International funds led the main hotel purchase operations in Spain last year and continue to look for opportunities in Madrid and Barcelona. According to Colliers' calculations, there are close to 2,000 million euros in ongoing transactions that will continue to keep the investment pulse going this year and that will materialize foreseeably in the second half of the year. The explosive recovery of the business after the pandemic explains the interest.
In 2022, international firms made full use of the main hotel acquisitions in Madrid and Barcelona. In Madrid, the Canadian firm Brookfield acquired the Princesa Plaza Hotel, the British Round Hill Capital bought the Hotel Faranda Florida Norte and the American Sancus Capital acquired 51% of the Villa Magna and Bless Hotel hotels. In Barcelona, the German fund Union Investment acquired the Hotel Barcelona 1882 and the American firm Invesco, the Hotel Occidental Barcelona 1929.
"The hotel sector in Madrid and Barcelona has raised a lot of interest among investment funds, especially international ones," says Ignacio Allende, partner in Corporate Finance at KPMG. These firms have launched into premium hotels "due to less elasticity of demand in the period of uncertainty" and "it is foreseeable that this interest will gradually expand to the rest of the medium and medium-high categories, three and four stars ", it states.
Laura Hernando, managing director of hotels at Colliers, highlights the ability of hotels to "transfer inflation and cost increases to rates", encouraged by tourism. Since the American giant Blackstone entered hotels in Spain in 2017, "these assets are in the international eye and continue to be."
Of the 3,279 million euros of hotel investment last year, 2,368 million correspond to international investors, that is, 72%, according to Colliers. The total investment figure is the third largest in recent decades and comes after, according to INE data, overnight stays in hotels increased by 85% last year.
Madrid, he explains, has taken a little longer to enter the international circuit than Barcelona, where the hotel moratorium first and the various limitations on the sector have reduced supply and raised the price of assets. “Many current operators have no interest in selling because business is good,” she adds.
The average price in the purchase of hotels was 168,000 euros per room in 2022, 41% above the 119,000 euros of five years ago. Last year the increase was 7% and was due to the sale of several prime assets, such as the Villa Magna in Madrid, in which more than one million euros per room was exceeded.
Will purchase prices continue to rise? "The valuation prospects for 2023 continue to be very favorable and it is foreseeable that records will continue to be broken in line with what happened in 2022," says Allende. International funds continue to have “excess liquidity”, he adds.
On the map of foreign investors, the Singapore fund GIC or the joint venture between Stoneweg Hospitality and Bain Capital also stand out, which has acquired three hotels this year, one in Barcelona and two on the Costa del Sol. The French firm Eurazeo bought the Aire chain, owned by El Corte Inglés and Palladium.
