Spanish chains report strong rebound as demand overtakes pre-pandemic figures

Senior Spanish hotel executives are planning new openings around the world as they report demand surging past pre-pandemic levels, but some were also cautious that economic and other factors could yet darken the business horizon.

A great 2022 marked by holidaymakers getting back on flights has resulted in higher room rates while the MICE and business travel sectors are also showing a return to normal, the executives said at a series of press conferences at Madrid’s FITUR travel fair.

However, rising inflation, a scarcity of employees and the possible future effects of the Russian war in Ukraine were concerns of some.

“I’m prudently optimistic as we go into 2023 and I expect that this year will see a total recovery in the sector,” said Gabriel Escarrer, the CEO of Meliá Hotels & Resorts, Spain’s biggest hotel group with more than 380 hotels on four continents and who was most bullish on the sector’s prospects.

“At the moment, we’re seeing room reservations in Spain up by 30 per cent over this time last year and 23 per cent above pre-Covid 2019. Globally, those figures are up by 35 per cent compared to 2022 and 40 per cent over 2019,” he said.

Average room rates were up by 20 per cent over last year and 30 per cent higher than 2019.

“So we’re predicting a very good first half of this year and it seems travel demand could be immune to fears of an economic recession. There is a noted recovery in MICE and business travel which is almost back to the levels before Covid and this is having a very positive effect on our urban properties,” Escarrer told reporters.

“Our goals for the coming year include attracting and retaining employees, consolidating our commitment to sustainability and expanding our international presence.”

New brands

Last year, the Mallorca-based chain opened 32 hotels totaling 7,500 rooms mostly in Vietnam, making it the second biggest hotel operator in that country. There were also five new properties in Spain, nine in the rest of Europe and two in Brazil, along with signed agreements for a further 33 properties totaling 8,200 rooms.

This year will see at least 25 Meliá debuts in 14 countries, including a Gran Meliá in Nha Trang, Vietnam; an ME by Meliá in both Malta and Guadalajara, Mexico; and the Meliá Collection Ngnorongoro Lodge in Tanzania.

The chain will also open two new hotels in Albania which Escarrer described as a “destination of special interest for our company.”

The CEO also announced two new brands, Zel (in a joint venture with Spanish tennis great Rafa Nadal) and Falcon’s Resorts, which he described as “lifestyle-oriented”, bringing the number of the chain’s marques to ten.

COVID-19 Payback

Ramón Aragonés, the CEO of NH Hotel Group, highlighted his company’s resilience in getting through the Covid years and boasted of the “tremendous recuperation” in business the chain is experiencing.

“Our turnover in 2022 was close to 1.7 billion euros which was above 2019’s figure thanks to our solid sales strategy with a focus on prices,” he said.

“And even though we have raised room rates with ADR now at 120 euros which is 15 to 20 per cent above the pre-pandemic level, guest satisfaction is very high across all brands and if this demand continues we expect ADR to reach 130 euros this year,” Aragonés said.

“Our higher rates are the only way to maintain profits and we have no worries concerning income. People are recovering their lives after what has happened over the past few years and we’re also seeing improvements in MICE and corporate travel.”

The CEO also announced the company, which is majority owned by Thailand-based Minor International, had paid back the last 50 million euros of its loan of 500 million euros from the Spanish government which extended credit to hoteliers to help them survive the business downturn triggered by Covid.

“We’re the first Spanish hotel company to do that,” he noted.

NH Hotel Group opened ten new properties in 2022 – four of its NH brand, three NH Collection properties, one Nhow and two Anantara luxury resorts – and plans debuting 50 new hotels in tandem with its parent company over the next two years, mostly in Europe, Asia and Latin America, the CEO said. 

Palladium’s Plans

Palladium Hotel Group, which is among the top ten Spanish hotel companies, saw turnover of close to 1 billion euros in 2022 for the first time in its history, CEO Jesús Sobrino said.

“This is a 113 per cent rise over the previous year and 26 per cent higher than 2019 while ADR was up 29 per cent and RevPAR increasing 16 per cent over pre-Covid levels,” he added.

“2022 was a good year for us and this year we should see moderate growth with room rates increasing by around 7 per cent,” Sobrino said.

However, guest demand could possibly be impacted negatively by inflation and the war in Ukraine driving up food and fuel prices. Another challenge, he said, was the difficulty in maintaining staff levels as many employees opted to switch careers due to the pandemic.

The executive credited much of last year’s growth to stellar performances at the chain’s Grand Palladium Sicilia Resort & Spa in Italy and Palladium Hotel Menorca, two of its Only You properties in the Spanish cities of Malaga and Valencia, and Hard Rock Hotel Marbella and TRS Ibiza Hotel.

“Over the next two years, we’ll be opening the five-star Only You in Seville with 226 rooms and a second tower at Hard Rock Marbella will begin taking guests,” he said.

Only You will make its debut outside Spain with a 168-room hotel in Venice following an extensive refurbishment of the property with the opening scheduled for late 2024 or 2025.

“And we are particularly excited about our agreement signed with Wyndham to include our 14 all-inclusive, upscale resorts in Mexico, the Dominican Republic, Jamaica and Brazil in its loyalty program,” he said.

“This will let us tap into Wyndham’s extensive customer base in the United States, Canada and Mexico which are the three largest generating markets for Caribbean tourism.”