Long a major holiday destination attracting package tourists eager to take in the sunshine on the country’s famed Mediterranean beaches and Atlantic islands, Spain is now luring upscale visitors with hotel investors taking note, industry experts say.
And one of the newest desirable destinations is the Andalusian city of Granada.
“If you look at hotel investment overall, Spain is the hottest market in Europe and one of the reasons is that you have a good mixture of leisure and business destinations,” Christie & Co managing director for Spain and Portugal Nicolas Cousin told Hospitality Investor.
“And the upper end of the market is coming into its own as we’ve seen a lot of rebranding of four and five-star properties along the Costa del Sol and there has been a real uptick in luxury hotels opening in Madrid and other cities over the past several years,” he added.
Cousin explained other reasons investors and brands are betting on luxury hotels is because they have proven to be resilient in a crisis, they are always a good investment asset because of their locations, and ADR has been exceptional in the luxury segment in recent years.
“So international investors and brands see a clear potential in the five-star segment,” he said.
Booming market
According to a recent Christie & Co report, since 2019, 28 international groups have opened 122 new hotels with 22,640 rooms in Spain, registering growth of 16 per cent by foreign groups or four times that of domestic hospitality groups which grew by just 4.5 per cent.
During the same period, five-star properties accounted for 12 per cent of the added rooms with 23 of the 28 international groups representing the luxury and upscale segment.
Eleven hotel groups have debuted in Spain since 2019, including such high-end brands as Four Seasons, Rosewood, Ikos Resorts, Club Med, Mandarin Oriental and Thompson.
And between now and 2026, another 68 international brand hotels totaling 10,667 rooms are scheduled to open in Spain with almost half the rooms slated for five-star properties, the report said.
“But then all levels of hotels have been doing well in Spain and the economy and budget segments in particular,” the Christie & Co executive explained. “For the investor, a brand can bring efficiency and brand recognition.
“For instance, B&B has been one of the most active economy brands in Spain and we’re seeing expansion of Accor and its Ibis brands, Holiday Inn Express and Germany’s Zleep hotels,” he said.
Cousin pointed out that big Spanish brands like Meliá and NH don’t have a presence in the budget segment in their own market leaving the field open for international brands to move in.
But it’s also the five-star market which is getting a lot of the buzz and most recently in secondary Spanish cities such as Granada which will see its current roster of seven luxury properties grow by at least 70 percent over the next several years.
Most visited
Nestled in the foothills of southern Spain’s Sierra Madre mountain range, the city of some 230,000 inhabitants boasts what the country’s tourism authorities say is the most visited monument in Spain, the magnificent Moorish palace and fortress complex known as the Alhambra.
Last year, 2.4 million people visited the site with numbers increasing as more and more tourists seek out Spain’s historic attractions.
Karen Rosenblum, the founder of the vacation planning company Spain Less Traveled, says she has noted that since the pandemic her clients are more interested in unique vacation experiences centered around local heritage and culture.
“Granada is high on our clients’ ‘must-do’ lists because of the Alhambra and the city’s historic architecture. They ask for five-star accommodation and it’s not always available so more hotels filling that need is a great idea,” she says.
“One indication of that is room rates are higher this year than in 2022 and even higher than before the pandemic as people are seeking out, and willing to pay for, upscale vacations.”
Antonio Garcia, the secretary-general of Granada’s Federation of Tourism and Hospitality Businesses industry group, concurs.
“We’re seeing a growth in visitors who come here specifically for our city’s cultural attractions and that includes not only the Alhambra, but the old city center and a world-renowned summer music festival,” he told Hospitality Investor.
“And this type of visitor is usually more affluent than the sun-and-sea crowd and wants to stay in an upscale hotel. That’s why I think the new wave of five-star hotels will do well,” he adds.
“But my advice to an investor still would be to do all their homework and thoroughly investigate the destination as a market for a luxury property.”
Domestic involvement
Despite international interest in Spain, domestic investors and brands are taking the lead in Granada with the Barceló Hotel Group opening the 38-room Palacio Gran Villa Royal Hideaway in a century-old building owned by a local businessman.
Slated for a 2025 opening following a 10-million-euro refurbishment is the Hotel Gran Colon with 52 rooms and three more five-stars will grace the city over the next several years, all being developed by local entrepreneurs.
None of the new properties will have more than 75 rooms with Garcia and Cousin saying the boutique business model is best to lure well-heeled travelers.
“These visitors want a good employee to guest ratio and I think the perfect number of rooms for a luxury property is somewhere around 38,” Garcia said.
“As for the size of these hotels, you’ll see it will be very limited,” the Christie & Co managing director said. “But it will still have an impact on the city’s hotel capacity.”