Wealthy visitors have long used the city of Malaga as the entry point to the upscale seaside resorts sprinkled along Spain’s Costa del Sol but now they’re deciding to stay over a while to explore the attractions of the provincial capital.
This new interest in the city has spawned a wave of five-star luxury accommodations in the pipeline with international and Spanish investors backing a pair of new builds and multi-million-euro conversions of two former government structures.
“What has happened is that over the past ten years, international demand has risen dramatically from the long-haul tourism market for high-end hotels,” noted Gonzalo Gutierrez, the managing director of hotels at Colliers Spain and a native of the city.
“When we talk to hotel groups they say that Malaga is at the top of their list for acquisitions and with only three five-star properties operating at the moment there is still plenty of room to grow.”
These investors, he continued, recognize that the city is fulfilling its potential as a luxury destination by vastly enhancing its tourism offer with new municipal infrastructure and cultural offerings, coupled with great weather and improving air connectivity to the rest of Europe and the United States.
According to Colliers, investment in hotels of all categories in the city reached 135.5 million euros last year, almost three times the amount of 2022 and close to the record investment of 135.7 million euros set in 2017.
“At the same time as we see this interest from hotel investors chic F&B groups are also looking at positions in Malaga,” Gutierrez added.
While the Costa del Sol, which runs along the Mediterranean from Malaga down to Gibraltar, has long been a magnet for the sea-and-sun seekers of all budgets, the city has now also become a cultural destination particularly attractive to wealthy travelers.
In recent years, art museums of international renown have opened with a local branch of Paris’ Pompidou Center and the Carmen Thyssen Museum joining the long-established Picasso Museum with major works by Malaga’s most famous son.
“Malaga is now unique as far as luring wealthy visitors to the Costa del Sol,” explained Javier Hernández, the vice president of the Costa Del Sol Hotel Business Association (AEHCOS).
“For decades the nearby resort city of Marbella has been the destination for that level of clientele and more recently Estepona with their deluxe hotels and world-glass golf resorts.
“But now Malaga has that irresistible cultural element which sets it apart for people in that financial demographic,” he said.
Also pulling in deep-pocketed visitors are Malaga’s state-of-the art luxury yacht club which city officials say enjoys a year-round occupancy rate of 80 per cent and a new cruise ship port which is increasingly popular with European-based lines.
Seaside Luxury
Under construction overlooking these maritime facilities is what is currently known as the Hotel Torre del Puerto, a 27-story tower of 378 rooms with a 1,100-seat convention center. It is expected to open later this year or in 2025.
It is being financed by Andalusian Hospitality II, a subsidiary of the Al Alfia Group which is partly owned by the Al Thani royal family of Qatar, according to Spanish press reports. Spanish hotel group Hesperia has signed on to manage the property.
A spokeswoman for local architecture firm Estudio Segui in charge of designing the property said it won the contract in a competition organized by the Port of Malaga authorities.
“It was conceived as a five-star ‘grand luxury’ congress hotel dedicated to hosting international conventions,” she said, adding that the property’s final branding has yet to be decided.
“This hotel will go a long way to solving the lack of MICE and convention venues in Malaga for hosting European or global-type big shows and events,” AEHCOS’ Hernández noted.
Meliá Steps In
Spain’s largest hotel group, Meliá Hotels International (MHI), is to open the latest of its Me by Meliá brand in a new, five-story building owned by Kerald Holding, the family office of ex-Barcelona football star and businessman Gerard Pique.
“We believe Malaga is a good place for a new five-star because it is one of the cities with the highest tourism offers in Spain,” said Rocio Galan, Meliá’s operations manager in Malaga.
“However, the offer of hotels in this range is not developing at the same pace as the city’s growth in tourism and it is insufficient to accommodate the demand from high-level clients.”
Originally, the hotel was to be a four-star hotel but the owners and MHI decided to upgrade in agreement with local authorities. Construction on the 128-key property was halted for archaeological excavations following the discovery of a Moorish cemetery on the site.
“There is some complex engineering work currently going. But if we maintain a good pace, we could see the hotel opening by the end of summer 2025,” Galan said.
“Me by Meliá is a good example of owners of four-stars wanting to upgrade to the upscale and luxury level,” said Gutierrez of Colliers. “Another trend we’re seeing in Malaga is that several of these new hotels are conversions of office buildings.”
Israeli Investment
One of these is a future five-star being transformed from the city’s former post office complex which was purchased in 2019 by Nitsba Spain, the local subsidiary of the Israeli real estate development and management group Nitsba Holdings, paying 23.5 million euros for the property.
Plans call for an investment of 90 million euros to convert the 1980 building into a 200-room hotel and shopping center featuring high-end retail stores and restaurants with opening scheduled for 2026, according to Spanish press reports.
“This project is a different change of use so it’s taking a long time to get off the ground,” Gutierrez said.
Several annexes are to be added to make it more attractive to potential branding partners which, according to Nitsba’s local representative, could include such stellar marques as Four Seasons, Mandarin Oriental, Belmond, Hyatt, Aman Resorts and Marriott.
Reinvention
Conversion work began last year on another former government structure, the Palacio de La Tintas built in 1908 and which over the years housed the headquarters of the regional railway company and the city water works.
Spain’s Hotusa Group, which bought the property at auction in 2020, obtained 30 million euros in financing for the transformation with half of the total coming from the Andalusian Regional Urban Development Fund.
Hotusa plans to operate the five-star, 150-key hotel under its luxury Aurea by Eurostars brand, according to group president Amancio López.
“At the moment, the capital of the Costa del Sol is in the middle of a growth and reinvention process promoting quality tourism by extoling its art and cultural heritage, historic monuments and gastronomy that align perfectly with the Eurostars and Aurea concepts,” he told the local press.