Growing demand and low or obsolete supply are combining to make the hospitality sector a sure-bet investment, experts agreed at the Iberian Investment Briefing, which took place at the Spanish Embassy in London recently. The summit was organised by Iberian Property and Real Asset Media.
‘Spain is the most competitive country in terms of travel and tourism, the industry is strong, and demand is increasing,’ said Jaime Buxó, Chief Development Officer, Grupo Barceló. ‘The forecast is very sunny’.
Spain is the second most visited country in the world after France and last year international visitor numbers reached 82.8 mln, the highest on record. Arrivals have increased by 28% in the last four years, and the expectation is that they will reach 110 mln by 2030.
Portugal also reached a record number of visitors last year, up 47% since 2014 to 15.4 mln, and the forecast is for 33 mln tourists a year to visit the country by 2030.
The hospitality sector is attracting a lot of attention and the market is liquid and transparent. Numbers last year were skewed by Blackstone’s €2 bln acquisition of Hispania, which has made the US group the largest hotel owner in Spain with 13,000 keys and has underlined the country’s attractiveness as destination for private equity.
Spain leads Europe in the resorts and sun & beach segment, accounting for 25% of all rooms. ‘There has been zero growth of supply in this segment and 65% of existing supply is obsolete, especially family-owned hotels that have not received the necessary investment,’ said Buxó. ‘Things are changing now and the Balearic islands have taken the lead in repositioning hotel stock and investing in capex’.
Grupo Barceló has made a €12 mln investment to improve its hotels and resorts. ‘We’ve invested heavily in refurbishment and repositioning, spending an average of €50,000 per room, focusing on good design and the customer experience,’ he said. ‘It really paid off for us. We have increased the number of rooms by 20% and have achieved 40% ROI through our refurbishment efforts’.
That is the right strategy, said George Minns, Acquisitions Director, Europa Capital: ‘Hotels are our favourite sector to invest in. Hotel refurbishment is good, especially if you keep the income-producing asset open while the refurbishment is going on’.
Tourism has been performing extremely well for three years so many investors have already got in on the act, said Bruno Hallé, Partner, Co-head Hospitality, Cushman & Wakefield: ‘However, there are still opportunities in refurbishment and repositioning. The big portfolios may have gone, but it is still possible to cherry-pick good assets’.
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