Hotel Market Beat 2024 H1 - Spain

Investment Trends

Spanish hotel transactions exceeded €1.6Bn in H1 2024, involving 56 properties and over 8,100 rooms. This is about a 3% increase compared to H1 2023 and 56% above the 5-year average (2019-2023). The Balearics, Barcelona, and Madrid were the most active hotel investment markets, supported by healthy operating results. Elevated investment activity is expected going forward, likely exceeding €3.0Bn by the end of 2024. 

Prime Yields

Yields remained generally stable in H1 2024, with downward pressure on yields for the top-tier assets in high-barriers-to-entry markets. This has been supported by improved access to financing and increased attractiveness of the hotel sector. Going forward, a gradual sharpening of prime yields is expected, underpinned by additional interest rate cuts and intensifying competition among major international and domestic buyers.

Market Performance

Hotels benefitted from strong performance in H1 2024, with RevPAR surpassing H1 2023 by 14.5%. This was driven by a 10.6% increase in ADR and a 3.6% rise in occupancy. All regions experienced significant RevPAR growth, led by Madrid (+23%), Bilbao (+20.3%) and Seville (+18.2%). Marbella continues to lead with the highest RevPAR in the country, followed by Barcelona, at €154 and €147, respectively (H1 2024).

Supply Outlook

Supply growth in Spain is constrained by a lack of suitable locations and elevated construction and financing costs. Madrid recorded a 2.5% supply growth in H1 2024, while Barcelona saw only a 1.7% increase due to the ban on new hotel development. Looking ahead, the supply growth is expected to remain moderate, especially in leisure destinations.

Demand Outlook

Spain saw record tourism in H1 2024, with 42.5M tourists (+13% increase vs last year). The Balearics remained the most popular destination, attracting 23.6% of visitors. The UK was the top feeder market with 1.2M visitors, while the demand from France increased significantly (+11.7%). Travel spending has grown notably, reaching a record €55Bn in H1 2024 (+20.5% vs H1 2023). The country is expected to surpass 90M visitors by the end of the year.