5 KEYS MADRID vs BARCELONA - Colliers International
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5 KEYS MADRID vs BARCELONA
MADRID Madrid closed 2018 with an historic record of both overnight stays (19.7 million) and occupancy levels (76.8%) confirming the favourable moment from the tourism point of view. However, the city continues to present a significant divergency in average price with respect to other comparable European destinations. The supply has adapted to the increase in demand, with noteworthy refurbishments and openings, especially in the luxury sector, and the entry of major international brands. The outlook for 2019 remains positive, with a good line-up of conferences and cultural and sporting events over the year.
BARCELONA In 2018, RevPAR in Barcelona fell for the first time in eight years, due to slack demand in the first nine months. The uptick in tourism in the last quarter suggests that the situation is returning to normal. The most sensitive niches to the situation in Catalonia were domestic and luxury tourists, while international tourists remained strong, with more than 20 million overnight stays. The limitation of the growth of supply in the city centre is leading to new developments in the peripheral areas. Market recovery and the gradual normalisation of the political situation have rekindled the interest of investors and chains.
01 DEMAND MADRID
Tourism demand in Madrid performed positively in 2018, though growing at rates below the average of the period 2013–2018
(3.2% growth in travellers in 2018 vs a CAGR of 5.2% over the abovementioned period).
Madrid remains the leading urban destination for tourist arrivals in Spain. In terms of nights spent, however, it lies second,
behind, Barcelona, which has a better average length of stay per traveller (2.5 days vs. 2.0 days in Madrid).
International tourism continues to be the main growth factor (+46% growth in the last five years) and already accounts for
61.3% of total nights spent.
The main source markets were the United States, Italy and France. The markets that grew most in 2018 compared to the
previous year were China (+17%), Mexico (+10%), the United States (+5%) and France (+5%). China (which already exceeds
200,000 visitors) remains strategically important on account of its enormous potential as a source of visitors with high average
expenditure. Another great opportunity is the Latin American markets which have great cultural similarities, are well connected
to Spain by air and have been shaping up as important source markets of luxury tourism.
One of the main factors supporting Madrid’s development as a destination is the growth of business tourism: Madrid has made a
qualitative leap in its capacity to host large events, partly because it is regarded as the second safest European capital1. This
positive trend is expected to continue during 2019, with the city acquiring major new events, including the European
Dermatology Congress, to be held in October (more than 12,000 expected participants), and the Farmaforum, to be held at the
end of March (more than 5,000 expected participants).
The IFEMA exhibition centre has thus consolidated its position as one of the main drivers of MICE tourism, hosting a total of 720
events in 2018, 21% more than in 2017.
Furthermore, in terms of business tourism, Madrid has benefitted from the instability and uncertainty afflicting rival European
destinations. The exodus of companies from Catalonia and of international companies from United Kingdom due to the
uncertainties of Brexit (most notably the European headquarters of American Express and of Uber) has helped Madrid position
itself as a key venue for business meetings.
Madrid has also greatly improved and strengthened its position as a leisure destination. The good transport and hotel
infrastructure, the wide range of culture and leisure activities and the closeness to other major heritage destinations have all
assisted Madrid’s rise as a tourist destination. One indicator that confirms this good positioning is the recognition of the Madrid
brand in social media, where Madrid holds sixth place worldwide, with 31 million # in Instagram.
Nevertheless, Madrid with 61% of international demand (5.1 million travellers) and 2 days of average stay, still lags far behind
Barcelona’s 6.5 million international travellers and 2.5 days of average stay, which shows that there is still great potential for
growth.
Madrid 2013 2014 2015 2016 2017 2018 CAGR '13 - '18
Travelers 7,520,832 8,384,306 8,894,518 9,068,040 9,409,386 9,711,884 5.2%
% annual change -5.1% 11.5% 6.1% 2.0% 3.8% 3.2%
National 3,832,575 4,356,412 4,472,588 4,457,227 4,414,795 4,535,409 3.4%
International 3,688,257 4,027,894 4,421,930 4,610,813 4,994,591 5,176,475 7.0%
Overnight Stays 14,848,663 16,520,205 17,818,431 18,138,279 19,331,896 19,715,570 5.8%
% annual change -3.9% 11.3% 7.9% 1.8% 6.6% 2.0%
National 6,583,531 7,479,028 7,777,065 7,574,099 7,591,983 7,630,321 3.0%
% of total 44.3% 45.3% 43.6% 41.8% 39.3% 38.7%
International 8,265,132 9,041,177 10,041,366 10,564,180 11,739,913 12,085,249 7.9%
% of total 55.7% 54.7% 56.4% 58.2% 60.7% 61.3%
Average stay 2.0 2.0 2.0 2.0 2.1 2.0 0.6%
% annual change 1.3% -0.2% 1.7% -0.2% 2.7% -1.2%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
CAGR: Crecimiento Anual Compuesto
1. According to the report of Safe Cities published by The Economist
Five keys: Madrid vs Barcelona 4
01 DEMAND BARCELONA
After being held back by social-political tensions in 2017 and the start of 2018, the growth of tourism demand in Barcelona
recovered in the last quarter of 2018, reaching levels similar to those last seen before 1 October 2017. In 2018, Barcelona received
more than eight million travellers, an increase of +5.2% compared to 2017.
Barcelona’s recovery is not reflected in the number of domestic travellers, which has fallen to below the levels of 2016.
Nevertheless, the city’s good reputation outside Spain allowed persistent brisk growth in the numbers of international travellers,
setting another record in arrivals (+7.0% vs 2017).
Social media are currently one of the key tools for promoting tourist destinations and Barcelona maintains an excellent position in
this respect, with 47 million # in Instagram, making it the third most popular city in the world. Barcelona has established itself as
a top tourist destination, featuring once again in 2018 among the world’s ten most popular cities according to TripAdvisor. In a list
headed by Paris, Barcelona ranks sixth (up one place compared to last year). It is also the fifth most popular city at the European
level in terms of overnight stays and the year’s leading destination in the national ranking.
Barcelona attracts visitors with very different profiles and diverse origin and motivation. In 2018, nights spent reached the
extraordinary figure of 20.3 million, 86.5% of which were international tourists, illustrating Barcelona’s worldwide popularity. The
diversity of profiles has led to a deseasonalisation of the city’s tourism activity and has made the destination resistant to economic
cycles.
As has occurred in Madrid, the growth in number of travellers in 2018 was greater than the increase in number of nights spent,
resulting in a decline in the average length of stay, to 2.5 days.
One of the segments that has suffered most has been business tourism, which has lost relative importance and is at lower levels
than in previous years. According to the Gremi d’Hotels, in 2013, corporate tourism accounted for 50% of the volume of total
demand; in 2014, it fell to 40%; and in 2017 and 2018, it slipped to 30%, as against 70% for leisure tourism. This decline is not
attributable to any loss of large events and conferences, where Barcelona is positioned ahead of Madrid (in fact, Mobile World
Congress has maintained its strength, reaching a new record of visits in 2019). Rather, it is caused by the decision of some
companies to reallocate their headquarters, companies which no longer hold their meetings and gatherings in Barcelona, and
cancellations by groups of incentives and companies, looking for alternative destinations.
Barcelona 2013 2014 2015 2016 2017 2018 CAGR '13 - '18
Travelers 6,563,285 6,728,640 7,090,244 7,484,276 7,656,747 8,055,374 4.2%
% annual change -1.0% 2.5% 5.4% 5.6% 2.3% 5.2%
National 1,316,117 1,407,027 1,463,593 1,567,798 1,537,833 1,509,645 2.8%
International 5,247,168 5,321,613 5,626,651 5,916,478 6,118,914 6,545,729 4.5%
Overnight Stays 16,630,808 17,535,214 18,537,357 19,590,241 19,688,076 20,251,548 4.0%
% annual change 2.5% 5.4% 5.7% 5.7% 0.5% 2.9%
National 2,477,411 2,706,362 2,811,311 2,980,826 2,883,224 2,726,368 1.9%
% of total 14.9% 15.4% 15.2% 15.2% 14.6% 13.5%
International 14,153,397 14,828,852 15,726,046 16,609,415 16,804,852 17,525,180 4.4%
% of total 85.1% 84.6% 84.8% 84.8% 85.4% 86.5%
Average stay 2.5 2.6 2.6 2.6 2.6 2.5
% annual change 3.6% 2.8% 0.3% 0.1% -1.8% -2.2%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
Five keys: Madrid vs Barcelona 5
MADRID
AIRPORT
Madrid Barajas Adolfo Suárez Airport is Spain’s main international airport, with 218 direct connections and 57.9 million
passengers in 2018, +8.4% more than in 2017.
In the near term, the airport’s flight network is expected to be reinforced with new connections. New routes will be opened in
2019, both to European destinations (Norway, Italy and France) and to international destinations (Panama, Iguazú and Medellín).
The new route to China (Xi’an) started in December 2018 has particular strategic importance as a key tool for the promotion of
Chinese tourism in the medium term.
A master plan for Madrid Barajas Adolfo Suárez Airport has been put in place to continue to maintain Barajas as Spain’s
premier airport. The plan envisages investments totalling 1,571 million euros over the period to 2026 to modernise the airport
and increase its capacity to 80 million passengers, 10 million more than at present.
That plan is already under way, marking out the land to be occupied by the expansion.
Madrid Barajas Adolfo Suárez Airport / No. passengers
+8,4%
2018
2017
2016
2015
2014
2013
0 10 20 30 40 50 60 70
No. passengers
Source: AENA
Five keys: Madrid vs Barcelona 6
BARCELONA
AIRPORT
In 2018, despite various strikes, both at companies such as Ryanair and of air traffic controllers, and despite having one of the
highest delay rates at the European level, Barcelona-El Prat Airport ended the year with a new record of more than 50.1 million
passengers (up +6.1% vs 2017). El Prat is getting close to its 55 million passengers of maximum capacity.
The new routes introduced by the low-cost carriers Level (the IAG Group’s transatlantic flight brand) and Norwegian and the new
international routes to Santiago de Chile and Hanoi scheduled to open in 2019 have assisted this growth, which is expected to
continue over the next few years.
Barcelona-El Prat Airport/ No. passengers
+6,1%
2018
2017
2016
2015
2014
2013
0 10 20 30 40 50 60
No. passengers
Source: AENA
Five keys: Madrid vs Barcelona 7
TOP #TRENDING CITY ON INSTAGRAM MADRID
@juan.villasante
@nuriablanco3
@juanmainar
@lidiabedman
@marlrivera
@caldeh
Five keys: Madrid vs Barcelona 8
TOP #TRENDING CITY ON INSTAGRAM BARCELONA
@hebenj
@juan.villasante
@simeona.g
@henry_do
@dani_hm
@maximmoraleslopez
Five keys: Madrid vs Barcelona 9
02 SUPPLY MADRID
The supply of hotel accommodation in Madrid, in terms of beds, grew 2.2% in 2018, to reach 85,400 beds, showing more
vigorous growth than in recent years (annual average of 1.0% between 2013 and 2018). The 3* and 4* categories are the ones
that grew most compared to 2017, with increases of +3.9% and +1.9%, respectively.
Madrid / No. Beds 2013 2014 2015 2016 2017 2018 CAGR '13 - '18 VAR '18 vs. '17
5* 10,135 9,339 9,150 10,333 10,665 10,596 0.9% -0.6%
4*
41,448 42,689 42,631 42,960 43,119 43,942 1.2% 1.9%
3* 12,111 12,237 12,389 11,968 12,155 12,632 0.8% 3.9%
1 y 2* 3,610 3,414 3,382 3,530 3,964 4,015 2.2% 1.3%
Total Gold Star Supply 67,303 67,679 67,552 68,790 69,904 71,185 1.1% 1.8%
Total Supply 81,198 80,903 80,640 81,387 83,544 85,415 1.0% 2.2%
% annual change 1.4% -0.4% -0.3% 0.9% 2.7% 2.2%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
In 2018, significant investments were made in refurbishing, expanding and upgrading Madrid’s stock of hotels. Specifically, a
total of €233.6m2 was invested in refurbishing 37 establishments.
Little growth in supply is expected in the future as a consequence of the pass in 27 March 2019 of the Special Plan Regulating
Lodging Uses (Plan Especial de Regulación de Uso de Hospedaje). On the one hand, this plan limits the availability of licenses
for tourist apartments, affecting 95% of the existing supply. On the other, it creates barriers to the growth of the hotel supply,
practically removing all possibility of changing a building from residential to hotel use (a specific plan being required for any
such project). In the short to medium term, these measures are expected to constrain the growth of the supply at the same time
as they benefit existing hotels, as has been the case in Barcelona.
In response to a shift in customer preferences towards unique accommodation and new experiences, Madrid’s new supply is
exploring other market niches. Several chains targeting a younger generation of travellers (millenials) have opened hostels
in Madrid in non-traditional areas such as Malasaña, Huertas and La Latina. The international chains exploring this niche
include Generator, which has opened a 542 bed-place establishment in Gran Vía, and BlueSock Hostels, which is due to open
an establishment shortly, also in Gran Vía, with 190 bed places. As chains specialising in the management of this type of
establishment have emerged, hostels have become more popular, to the point where they now compete openly with traditional
hotels, generally with very competitive prices.
In 2018, the luxury segment (currently 15% of the supply of bed places) was affected by the closure of the Ritz for
refurbishment works, reducing the supply by -0.6% compared to 2017. However, the significant openings expected in 2019 will
increase the current 5* supply in Madrid by approximately 10%. Madrid’s image as a safe city, the good perspectives of tourism
market growth and the perceived political stability, compared to other European destinations, make its luxury sector a strategic
target for the large brands that focus on this segment, such as Four Seasons, Marriott, Mandarin and Hyatt, which have recently
taken positions in the city.
Distribution of the supply Statistics Institute (INE)
Distribution of investment in refurbishment
5%
15% 3%
5%
18% 5* New build/Change of use
4*
2018 Complete refurbishment
3*
39% 2018 53%
1 y 2* Partial refurbishment
62%
Isolated improvements
Source: compiled by the author with data from the Spanish National Source: Colliers International
2. Includes new construction and the change of use
Five keys: Madrid vs Barcelona 1002 SUPPLY BARCELONA
The Special City Development Plan for Tourist Accommodation (Plan Especial de Urbanismo de Alojamiento Turístico, PEUAT)
currently in force in Barcelona puts a halt to the opening of new hotels and new projects in the city centre and has encouraged the
development of hotels in surrounding areas.
That is why, although the supply of hotel accommodation in Barcelona continued to grow in 2018 (+3.4%), the growth came from
i) the opening of hotels that were previously closed due to refurbishment works, ii) projects for which the licenses were granted
before 2015 and iii) openings in areas just starting to be developed.
Examples of these new peripheral hubs are the 22@ area in Barcelona itself and neighbouring metropolitan areas such as
L’Hospitalet (close to Fira de Barcelona exhibition centre), which has various plans for future openings. There are up to five known
new projects in these areas, most notably the future Hampton by Hilton (242 rooms), scheduled to open at the beginning of 2021,
and the future A&O Hostel, which will have 170 rooms.
The distribution of the hotel supply is similar to Madrid, in that 4* hotels predominate, accounting for almost 55% of the supply last
year. The 5* segment is the one that saw the biggest growth in supply in 2018 (+9.3% year-on-year), with some very high-profile
openings, including the Barcelona Edition (100 rooms), in an area slated by the City Council for a “decrease in hotel presence”.
Another noteworthy reopening, after a year of refurbishment, was the Hotel Sofía (5*, 465 rooms), in the Unbound Collection by
Hyatt. Further openings of hotels that obtained their licences before the moratorium are expected in the future; but apart from
these exceptions, the growth of supply in Barcelona’s city centre over the next few years will be nonexisting.
Barcelona / No. Beds 2013 2014 2015 2016 2017 2018 CAGR '13 - '18 VAR '18 vs. '17
5*
8,072 8,514 8,758 8,914 8,914 9,746 3.8% 9.3%
4* 35,008 36,265 36,430 37,371 38,749 40,650 3.0% 4.9%
3* 16,191 16,483 16,699 16,522 16,155 15,662 -0.7% -3.0%
1y2 *
6,068 6,450 6,621 7,039 7,716 8,111 6.0% 5.1%
Total Gold Star Supply 65,339 67,712 68,508 69,846 71,533 74,170 2.6% 3.7%
Total Supply 70,433 73,022 74,240 75,950 77,744 80,364 2.7% 3.4%
% annual change 4.2% 3.7% 1.7% 2.3% 2.4% 3.4%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
Refurbishments in Barcelona have brought a large volume of investment, totalling 287 million euros in 2018, 62% of which went
to new-build or conversion projects (notably the €50m invested in the change of use of the building that houses the Edition
Hotel) and the remaining 38% to refurbishments of existing hotels (both complete and partial, as well as isolated improvements).
Noteworthy operations in this latter category include those carried out by local operators such as Selenta and Hesperia, which,
after signing franchise agreements with international operators (to optimise their hotels’ revenue generation), are repositioning
their assets.
The hotels refurbished by Selenta are the Hotel Sofía - Unbound Collection by Hyatt (with an investment of €60m - €130k/
room), and the Nobu Hotel Barcelona, which is expected to open in 2019 once the refurbishment of the former Gran Hotel Torre
Catalunya is complete. Hesperia plans to refurbish the Hyatt Regency Barcelona Fira (5*, 280 rooms), which is due to open in the
second half of 2019.
Distribution of the supply Distribution of investment in refurbishment
3% New build/Change of
11% 13% 5*
use
4* Complete
21% 35%
refurbishment
2018 2018
3* Partial refurbishment
62%
55% 1 y 2* Isolated
improvements
Source: compiled by the author with data from the Spanish National Source: Colliers International
Statistics Institute (INE)
Five keys: Madrid vs Barcelona 11MADRID
6
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MADRID - RELEVANT OPENINGS PLANNED (5* & 4*)
4
Refurbishment of existing hotels
1 7
Conversion
Change of operator
2 8
Establishments
3 9
6 5*
4 10
4 4*
5 11
2,051 rooms 5
6 4. Opened in April 2019
5. Relevant new openings will mean approximately 70% of the
new supply whose pipeline is estimated at 3,000 inhab.
Five keys: Madrid vs Barcelona 12BARCELONA
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BARCELONA - RELEVANT OPENINGS PLANNED (5* & 4*)
6 Refurbishment of existing hotels
1
New build
2 Change of operator
Establishments
3
4 5*
4
1 4*
5
1,399 rooms 7
6. Entry of new operator Hyatt Unbound in January 2019
7. Relevant new openings will mean approximately 74% of the new
supply whose pipeline is estimated at 1,900 inhab.
Five keys: Madrid vs Barcelona 1303 KEY PERFORMANCE INDICATORS MADRID
In terms of average growth, the main profitability indicator, RevPAR2, rose +8.8% (over the period 2013-2018), after an upward
cycle marked by year-on-year growth rates in the double digits. The 2018 figures, however, show the rate of growth slowing to
+1.5% year-on-year.
The stabilisation of growth in 2018 is the result of a slight improvement in occupancy levels (+1.2 p.p. vs 2017) that,
nevertheless, reaches its maximum historical level with a 76.8% for the total of the market and very little change in the average
price, reaching €95.7 (24% lower than the average price of Barcelona).
The category that suffered most in 2018 and the only one without an increase in RevPAR was that of 5* hotels, which
experienced a substantial decline due to the Ritz being closed for refurbishment. All the same, the outlook for this segment is
very positive, as the new supply, coupled with the entry of the main luxury operators, will drive up prices and generally close
the existing gap between the 5* category in Madrid and in other European capitals such as Barcelona, Paris and Milan.
Meanwhile, the 4* category ended the year with very good results. RevPAR was up +4.0% this year, continuing its upward
trend. The positive trend in this category’s operating results in recent years is expected to be reinforced by the opening of the
Riu Plaza de España (590 rooms) and the Hard Rock Atocha (160 rooms) at the end of 2019.
Madrid 2013 2014 2015 2016 2017 2018 CAGR '13 - '18
ADR (€) 79.22 79.19 83.1 86.8 95.8 95.7 3.9%
% YoY ADR -5.1% 0.0% 4.9% 4.5% 10.4% -0.1%
Room Occupancy 60.7% 66.8% 71.8% 72.9% 75.6% 76.8% 4.8%
p.p. Occupancy -2.68 p.p. 6.10 p.p. 4.96 p.p. 1.10 p.p. 2.70 p.p. 1.20 p.p.
RevPAR (€) 48.1 52.9 59.7 63.3 72.4 73.5 8.8%
% YoY RevPAR -9.1% 10.0% 12.7% 6.1% 14.4% 1.5%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
ADR 2013 2014 2015 2016 2017 2018 CAGR '13-'18 VAR '18 vs. '17
5 stars 154.4 161.2 173.9 172.7 184.8 178.6 3.0% -3.4%
4 stars 79.0 81.3 85.4 88.0 96.4 98.8 4.6% 2.5%
3 stars 71.1 64.1 68.4 73.8 84.5 87.7 4.3% 3.8%
Average 79.2 79.2 83.1 86.8 95.8 95.7 3.9% -0.1%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
Occupancy 2013 2014 2015 2016 2017 2018 CAGR ‘13-’18 VAR ‘18 vs. ‘17
5 stars 58.7% 66.2% 68.5% 66.4% 69.7% 69.2% 3.4% -0.7%
4 stars 62.7% 67.8% 72.4% 74.0% 76.1% 77.2% 4.3% 1.4%
3 stars 67.7% 72.4% 74.3% 75.1% 78.6% 76.5% 2.5% -2.7%
Average 60.7% 66.8% 71.8% 72.9% 75.6% 76.8% 4.8% 1.6%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
RevPAR 2013 2014 2015 2016 2017 2018 CAGR ‘13-’18 VAR ‘18 vs. ‘17
5 stars 90.6 106.7 119.1 114.7 128.7 123.6 6.4% -4.0%
4 stars 49.5 55.1 61.8 65.2 73.4 76.3 9.0% 4.0%
3 stars 48.1 46.4 50.8 55.4 66.4 67.1 6.9% 1.1%
Average 48.1 52.9 59.7 63.3 72.4 73.5 8.8% 1.5%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
Five keys: Madrid vs Barcelona 1403 KEY PERFORMANCE INDICATORS BARCELONA
After eight consecutive years of increases, driven by strong growth in tourism demand, in 2018 RevPAR reached a turning point
and fell for the first time since 2009. Political instability weighed on the sector’s profitability during the first nine months of the
year, with RevPAR -6.8% lower than in the first nine months of 2017, but thanks to a marked recovery in the last quarter (RevPAR
+8.9% vs Q4 2017), the full-year result was not so negative.
RevPAR for all the categories, which had a CAGR of +4.4% over the period 2013–2018, fell -2.6% in 2018, to €98.9. Although hotel
occupancy levels remained stable during the year, it was the decrease in the average daily rate (ADR), a decrease of -2.1%, that
had the most impact on RevPAR.
The sharpest fall in RevPAR in 2018, - 7.2%, was in 5* hotels, which, despite maintaining their ADR (-0.2% vs ’17), saw a
significant decline in occupancy (-5.0 p.p. vs ’17), partly due to the city’s loss of reputation as a destination. This has resulted
in articles being published in countries source of quality tourism such as the United States warning about the deterioration of
tourism safety and the risks of travelling to Barcelona.
Other categories suffered less. The 4* segment, for example, saw its RevPAR fall -3.2% in 2018. Hotels in this segment have opted
to try to maintain their previous occupancy levels (+1.0 p.p. vs ’17) at the cost of a decline in ADR (-4.4% vs ’17).
Despite last year’s decline in the profitability indicators, Barcelona continues to outperform Madrid by 31% in ADR, which stands at
125.5 euros, and by 35% in RevPAR, taking the average for all the categories.
Barcelona 2013 2014 2015 2016 2017 2018 CAGR '13 - '18
ADR (€) 109.29 109.6 117.6 120.8 128.2 125.5 2.8%
% YoY ADR 0.7% 0.3% 7.3% 2.7% 6.1% -2.1%
Room Occupancy 73.1% 73.6% 77.5% 79.4% 79.2% 78.8% 1.5%
p.p. Occupancy 0.92 p.p. 0.55 p.p. 3.90 p.p. 1.90 p.p. -0.20 p.p. -0.40 p.p.
RevPAR (€) 79.8 80.7 91.1 95.9 101.5 98.9 4.4%
% YoY RevPAR 2.0% 1.0% 13.0% 5.2% 5.8% -2.6%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
ADR 2013 2014 2015 2016 2017 2018 CAGR '13-'18 VAR '18 vs. '17
5 stars 214.4 219.4 243.6 255.8 267.5 266.9 4.5% -0.2%
4 stars 109.7 110.2 118.6 124.5 130.9 125.2 2.7% -4.4%
3 stars 87.1 84.3 89.1 88.7 102.4 98.2 2.4% -4.1%
Average 109.3 109.6 117.6 120.8 128.2 125.5 2.8% -2.1%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
Occupancy 2013 2014 2015 2016 2017 2018 CAGR '13-'18 VAR '18 vs. '17
5 stars 73.5% 71.8% 73.3% 72.0% 71.0% 66.0% -2.1% -7.0%
4 stars 75.1% 75.7% 77.9% 79.8% 78.8% 79.8% 1.2% 1.3%
3 stars 77.1% 77.0% 82.1% 83.2% 83.8% 84.4% 1.8% 0.7%
Average 73.1% 73.6% 77.5% 79.4% 79.2% 78.8% 1.5% -0.5%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
RevPAR 2013 2014 2015 2016 2017 2018 CAGR '13-'18 VAR '18 vs. '17
5 stars 157.5 157.6 178.6 184.2 189.8 176.1 2.3% -7.2%
4 stars 82.3 83.4 92.4 99.4 103.2 99.9 3.9% -3.2%
3 stars 67.2 64.9 73.2 73.8 85.8 82.9 4.3% -3.4%
Average 79.8 80.7 91.1 95.9 101.5 98.9 4.4% -2.6%
Source: compiled by the author with data from the Spanish National Statistics Institute (INE)
Five keys: Madrid vs Barcelona 1504 TRANSACTIONS MADRID
Spain ended 2018 with the best hotel investment performance in its history. Including existing hotels and properties and land
for the development of new hotel projects, the investment totalled 4,810 million euros, 23.1% more than the previous record of
3,907 million euros, set in 2017.
Madrid outperformed Barcelona both in investment in existing hotels and in property conversions, with a total of €632m,
compared to Barcelona’s €232m.
Investment in operating hotels accounted for 97% of the total: 17 hotels (2,255 rooms) changed hands for a total of 601 million
euros, reflecting the increasing difficulty of converting other buildings to hotels. Deals involving buildings for conversion were
significantly reduced compared with previous years: only two buildings were acquired for a combined €31m (down -89% vs
2017). The two buildings are the Real Cinema Madrid and the building that houses the newly opened CoolRooms Atocha.
The highlights of 2018 were corporate transactions and asset portfolio sales, and to a lesser extent sales of individual assets.
The year’s most important individual asset sale in the city of Madrid was the purchase by RLH Properties of the Villa Magna
hotel (5*, 150 rooms) for €210m, setting a record price per room of €1.4m. This represents a 16.6% gain in value in just two
years, having been acquired by Dogus for €180m, demonstrating the strong performance and growth of the capital’s hotels and
the enormous investor appetite for prime assets.
Other noteworthy deals include the Silken Puerta Madrid (4*, 194 rooms), bought by CBRE Global Investors, and the Occidental
Madrid (4*, 108 rooms), acquired by Marathon Asset Management.
The following corporate transactions also deserve mention:
The Thai group Minor International won control of NH Hotel Group, thus acquiring ownership of 11 hotels in Spain (1,790 rooms),
including, in Madrid, the NH Eurobuilding (4*, 414 rooms), the NH Collection Palacio de Aranjuez (4*, 86 rooms) and the NH
Lagasca (4*, 100 rooms).
In April, Blackstone launched a takeover bid for the Spanish hotel REIT Hispania, acquiring, among many others, the Holiday Inn
Bernabéu (4*, 313 rooms), the NH San Sebastián de los Reyes (3*, 99 rooms) and the NH Madrid Sur (3*, 62 rooms).
In June 2018, Accor took advantage of rising investor appetite to sell 57.8% of its asset vehicle AccorInvest to a group of two
sovereign funds. AccorInvest owns 11 hotels, including the Novotel Madrid Campo de las Naciones (4*, 246 rooms), the Ibis
Madrid Barajas (3*, 168 rooms) and the Novotel Madrid Puente de la Paz (4*, 240 rooms).
Madrid 2013 2014 2015 2016 2017 2018
No. Transactions 4 11 20 23 16 19
(Hotel in operation) 0 9 17 22 13 17
No. Rooms *
922 1,167 2,423 2,888 2,558 2,290
Total Investment (€M) 166.3 224.3 637.0 573.4 636.9 632.1
Average selling price/room (€k) 180,325 192,119 262,949 198,542 248,968 276,004
Source: compiled by the author
* Weighted by percent acquisition
Five keys: Madrid vs Barcelona 1604 TRANSACTIONS BARCELONA The political tensions in Barcelona have caused insecurity among investors, who in 2018 adopted a cautious, wait-and-see approach to investment opportunities. Even so, Barcelona ended the year with investment of €232m, mainly due to the corporate transactions and portfolio sales that marked the investment panorama throughout Spain. As a result of the curb on further growth in tourism supply in the city centre, only one building was acquired for conversion, namely the building that will house the hostel to be operated by the A&O chain, which will have 170 rooms and is located in the neighbouring metropolitan area of L’Hospitalet. There were no sales of individual hotels during the first half of the year. Four individual asset sales took place in the second half, but with the exception of the sale of the Edition Barcelona by KKH Capital (arranged already in 2017), they were small deals (three hotels with fewer than 25 rooms) and accounted for only 2% of the investment. The year’s three largest corporate transactions also affected Barcelona. The Minor deal involved the NH Collection Gran Hotel Calderón (5*, 255 rooms); the Blackstone takeover bid affected the NH Barcelona Ramblas (3*, 70 rooms); and the sale of AccorInvest involved the Novotel Barcelona Sant Joan Despí (4*, 161 rooms), the Ibis Barcelona Cornellà (3*, 122 rooms) and the Ibis Barcelona Santa Coloma (2*, 146 rooms). The year’s deals totalled nine hotels and one building for conversion, with a total of 884 rooms. Barcelona 2013 2014 2015 2016 2017 2018 No. Transactions 15 11 16 10 16 10 (Hotel in operation) 4 3 14 7 14 9 No. Rooms* 729 744 1,371 1,348 2,144 884 Total Investment (€M) 380.28 285.2 397.8 246.3 400.0 232.0 Average selling price/room (€k) 521,503 383,230 290,096 182,723 186,581 262,574 Source: compiled by the author * Weighted by percent acquisition Five keys: Madrid vs Barcelona 17
05 PERSPECTIVAS MADRID Entering 2019, the tourism industry faces uncertainties arising from possible changes of government at national and municipal level that may alter the industry’s strategies and regulation. The Spanish economy is projected to grow more slowly in 2019 than the previous year (2.2% according to the IMF vs 2.6% in 2018), which will squeeze earnings in the tourism industry, too. According to Exceltur, the tourism industry will grow 1.7% in 2019. The outlook for Madrid, however, is above the industry average. On the one hand, Madrid is expected to continue to grow as a business destination, attracting new conferences and conventions. Madrid Convention Bureau, a municipal body set up to promote Madrid as a business tourism destination, has made a decisive contribution to achieving that goal (at the end of 2018 it conducted a large promotional campaign in the main Chinese cities). The success of FITUR 2019, beating its historic levels of assistance, is evidence of continuing growth in the MICE segment. As a leisure destination, Madrid has a positive outlook, supported by the latest measures adopted by the City Council. The pedestrianisation of the city centre has facilitated the use of alternative means of transport (bicycles and electric cars), which improve the experience for tourists, especially younger travellers. Moreover, Madrid will host major sports events in 2019 that will boost the growth of leisure tourism, most notably the UEFA Champions League final, the Copa del Rey (King’s Cup) in basketball and the Davis Cup in tennis. The scheduled new openings are expected to bring an increase in average prices, especially in the higher categories. Urban hotels will benefit from the investment in repositioning and new product creation, prompting expectations of an improvement in operating results in the middle term. As a result of this, the differential in the levels of RevPar with respect to other comparable European destinations should be diminished. Lastly, investor appetite for Madrid remains very high, as evidenced by the Tryp Chamartín (3*, 199 rooms) and Exe Moncloa (4*, 161 rooms) acquisitions, by Meridia Capital and CBRE Global Investors, respectively, both in the first few months of 2019. The current context of high liquidity and low interest rates, combined with the number of deals currently on the table and the high interest of institutional investors to enter in Madrid, makes us optimistic about the level of hotel investment in 2019. Five keys: Madrid vs Barcelona 18
05 PERSPECTIVAS BARCELONA The political situation in Barcelona, which has caused a loss of popularity, especially among domestic and luxury travellers, is expected to diminish in importance in 2019 as the independence dispute subsides. From the point of view of the demand, we foresee that, although the leisure demand towards Barcelona will continue to grow, the business and MICE demand will continue to be affected. We believe that this effect will condition the evolution of the operating results of the city in the coming years, moderating its growth compared to the good trend presented by the city destiny during the last decade. Notwithstanding the foregoing, the appetite of investors and large international brands to enter Barcelona continues unaffected. As was apparent at IHIF 2019, held in March in Berlin, both investors and the international chains consider Barcelona a key city in their expansion strategies. After a 2018 marked by a scarcity of hotel deals – which in our opinion was due to a lack of product on the market, as hotel owners considered the market situation to be unfavourable to sell their assets – we expect 2019 to be more conducive to investment, once the market recovery and the impact of the moratorium make themselves felt. The extraordinary motivation of new hotel brands and concepts to enter Barcelona and the impossibility of developing new hotels will make any hotels sold without an operator especially attractive. In the absence of such deals, the only remaining option for the brands will be to enter into agreements with small and medium- sized operators that are looking to increase their revenue-generating capacity, while maintaining the management to optimise results. This trend is illustrated by the agreements between Selenta and Unbound by Hyatt and Nobu and between Hesperia and Hyatt Regency mentioned earlier. The possibility that this phenomenon will spread to the capital and other destinations with strong international demand cannot be ruled out. Five keys: Madrid vs Barcelona 19
EXPERTS HOTELS Miguel Vázquez Laura Hernando Managing Director Managing Director +34 91 579 84 00 +34 91 579 84 00 miguel.vazquez@colliers.com laura.hernando@colliers.com Gonzalo Gutiérrez Patricia Lapresa Director Senior Analyst +34 91 579 84 00 +34 91 579 84 00 gonzalo.gutierrez@colliers.com patricia.lapresa@colliers.com Fernando Azcárate Analyst +34 91 579 84 00 fernando.azcarate@colliers.com Content prepared by COLLIERS INTERNATIONAL SPAIN, S.L. (hereinafter “Colliers International) is copyright protected, pursuant to the contents of Royal Legislative Decree 1 of 12 April 1996, which approved the consolidated text of the Spanish Intellectual Property Act and which regularised, clarified and harmonised the current legal provisions governing this issue. Pursuant to the contents of Articles 17 et seq. of the aforementioned Act, users are prohibited from reproducing, distributing, publicly communicating or transforming any of the digital content prepared by Colliers International unless they have received prior written authorisation from Colliers international, which is the exclusive holder of all rights to exploit the said digital content. www.colliers.com/es
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