In a country that annually receives more than 85 million tourists, the hotel sector plays a crucial role. Therefore, it is not surprising that the two cities with the highest influx, Madrid and Barcelona, are driving hotel investment so far in 2024.
Following the global impact of the COVID-19 pandemic, international tourism has recovered. According to the World Tourism Organization (UNWTO), in the first quarter of 2024, international arrivals reached 97% of those recorded in 2019. Globally, nearly 285 million tourists traveled abroad in the first three months of the year, representing a 20% increase compared to the same period in 2023. In Europe, visits surpassed pre-pandemic figures for the first time, with a 1% increase over the first quarter of 2019.
In Spain, the recovery of tourism is already complete. Last year, tourist demand exceeded the 2019 figure, driven by both national and international travelers. Additionally, tourists are spending more money at their destinations. In Spain, foreign travelers spent 108,000 euros, 24% more than in 2023 and 17% more than before the health crisis.
Hotels, the engine of real estate investment
The boom has been felt in the hotel sector. 2023 exceeded all forecasts in terms of hotel investment, following two years with volumes exceeding 3 billion euros. According to Colliers, Spain closed last year with a hotel investment volume of 4.248 billion euros, with 205 assets transacted – compared to 163 in 2022. Hotels were, therefore, the most demanded assets by real estate investors in Spain, accounting for more than 38% of the total.
These figures position Spain as the leader in hotel investment in Europe, ahead of powerhouses like the United Kingdom, France – the world’s leading destination for international tourism – and Germany. Our country is, in fact, the second-largest investor in hotels worldwide, only behind the United States.
In the first quarter of the year, hotel investment grew by 12% annually in Spain, reaching 577 million euros. Madrid and Barcelona, which lead in tourist arrivals, are also key players in terms of investment. According to CBRE, London remains the most attractive city in Europe for hotel investment. However, Madrid has overtaken Paris to claim the second spot, and Barcelona is in the top 10 of the Old Continent.
Why hotel investment is thriving in Madrid
The consulting firm Colliers highlights several features that have driven hotel investment in the capital. Although Barcelona remains the top tourist destination within Spain, Madrid’s tourist demand grew again in 2023. The city received 9.9 million tourists, approaching 2019 levels. The luxury segment – large five-star hotels – is capitalizing on international chains’ interest in Madrid.
On the other hand, prices have risen significantly. The average price in 2022 reached 134 euros, which is 29% more than in 2019. Although occupancy was still below pre-pandemic levels, Colliers highlights Madrid’s potential in the luxury and MICE (meetings, incentives, conferences, and exhibitions) segments.
Barcelona’s appeal for hotel investment
In the case of Barcelona, international visitors are key: they accounted for 86% of the total overnight stays in 2023. Barcelona was also the urban destination with the highest revenue per occupied room in Spain, averaging 162 euros in 2023.
Colliers also highlights Barcelona’s positioning in MICE and corporate tourism and notes that it broke its record for hotel investment last year, with 489 million euros. The figure is lower than that recorded in Madrid (601 million euros), and the consultancy points out that “various limitations” make the project pipeline “much smaller” in Barcelona than in Madrid.
Real estate investment in the hotel sector in Spain presents an attractive opportunity for investors. With constantly growing tourism, a recovering economy, and a diversified hotel offer, well-located and managed hotels can generate stable income and capital appreciation. Madrid and Barcelona are uniquely well-positioned to lead the sector in Europe and confirm the healthy state of real estate in Spain.
