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Spanish Hoteliers’ Profitability Shoots Up Due to Tourist Boom

Posted by: In: Real Estate 08 Aug 2017 Comments: 0 Tags: , , , , , , , , , , ,


The increase in demand, coupled with an updated hotel portfolio, has led to record occupancies and has allowed large groups increase prices by double digits.

Tourism in Spain has continued its vertiginous climb of the last five years and, after beating a new record with 75.6 million international visitors in 2016, forecasts indicate that this year there could be a return to record highs with the arrival of 84 million foreign tourists, which would make the country the world leader in the sector, surpassing France.

Among the big beneficiaries of the tourist boom are the large Spanish hotel groups, which anticipate an excellent summer season and expect an increase in their revenues, thanks to high demand and a double-digit increase in prices, brought about by high occupancy rates and the modernization of hotel portfolios. Large chains have thus been able to reach prices and occupation rates last seen in 2007, and, in some cases, profitability has also reached pre-crisis levels.

Specifically, Meliá, the top Spanish hotel chain by number of rooms, which has focused on improving room rates to increase occupancy, and maximizing operating efficiency in newly repositioned hotels, is predicting a strong third quarter. The hotel group owned by the Escarrer family achieved a 15.7% increase in average revenue per room available (RevPar) in hotels in Spain up to June and plans to conclude the current tourist season with a RevPar higher than the previous year in all areas.

Holiday Rentals

Meliá points out that the best performing area is the Canary Islands, where it is registering the most significant increase in prices, and the peninsular coast. The most important market for the chain is still the British, which saw growth of 8%. By contrast, the German, Italian and Spanish market figures are below the previous year.

Regarding the Balearic Islands, although occupancy rates continue to improve, high season prices hide a decline due to the early sales in the British market and the fall in German and Russian visitors, due to the recovery of Turkey, the main competitor in last-minute bookings. Likewise, the demand for short-term private holiday homes is significantly damaging sales of regulated tourist accommodations in the Balearic Islands, Meliá says.

The Barceló hotel group anticipates occupancy rates of 94% in the Balearic Islands and of more than 90% in the Canary Islands, as well as an improvement in prices of 11% and 9%, respectively. In Andalusia, the group estimates that price increases will exceed 10%, with occupancy rates at 90% in August.

Regarding the main European markets, the United Kingdom is still the number one in the Balearic Islands, with growth of 5% over the previous year, followed by Germany, with a 6% increase, Italy (+8%) and France (+5%). Meanwhile, domestic market demand in this destination has grown 12% over the previous year and is expected to grow even more, since it is a market that does not book rooms so far in advance. Spanish tourists are also the main engine of growth for the Barceló Group in Andalusia.

The company already achieved record EBITDA and recurring net profit last year.

In the case of the Palladium hotel group, the chain has increased prices in Ibiza by 4% on average, although growth is higher in some areas such as San Antonio and Santa Eulalia, with increases of 8% and 6%, respectively. The best markets remain the British and German, accounting for 37% and 17%.

This will be the Matutes family’s first summer in the Canary Islands, since the opening of the Hard Rock Hotel of Tenerife in October. The company notes that bookings are performing very positively.

For its part, RIU Hotel & Resorts anticipates high occupancy in July and August, as well as an extended tourist season. RIU points out that, although the summer is off season in the Canary Islands, in recent years the occupancy has remained high throughout the year. In addition, it has renovated its hotel portfolio on the Costa del Sol which, together with the popularity of the destination, is positively impacting demand.

RIU is estimating an improvement of between 5% and 7% in average room rates. The firm underlines the positive performance of the German market, the increase in Scandinavian and British visitors, as well as the rebound in bookings by Spanish nationals, up 5%.


The Canary Islands and the Balearic Islands are Iberostar’s top destinations, where returns have been the highest compared to the peninsular coast, which is more dependent on the Spanish market. Together, the Fluxá family’s chain anticipates an increase in RevPar of 10% thanks to increased prices resulting from high demand and to investments made to reform and modernize its establishments.

Iberostar emphasised the strength of the British market and the Benelux area, while detecting a downward trend in the German and Spanish markets. Iberostar believes that domestic demand has not yet fully recovered. The hotel group believes that the cut in the duration of the stays during the traditional high season is still a reality in the case of the Spanish market. In addition, it considers that price increases have affected demand from families, while other segments such as couples or single adults have only continued to rise.

Grupo Piñero, with a presence in Tenerife and Mallorca, expects to reach average occupancy rates of 94% and 84% and a RevPar increase of 7% and 13%, respectively.

Regarding demand, Grupo Piñero anticipates a rebound in German and Polish visitors, and a recovery of the Russian market in Mallorca. In Tenerife, the demand by the British – the ones that contribute the most to sales – has registered a slight decrease, compensated by improved performance in other markets.

Original Story: ProOrbyt Expansion – Rebeca Arroyo

Translation: Richard Turner

The post Spanish Hoteliers’ Profitability Shoots Up Due to Tourist Boom appeared first on Aura Real Estate Experts.

Source:: AURA Real Estate Experts


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