Hotel investment in Europe reached 9.0 billion euros, with Spain emerging as the second destination for this capital. Investments in Spain surpassed 1.5 billion euros, marking the second highest figure on the continent, surpassed only by the United Kingdom and ahead of Germany, France, and Italy. This finding comes from The Hotel Property Telescope, a report produced by EY’s Strategy and Transactions team.
In the first half of the year, there was a surge of purchases by hotel chains. Operators accounted for roughly one third of continental investment, with more than 3.0 billion euros in acquisitions. They also participated as investors in seven of the 25 largest transactions. The report notes a growing trend of private buyers and operating groups, while private equity funds seek returns from the United Kingdom.
2.2 billion euros in Spain transactions
The hotel investment in Spain hovered around 1.5 billion euros, continuing the 2021 momentum that positioned these assets at the forefront of the Commercial Real Estate grouping, which includes offices, retail assets, logistics, and alternatives. EY’s Strategy and Transactions team projects that hotels will transact for more than 2.2 billion euros in the coming months: 815 million in the short term, 972 million in the medium term, and 260 million in the long term.
The year’s standout deal was the acquisition of the Six Senses Ibiza by Beach Box for 190 million euros. Other notable acquisitions include Bancalé’s purchase of the Rafael Benitez hotel, previously owned by Reyal Urbis, a builder facing liquidation after the bubble just burst, for 81 million.
Returns and occupancy: a closer look
The yields, the required return investors demand to acquire a property, rose by about half a point from 4.5 percent recorded in 2022 and 2023 to around 5 percent. The correction has been more pronounced in Germany and the United Kingdom, where yields now approach the Spanish level.
Meanwhile, the average daily rate for a hotel room in Spain rose about 9 percent since 2019, the last year before the Covid-19 shock, while Germany saw a 4 percent decline. Occupancy remained strong in Spain, the best in northern and southern Europe, averaging 68 percent, compared with 67 percent in the Netherlands, 61 percent in Portugal, 60 percent in Germany, and 55 percent in Italy.
Hotel chains reassert buying power in 2024
A major shift in 2024 has been the renewed buying presence of Spanish hotel groups. After the pandemic, these operators reduced their real estate footprint to focus on operations. While the two largest Spanish groups, Meliá and NH, did not headline new acquisitions, other players stepped forward.
In less than eight months, Hotusa added four hotels to its portfolio: the EXE A Coruña from Atom Hoteles Socimi for 17.2 million, the San Antón in Granada for 15 million, Alma Pamplona for 6.8 million, and Louxo on Isla de la Toja in Galicia for a negotiated price. Lopesan bought the AC Iberia hotel in Las Palmas de Gran Canaria for 31 million.
The largest purchase involved Grupotel, a Mallorca-based chain owned by the Ramis family, which entered Madrid with the buyout of the Mayorazgo hotel for around 60 million. British Travelodge followed, adding five assets in Alicante, Barcelona, Madrid, Málaga, and Murcia.
In terms of dispositions, Meliá moved about 38 percent of the Palacio de Isora and Cala Galdana complexes to Moon GC&P Investments, a Santander-backed investment fund that injects capital to deleverage the hotel group’s subsidiary. Antonio Catalá also led the sale of the AC Aravaca hotel, which will be repurposed as a supermarket.
Citation: EY Strategy and Transactions, The Hotel Property Telescope, 2024. EY notes that the European hotel market shows robust activity with Spain playing a pivotal role among growth markets, supported by resilient occupancy and improving ADRs while yields converge with peers in major European economies. The data reflect a post-pandemic reset and ongoing sector consolidation across the region.