Barcelona's loss is Madrid’s gain

NH Collection Barcelona Gran Hotel Calderón

After the recent conflict in Spain’s Catalonia region, tourists are turning to Madrid rather than Barcelona as a result of the ongoing political turbulence in Catalonia.

As we noted last month, Catalonia, aided by the popular business and leisure destination of Barcelona, generates a fifth of the country's $1.31 trillion GDP, and attracts 17 million tourists each year. RevPAR in Barcelona's dropped considerably during the first five days after the independence referendum, with the sharpest year-over-year decline (-27.5 percent) on October 4. 

But despite estimates of a €450-million loss in revenue to the area, Spain’s hotel operators were confident, leaning on the rest of their estates as the protests remained localized.

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The Hotel Effect

Speaking at the World Travel Market in London, Patrick Torrent, executive director at the Catalan Tourism Agency, said that the region would see a 10- to 12-percent drop in visitor numbers on the year in the fourth quarter, at a cost of €450 million in revenues. Exceltur, the industry lobby group, said that hotel and transport reservations in Catalonia for the fourth quarter were down by around 20 percent.

“After the hit that we had in the first week with the cancellations, we have not seen a big impact,” NH Hotels Group CEO Ramon Aragonés told analysts on the company’s most-recent earnings call. “Our results do not depend on what happens in Barcelona. In our worst-case scenario, we could lose €2 million. Don’t forget that 50 percent of our clients come from the leisure sector and thousands of tourists are still coming to Barcelona. The company has the tools to face these challenges.

“In October, we had some cancellations and the companies asked to have the meetings in Madrid and other cities. Fortunately, NH is a global company and we can manage without worrying about one city.”

The company said that demand in Catalonia for the first quarter 2018 was slightly below last year. “For Barcelona in October, revenues decreased by 9 percent, on strong comparables,” CFO Beatriz Puente said. “Madrid trading was very strong, very positive, with 9.1 percent growth.”

Rival Meliá Hotels International was officially “still at an early stage” to estimate the conflict’s impact on its Spanish hotels, although the company acknowledged “a drop in the pick-ups and a slight increase in the number of cancellations in the area.

“A slowdown in the number of reservations in the area that has been partially offset by the increasing demand of other Spanish cities that are dragging some of the business (both MICE and transient) that comes from Catalonia.”

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Gabriel Escarrer, Meliá’s EVP & CEO, said that “in spite of these challenges, the positive results in urban and resort hotels in Spain, the excellent performance of major projects such as the Gran Meliá Palacio de los Duques in Madrid and the ME London, and the trends in sales confirm the appropriateness of our sales and brand strategies and make us optimistic about the short and medium term.”

Catalonia was performing strongly in the month prior to the vote, according to Idescat, the region’s statistics service. The total expenditure made by foreign tourists whose principal destination was Catalonia was €2.17 billion for September, up 6.3 percent on the year. Visitors from the U.S. stood out, with a total expenditure of €328 million. Figures for October were not yet available at the time of writing.

This summer saw a number of protests in Barcelona from residents complaining of over-tourism. With no clear end in sight for the region’s political troubles, they now have what they wished for.

Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.