Economic Trends

Can hotel development in Spain save the economy?

5 Jun, 2012 By: Jena Tesse Fox

While the world waits to see how Greece's elections will impact its role in Europe and the eurozone, other eyes are turning to Spain. The country's economy has been in decline for years, and there have been rumors that it, too, may drop the euro.

But in spite of the worrisome fiscal situation—or perhaps because of it—hotel development in the country is continuing at a brisk pace.

Consider this recent story from the AFP: Tarifa, a "jobs-starved" town in southern Spain is causing an uproar by agreeing to build 350 homes and a batch of hotels with 1,400 rooms on unspoiled land along a pristine beach. The town hall has approved 904,000 square feet in construction on an area of 70 hectares (170 acres). The mayor, Juan Andres Gil Garcia, says it will help the economy in a region with a 33-percent unemployment rate, the highest in Spain, which in turn has the highest in Europe. Environmental and citizen groups are protesting, claiming that the hotel will spoil the empty beach that is the town's greatest asset.

But other hotel brands are investing heavily in the country's hotel scene, with several new developments in recent weeks and in the pipeline.

For example, Sheraton Hotels & Resorts has debuted in Madrid with the opening of the Sheraton Madrid Mirasierra Hotel & Spa. Owned by Comercial Mirasierra Group, the hotel is part of Starwood's multi-billion expansion plan to open more than 60 Sheraton hotels around the world in the next three years.

Located nearby Barajas Airport, adjacent to "Cuatro Torres" and close to the IFEMA Congress and Convention Centre, the Sheraton Madrid Mirasierra is a conversion of the former Mirasierra Suites Hotel. The opening follows a renovation and re-branding t.

Starwood currently has 17 hotels throughout Spain under seven of its nine brands. These hotels include the W Barcelona, the Westin Palace in Madrid, the St. Regis Mardavall, the Marques de Riscal, the temple of Spa lovers Le Meridien Ra, and impressive Sheraton Golf resorts in the Canaries and Majorca. Starwood is also investing heavily into restoring some other hotels, including the historic Hotel Alfonso XIII in Seville which recently re-opened following a multi-million dollar renovation and the Hotel Maria Cristina in San Sebastian which is scheduled to re-open this autumn.

The Financial Channel is reporting that Marriott Hotels & Resorts has completed its year-long refurbishment of Mallorca Marriott Son Antem Golf Resort and Spa on the Spanish island. The lobby and its bar received the bulk of the attention, with new open-air "chill out lounges" on the hotel patios. The 142 bedrooms and eight suites had a more cosmetic treatment. And the Rezidor Hotel Group has opened its first hotel on the Spanish resort island of Gran Canaria, according to Luxury Travel Advisor. The Radisson Blu Resort, Gran Canaria is situated on the island’s south western coast, near the village of Arguineguín; a little more than half-an-hour away from Las Palmas.

These are in addition to other major developments that we mentioned in April, which include a "mini Las Vegas" in either Madrid or Barcelona and a project from Madrid-headquartered Meliá Hotels International in the Balearic town of Magaluf.

But whether any of this development will help remains to be seen. If, as Tarifa suggests, new hotels create new jobs, the impact to the country's overall economy cannot be ignored. According to Bloomberg, tourism is the biggest contributor to the country's economy, and any slowdown in hiring, at a time when unemployment already tops 24 percent, will make it more difficult for the government to meet its pledge to slash its deficit by more than half this year. Growing investor concern about Spain's public finances and the need to shore up the banking system has fueled speculation the country will be the next to need a bailout.

External Source : AFP, Bloomberg, Financial Channel, Luxury Travel Advisor

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