Last week Four Seasons announced it will make its Spanish debut in the capital city within the next four years. The new Four Seasons will be housed in the series of heritage buildings comprising the Canalejas complex, adjacent to the Puerta del Sol and close to Madrid’s major landmarks and city center. The buildings include frontages on Alcalá Street, Sevilla Street, Canalejas Square and Carrera de San Jerónimo. Grupo Villar Mir is investing €500 million in the project through its subsidiaries Inmobiliaria Espacio and Grupo OHL.
The building, said Scott Woroch, EVP of worldwide development for Four Seasons Hotels and Resorts, had everything the company wanted in an established urban market, both in terms of location and the building itself. “It’s very dramatic, and iconic in architecture,” he told Hotel Management. “It’s a building that many people know, [so] it will appeal to the local market.”
Madrid also continues to see plenty of corporate and leisure demand. “That’s what makes many of the European capitals such interesting markets," he said. "There’s business demand during the week but they attract the leisure market for culture…Madrid has that demand and draw.”
The hotel will be completely renovated on the inside, but will maintain some historic features, as the brand has already done with their properties in Prague, Geneva, Paris, Florence and Milan—all of which are new hotels within a historic building. Andrés Pan de Soraluce, president of OHL Desarrollos (a division of Grupo OHL) told Hotel Management that there has been a significant dearth of luxury hotel space within Madrid, since there were no available buildings “spectacular” enough to attract a top brand.
The Canalejas complex, with buildings that date back to 1887, had been held by Banco Santander, which decided to sell the property when they moved their headquarters outside of Madrid. The bank received several offers from several corporations, one of which reached €330 million, but the global financial crisis derailed any potential purchasers. “Santander didn’t find anyone with the contacts and experience who they could trust,” Pan de Soraluce said. “When we arrived three years ago, we started to analyze the project from scratch. We realized that in Madrid, there were no high-high-end hotels, and many upscale properties were out of date. We also realized that in Madrid, there is a lack of international brands.” This, he noted, could be because there are domestic brands that fulfil visitors’ needs...but, on the other hand, the lack of international investment also translates into a lack of international visitation.
“We approached Banco Santander with a fresh and new project, and Santander realized that we were the only ones who could [take advantage of this space],” Pan de Soraluce said. OHL’s portion of the offer was reportedly €215 million to be paid in five years, which means that the net price is less than €200 million. “This is a 100 percent investment from Villar Mir,” he explained. “Seventy-five percent will be from Villar Mir Group directly and 25 percent will be from OHL development, which will be in charge of development and construction.”
Following repairs, restoration and renovations, the Four Seasons Hotel Madrid complex will include the 215-room hotel, luxury residences also managed by Four Seasons, a shopping center, and a 500-space parking garage. Several historic attributes of the seven buildings are protected, including all of the exteriors and some of the interiors. “Those present a wonderful tableau for the hotel and for guests,” Woroch said, “but they also represent things that need to be preserved and worked around in light of their history. That can increase both the time for development and the overall cost as well.” Pan de Soraluce, meanwhile, said that OHL is committed to maintaining the heritage of the historic buildings: The exteriors will remain as they are, and protected aspects of the interior (doors or stairs) can be moved to places where they are better suited for a Four Seasons hotel.
Following the planning process, construction is projected to begin at the end of 2013. Altogether, Pan de Soraluce estimates that the project will take four years to complete. “We closed the acquisition on December 20,” he said. “We are assuming that the process of getting all the necessary permits will take until October of this year. And on top of that, we will have three years of work.” The hotel is currently expected to open in October 2016.
Perhaps most importantly, the hotel represents some hope for Spain’s beleaguered economy, which has faced severe unemployment. “The introduction of the world’s most prestigious hotel brand reinforces Madrid’s position as a venue for major international events,” Juan-Miguel Villar Mir, head of Grupo Villar Mir, said in a statement. “Further, the development project will contribute significantly to the reactivation of the local labour market, generating 4,800 jobs, including 1,800 during the construction stage and 3,000 direct and indirect permanent jobs.”