CBRE: Spain now most attractive European destination to invest in hotels

Spain has been crowned the most attractive European country to invest in hotels. This is the conclusion from the European Hotel Investor Intentions Survey report that the consulting firm CBRE published, where it analyses investors' appetite and their preferred investment destinations. The 2024 edition determines that Spain's market has overtaken the United Kingdom.

The document outlines that the Spanish hotel sector had an "excellent performance in 2023. It was the only segment that registered increases in investment volumes compared to the previous year and last year was the second year with the highest hotel investment on record, only behind 2018. The sector led investment last year, accounting for €4.1 billion, 36% of the total."

And the forecasts for this year are also positive, thanks to the sustained growth in the number of tourists and overnight stays. According to projections by CBRE's Data Science Department, in 2024 the number of tourists and overnight stays in Spain will increase (by 1.6% and 1.5%, respectively), with foreign tourism proving to be the most dynamic.

Jorge Ruiz, Director of Hotels in Iberia at CBRE, highlights that the European investors are focused on the Spanish hotel sector thanks to record tourism data and the positive evolution of the industry's operating results. "Our outlook points to a favourable context for the coming months driven by stable operating results, a good booking pace expected for the coming months and interest rates expected to stabilise. We expect more opportunities to come into the market as the funding environment improves," said Ruiz.

The growing interest in Spain is also reflected at the city level. In fact, in this edition of the study, Madrid overtook Paris to become the second most attractive city for hotel investment, second to London. "Spain's capital is becoming increasingly attractive to international capital, with notable interest from Latin America," the document states.

Barcelona is also among the most attractive cities in Europe for the sector, ranking sixth (after London, Madrid, Paris, Rome and Amsterdam). Another of the report's top cities is Athens, which ranks ninth and becomes an opportunity among the key tourism cities.

70% of hotels plan to invest more

The CBRE survey reflects hotel investors' optimism in the sector's evolution in Europe, which is set to be very dynamic this year. "The tourism sector's continued expansion and interest rate stabilisation have bolstered investors’ renewed confidence in the hotel market," says the study. Up to 70% of investors plan to increase capital commitments in the sector.

"Hotels have always proven to be a great hedge against inflation. Following the expected rate cuts at the end of the year, investors are keen to invest in the sector. They see many value-added opportunities and, crucially, long-term forecasts for tourist numbers in Europe suggest that projected supply levels will be insufficient to meet this demand," argues Kenneth Hatton, head of hotels for Europe at CBRE.

In terms of which market segment is most attractive for investment, luxury and ultra-luxury products lead the way with 51% and 45% respectively. On the other hand, the report detects a renewed investor focus on urban products (57%), while resorts, a segment that has proven historically resilient to inflation, came in second place with 36%.