The tourism halt has taken its toll on hotel investment, which plunged 61% in 2020, according to a report from CBRE. The value of the assets traded fell to 960 million euros compared to the 2,500 million euros registered in 2019. During the past financial year, 77 hotels with 6,800 rooms and land were bought and sold, and rehabilitation projects that included another 2,000 rooms.
Miguel Casas, investment director for Continental Europe at CBRE HotelsHe pointed out that despite the collapse there are signs that invite optimism. “A large part of investors, especially institutional ones, continue to show a high interest in the Spanish hotel sector, accentuated by an environment of low rates, high stock market volatility and the possibility of acquiring prime and strategic assets at more competitive prices. In the coming months, a considerably higher transactional activity is expected, which will accelerate especially from the second half of the year. “
The most important operations include the sale of the Formentor hotel, owned by Barceló to Emin Capital for 165 million, or the Nobu hotel, sold by Selenta to the ASG fund, for 80 million euros. These two operations reveal the change in profile among investors, since only 16% of purchases were carried out by hotel groups. 44% were made by institutional investors and 37% by private investors, such as family offices or managers. By geographical areas, the archipelagos concentrated 47% of the operations, with a 34% share for the Balearic Islands and 13% for the Canary Islands. Catalonia is already far behind, with 18%, followed by Madrid (11%) and Andalusia (8%).
“Although in 2019 we were already anticipating the beginning of a new tourism and hotel cycle, nothing suggested that we would live in 2020 one of the most unusual and extraordinary years in history. Despite the fact that the year had started adding 14% more investment volume compared to the first quarter of 2019, the pandemic has contracted transactional activity to levels more typical of the previous crisis. Factors such as the great uncertainty of the markets, the scarcity of bank financing, the slowdown in operating activity and the difference in price expectations between buyers and sellers have caused total investment during 2020 to have been reduced by 65% compared to the volume registered in 2019 ”, he said Jorge Ruiz, head of the Hotels department at CBRE Hotels.
The statistics also reveal that portfolio purchases continued to gain weight compared to assets. Despite the fact that the two largest assets (Formentor and Nobu) accounted for almost 25% of the volume traded in 2020, real estate asset portfolios grew strongly and represented 26% of the total, five points more than twelve months earlier. Despite this, individual assets accounted for 74% of transactions.
2020 data also shows a greater appetite of investors for vacation assets versus urban ones, hit harder by mobility restrictions and by the collapse of business tourism and conventions. The vacation accounted for 61% of operations.
2018. It marked a historical record, with 4,810 million euros of investment and a growth of 23.1%, thanks to the purchase of 97.91% of Hispania by Blackstone, in which 49 hotels and 12,649 rooms were transacted for an amount of 1,900 million euros.
2019. Hotel investment fell to 2,518 million euros, which was the worst record in the last three years, after achieving a volume of 3,907 and 4,810 million in 2017 and 2018. In that year, Madrid attracted 16% of funds, the double what Barcelona received.
2020. The health crisis of the coronavirus sinks hotel investment in Spain to 960 million euros. Five-star and four-star hotels account for more than two thirds of closed operations.