Last year, Barcelona-based CaixaBank closed on more than €1.3 billion in hospitality financing—a sign not only of the strength of Spain's hospitality sector, but of the confidence financial institutions have that the strong performance will continue.
CaixaBank has a dedicated tourism department based in Mallorca and a presence in Barcelona, Madrid and the Canary Islands. At the Mediterranean Resort & Hotel Real Estate Forum, running in Athens from October 17-19 this year, Helena Murano, director of tourism at CaixaBank, will speak on a panel about the latest lending trends in Europe. The panel will discuss key points like how lenders’ requirements have evolved in the Mediterranean, what the trends are in structuring debt and equity for resorts and the challenges and opportunities in dealing with non-performing loans.
Murano has been working with the tourism industry for most of her professional life, focusing on risk analysis, trade finance and customer relationships at different points in her career. Currently, she oversees hospitality financing for the bank, handling lending deals worth more than €10 million for transactions within Spain and accompanying clients in their internationalization.
Ahead of October's Forum, Murano shared her insights on the future of hospitality investment in the Mediterranean, and what challenges investors are likely to face.
1. How would you characterize the overall state of hotel investment and development in the Mediterranean region?
Overall, my impression is that it’s very active. The recent interest of institutional investors in resort-type assets has revitalized the market, [as have] growing tourism trends.
2. In what markets are you seeing the most amount of investment activity and why?
Being a Spanish bank, we see the most amount of investing in the Spanish market, and also the Caribbean. Within Spain, [we see investment] mostly in the Balearics and Canary Islands, and along the Costa del Sol.
3. What is the biggest obstacle for a foreign investor searching for a project to invest in?
Right now, I think the biggest obstacles are growing demand, growing prices and entry barriers such as municipal planning and regulations. Our recommendation to investors is that they rely on locally established consulting companies to advise them.
4. How would you describe the lending landscape in hospitality real estate in Southern Europe? What are the opportunities for banks and for alternative lenders?
There is a huge [amount] of money available, and banks have a healthy appetite. Banks are going into deals with more standardized or conservative structures, whereas alternative lenders are being more aggressive and (obviously) more expensive. We have a growing infrastructure to deal with hospitality clients throughout Spain, with specialized professionals who speak the same language as the clients and have expertise in the risk and legal departments, too.
5. What are the types of hotels and resorts being built and what has the best ROI? Branded? Select- or full-service? Multiuse developments?
All of the above. In our experience, the key factor for better success is identifying (or even developing) a niche product that works for the brand/destination/segment. What does not work in the resort industry is doing more of the same. Differentiation is key to “decommoditizing” the product.
6. How do you compare hotel development in the Mediterranean versus other classes of real estate? Is it a safer or riskier bet?
I don’t have the expertise in other classes of real estate to give a strong opinion, but my impression is that leisure travel to good destinations is less cyclical than other businesses. There is less demand risk because clients come from different source markets, so I would say it is a safer bet.
7. What are you most looking forward to at MR&H this year?
Visiting Greece and meeting up with business colleagues and new contacts.