Spain’s Hispania has become the leading hotel owner in the country after paying €16 million for the Hotel Selomar in Benidorm.
The deal came as a study from Christie & Co revealed that, in most destinations, international tourists exceeded local demand for the first time as Spain’s popularity with visitors and investors continued to rise.
Hispania will invest €17 million to €19 million on a full refurbishment programme for the hotel, which will be operated by Barceló Group. Hispania’s total investment, including transaction costs and expected CapEx amounts, is estimated at between €33 million to €35 million.
The hotel has been closed since 2007 and in 2015 was the scene of a fire.
Following the acquisition, Hispania became Spain’s largest hotel owner with 11,021 rooms across 38 different properties.
“By entering the Benidorm market, Hispania accesses a strategic market in Spain given its stable occupancy rate throughout the year and its high exposure to European tourists,” said Hispania board member Concha Osácar. “This transaction shows, once more, Hispania’s capacity to create value through individual transactions while increasing our exposure in the Mediterranean.”
Deal Flow
The Hotel Selomar was not the only hotel deal in Spain last week, with AXA acquiring a 55-percent stake in the Hilton Diagonal Mar Hotel, in central Barcelona, from Iberdrola Inmobiliaria for €80 million. The hotel is operated by Hilton Hotels on a long-term lease.
Laurent Jacquemin, European head of transactions at AXA IM - Real Assets, said: “The hotel is located in one of the most attractive parts of Barcelona, a city that remains one of the preferred destinations for foreign visitors to Spain, with a balanced mix of both leisure and business visitors. The Spanish market outperformed most European markets during 2016, driven by Barcelona, where a ban on some new hotel developments should combine with positive economic growth and rising tourist numbers to continue driving growth.
“The asset represents a strong addition to our growing portfolio of hotels, aiming to provide stable income and to offer longer term asset management upside potential, and is likely to attract increasing leisure and corporate business.”
Tourism Growth
The deals came as a study from Christie & Co, which looked at the top seven cities in the country, found that, over the past year, there had been consolidated tourism growth, mainly driven by the increase of international demand in 2016.
It said: “In most destinations, international tourists exceed local demand for the first time. The impact of price increases in urban destinations after the crisis, as well as, the growth of tourist apartments and other alternative accommodation options, may have also contributed to the decrease of the domestic demand in hotel establishments.”
The destinations recorded a general increase in overnight stays, registering a total of 52 million. Tourist arrivals of all analysed cities have also grown, reaching 23.5 million. In the case of Malaga, which acts as a leader in arrival terms, tourist arrivals reflect a cumulative growth to 6.7 percent since 2009, and 2 percent in the case of Valencia, where a lower rate of growth was observed.
The instability of other European and Mediterranean urban destinations, as well as the positive effect of international investment, were key factors in this consolidation.
It concluded that it was not surprising that “both hotel operators and investors, national or international, focus on the so-called ‘most competitive urban destinations’ when planning on opening or investing in new hotel assets.”
With international demand now ahead of local demand, the global brands may increase their interest in Spain. For Hispania, the picture may not be as clear as it initially appears, with the company's close ties with NH Hotels, owning a number of its hotels. With China’s HNA Group having a 29.5-percent stake in NH, things could get a lot more international soon.
Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.