% of investors prefer central business districts. Tourist complexes, known for their resilience to inflation, are also well rated, ranking second with a 36% preference, supported by growing demand for leisure and limited new supply.
The Tourist complexes, known for their resilience to inflation, are also well rated, ranking second with a 36% preference, supported by growing demand for leisure and limited new supply.
