In recent years, Spain has emerged as a leading destination for hospitality investment in Europe. According to the Hotel Investment Report prepared by Colliers, hotel investment in Spain reached €4.248 million in 2023.
The record-breaking year of 2023 saw the transaction of 171 hotels and 21,748 rooms, along with 34 land operations. Spain’s position as the largest hotel investment market in Europe was further solidified when it overtook the UK in 2022.
The positive trend in hospitality investment is expected to continue, with Savills’ latest research indicating that investment volumes for European hotels are projected to surpass the numbers of 2023.
The Savills European Investor Sentiment Survey 2024 [see footnote] also reveals a significant appetite among investors to increase their allocation to the hospitality sector over the next three years. Survey respondents anticipate deploying approximately €10billion in that period, with a particular focus on serviced apartments, lifestyle hotels, and mid-market hotels.
Product quality and specialisation
One of the key factors driving hospitality investment in Spain is the emphasis on product quality and specialisation.
Jorge Zelada, the digital expansion director of B&B Hotels Spain & Portugal, highlighted the trend towards specialisation and product quality in all segments of the industry in a recent article by Hospitality Investor.
The typology of hotel segments where investors are focusing their investments has evolved over the years. Initially, the focus was mainly on urban assets, but starting in 2014, institutional funds began to see the potential for growth and investment in vacation products.
This shift has resulted in a balanced investment approach, with approximately 50% of investments in urban areas and 50% in vacation destinations. In urban areas, the trend is towards luxury and limited-service products.
Malaga continuing to develop as luxury destination
The provinces of Málaga and Granada have emerged as attractive destinations for hospitality investment in Spain. Málaga, in particular, has seen a growing interest as a luxury destination for wealthy travellers.
International and Spanish investors have been supporting the development of five-star luxury accommodations in the city, including new builds and conversions of former government structures.
The investment in hotels in Málaga reached €135.5 million in the previous year, nearly three times the amount in 2022. The city’s cultural offerings, such as art museums and luxury yacht marina, have been instrumental in attracting affluent visitors.
Notable upcoming luxury hotel projects in Málaga include the Hotel Torre del Puerto, financed by Andalusian Hospitality II, and a new Me by Meliá hotel owned by Kerald Holding.
Additionally, there are plans for the conversion of the former post office complex into a five-star hotel and the transformation of the Palacio de La Tintas, reflecting the growth and reinvention of Málaga as a quality tourism destination.
SPI has a number of off-market properties in Malaga and Granada prime for development. Contact us for more information.
Ronda to offer high-end hospitality
A new plan from the Ronda local council could potentially change the permitted use of two former private schools, allowing them to be transformed into high-end hotels. This development could mark a successful conclusion to several previously failed attempts to achieve the same in the city.
The first building is situated in the heart of the city’s historical quarter, near Duquesa de Parcent Square, an area known for its series of convents and other centuries-old structures. The project will be undertaken by a company called Catalonia, which has struck a deal with a foundation to undertake the transformation. Catalonia already owns two other hotels in the city and hopes to secure the necessary building licences by the end of the year, though this timeline could be delayed by administrative processes.
Meanwhile, hotel chains Summum and Melia are collaborating to create another five-star establishment in the former Madre de Dios convent, located adjacent to the Padre Jesus neighbourhood.
Granada following Malaga’s lead
Granada is benefiting from the hospitality interest in Málaga, following a similar pattern to the coastal city’s development.
Granada’s Albaicin area, with its carmenes, is prime for investment in luxury boutique hotels. The five-star market in Granada is experiencing significant growth, with the current roster of seven luxury properties expected to expand by at least 70% in the coming years.
The Alhambra and the city’s historic architecture make Granada a must-visit destination for many travellers. However, the availability of five-star accommodation has been limited, creating an opportunity for more hotels to cater to this demand.
The Barceló Hotel Group has already opened the five-star Palacio Gran Via Royal Hideaway in a century-old building owned by a local businessman. Additionally, the Provincial Historical Heritage Commission of Granada has approved the conversion of the Colón building into a new five-star hotel, which is set to open in 2025.
Overall, the hospitality investment landscape is thriving. With council planning departments greenlighting more change of use for existing properties, opportunities will continue to present themselves.
