As domestic and international tourism grows rapidly across Spain, the country's secondary cities offer new investors significant opportunities for development and business, reports Hotel management.
While international brands have traditionally held By focusing their attention on the country's popular, hyped destinations, alternative cities are already proving their worth and attracting international investors.
Barcelona Moratorium
Investment activity in the Spanish hotel sector reached a new record high in 2017, with transaction volume reaching €3.9 billion. Today, Spain positions itself as the third-largest hotel investment market in Europe, followed by the UK (£5.4 billion) and Germany (€4.2 billion)—countries that quickly recovered from the economic downturn and traditionally attract large volumes of hotel investment.
Meanwhile, authorities in Spain's most popular city, Barcelona, have imposed a moratorium on further hotel construction. According to preliminary reports, Madrid is ready to follow suit.
Since the moratorium was introduced in Barcelona, at least 38 hotel projects have been paralyzed, resulting in losses of approximately €3 billion and the loss of several thousand jobs.
Only a handful of projects granted permits before the moratorium will proceed, and the future of new properties remains uncertain. Consequently, only six hotels in the city have either recently opened or are expected to open in the next two years, adding a total of approximately 1,000 new rooms to the market, representing just 2.5 percent of the current supply.
Alternative cities are replacing the popular ones
A study by Christie & Co. has found that Spain's secondary cities are an attractive alternative to prime destinations as they offer higher returns.
Christie & Co. identified seven cities with real potential: Santander, Alicante, Cordoba, Granada, Toledo, Santiago de Compostela, and Valladolid.
These destinations posted higher RevPAR figures in 2017 and grew significantly between 2016 and 2017, leaving behind parts of Barcelona, Madrid, Valencia, Seville, San Sebastian, Malaga and Bilbao.
Furthermore, these cities recorded over 10 million overnight stays in 2017, accounting for 3.2 percent of the total number of overnight stays recorded nationwide. Nearly 6 million tourists visited these cities last year, representing a 3 percent increase over 2016. This, in turn, represents approximately 5.79 percent of all tourist arrivals to Spain in 2017.
Santander was the city with the highest ADR at €86 (average room rate), followed by Alicante (€77) and Córdoba (€71). In 2017, Alicante recorded the highest hotel occupancy rate at 73 percent (an increase of 7.2 percent compared to 2016), followed by Granada (71 percent) and Córdoba (67 percent).
Experts believe that these "secondary" cities could come to the fore in the coming years.
Risk assessment
"The recovery of domestic tourism, along with the growth of international tourism, has led to increased profitability for all alternative destinations. Added to this, good transport accessibility and excellent demand have made them attractive for both investment and development," said Xavier Batlet, director of Christie & Co.
Batlle added that there is a certain risk associated with developing tourism in secondary destinations due to their historical dependence on domestic demand. However, he clarified, "This risk will disappear once cities demonstrate their effectiveness, increase international tourism, and attract international investors."
Source: trn-news.ru
