How did 2022 end for investment in the Spanish hotel sector?

2022 was positioned as the third best year for hotel investment recorded in Spain. Having an excellent closing with an increase of 3 billion euros. The country attracted more than 6 billion euros during the year and joined the first countries, after France and the United States, to have a growth in foreign investment rate of 72% compared to 2017. Want more information about the hotel sector? Stay until the end! 

2022 ranks third best year for hotel investment in the country

Compared to the figures of two years ago, at the height of the pandemic, 2022 represented a period of recovery for the hotel sector in Spain.

During the past year, a fund increase of 1,655 million euros was achieved. Thanks to this figure, the economic increase is 39% compared to 2021. 

In this regard, hotel investments managed to increase their figures to 3,279 million euros. Such amount of money had only been surpassed in 2017 and 2018. 

In addition, 85% of the 2019 economic investments were recovered, implying a possible recovery to the crisis so far in 2023.

This can be seen in the graph published in the report Hotel Investment, Spain 2022 by the consulting firm Colliers: 

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Foreign capital as the main source of investment in the hotel sector

Since 2015, international investments lead the main sources of capital in the hotel sector in Spain. 

In terms of acquisitions, there were numerous investments valued at 2,368 million euros (equivalent to 72% of the year’s total). Of these, the Singapore sovereign wealth fund, GIC, the Israeli group Fattal, the Canadian multinational Brookfield, among others, stand out. 

Below is a more detailed list: 

Which parts of the hotel sector were invested in 2022?

The international real estate company CBRE has released a new report called Hotel Investment Report 2022. In this report it is pointed out that the hotel market has closed one of the best years in terms of operations and transactions. 

According to the report, most of the hotel sector’s investment comes from: 

• Institutional investors (50%).
• Hotel groups (23%) 
• Private investors together with real estate companies or companies from other sectors (24%) 
• In addition, as in previous years, most of the investment went to 4-star hotels (46%), followed by 5-star and luxury hotels (33%).

Within these figures, which hotel investment segments and zones were relevant during 2022? We highlight two important aspects:

Recovery of the vacation segment of the hotel sector. 

In 2022, there is a trend in hotel investment towards the vacation sectors, with 58% of investments.

The previous year was considered one of the most relevant due to the arrival of new institutional funds, reflecting confidence in the Spanish hotel sector. It is important to note that the investment should be weighted by its return gain one season later. 

Some examples of these transactions are the acquisition of Ferrer Hoteles by the U.S. fund Cerberus, the purchase of Expo Valencia and Kympton Aysla Mallorca by the Swiss manager Pictet.

There is also the alliance of Santander Bank with Signal Capital and the launch of a monetary fund for hotel investment. Its first purchase was the Sheraton La Caleta hotel in Tenerife. 

Although Madrid and Barcelona (urban segments) have also been important investment destinations for the hotel sector, they have failed to balance the trend towards the vacation segments. The latter has remained linear with 2016 trends.

2. Madrid and the Balearic Islands are leading players in both urban and vacation investment segments

With more than 803 million euros of new investment, Madrid is the city with the best performance in the hotel sector this year. It represents 24% of all national investment, more than tripling Barcelona and its record of 225 million euros.  

The Balearic archipelago broke a record with 33 transactions worth €913 million, more than three times as much as in 2018 (€947 million).

The province of Malaga, a national destination that has positioned itself in recent years as one of the preferred destinations for investment in the hotel sector, has surpassed the Canary Islands with an investment volume of 572 million euros.

Finally, the Canary Islands, with only 6 operations this year, accumulated hotel investment of 175 million euros. The summary can be seen in the graph in the Colliers report: 

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What are the predictions for investment in the hotel sector in 2023?

According to CBRE’s national hotel director, 2023 presents significant challenges that require caution for the hotel sector. 

The conflict between Russia and Ukraine, the increase in operating costs, the decrease in travelers’ purchasing power and financing costs, generate a scenario of uncertainty.

As a result, occupancy rates are expected to fall as costs are passed on to rates and many investors will take a wait-and-see approach. 

However, Spain remains one of the preferred destinations for both foreign tourists and international investors, says Jorge Ruiz. 

On the other hand, CBRE expects some of the trends that have been consolidating in recent years in the hotel sector to continue in 2023.

Some of them are: the growth of the luxury segment, the increase in sales and rental transactions, hotel alliances between groups, the increase in the application of sustainability and social responsibility principles and the prominence of the “core” investor.

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