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The hotel investment market remains solid during the first quarter in anticipation of the most dynamic second half of the year

• From March 2022 to March 2023, the volume of hotel investment in Spain was 2,654 million euros, 14% less than from March 2021 to March 2022.
• In Europe as a whole, transactions worth 4,100 million euros have been carried out in a total of 154 assets and 16,817 rooms.
• The resorts attract great interest from investors since they account for 22% of operations.
• The expectations of sellers and buyers will converge in the coming months, whichfurther the prospect of a more active second half of the year.
In Spain, the investment figure was 487 millioneuros during the first quarter of the year and, according to the Europe Hospitality MarketBeat, it remains among the Top3 most attractive countries for hotel investment. Themost outstanding operation of this beginning of the year has been the purchase of the Sofia hotel in Barcelona by Blasson Property, in alliance with Axa IM. The manager has acquired the 500-room establishment for about 180 million euros from Brookfield.

The European figure represents an increase of 18% compared to the almost 3,500 million achieved in the same period of 2022, despite the increase in financing costs and doubts about the economic and geopolitical situation. For , partner and co-director of Cushman & Wakefield Hospitality in Spain, "the focus of hotel investors continues to be on Spain despite the fact that financing conditions make it difficult to close operations. In the second half of the year, we expect new opportunities to emerge both in the holiday and urban segments, where the recovery of activity is complete."

Some important operations have driven this strong growth, such as thesale of the Westin in the French capital, the Mandarin Oriental in the Turkish city of Bodrum and Le Richemond in Swiss Geneva. However, if we analyze the period from March 22 to March 23, softening the impact of these large operations, we observe a more moderate growth of 3% compared to the 12 months prior to March 2022.

The United Kingdom (€3,687m), France (€3,303m) and Spain (€2,654m) have been the most attractive markets with the highest business, accumulating 52% of the total investment volume activated in the last 12 months, which has been €18.6m throughout Europe. Investors of European nationality have been protagonists of 76% of the capital invested, although the capital from the Middle East has grown strongly, 142% more during the last 12 months. Looking only at the operations carried out during the first quarter of this year, the Upscale and Upper Upscale hotels have concentrated more than half of the investment, with resorts as the sector that accumulates the greatest demand.

The resorts' popularity among investors is supported by the strong recovery in leisure demand, long-term growth potential and limited supply growth. Overall, resorts accounted for 22% of total first-quarter investment and 28% if we look at data from the last 12 months. This figure is much higher than that recorded before Covid-19, in 2019, when this type of hotel represented only 13% of the total volume of investments that year.

Positive investor sentiment towards hotel assets is supported by the strong recovery in hotel activity, with RevPAR (revenue per available room) being 13% higher than in 2019 in Europe as a whole. The reason for this increase must be sought in the rise in prices in the continent since the ADR (average daily price) has grown by 19% compared to 2019 levels. The highest growth in RevPAR during this first quarter of 2023 compared to the figures of 2019 have been registered in Lithuania, Turkey, Ireland, Croatia and France while, at the city level, the increases in Paris, Belgrade, Istanbul and Vilnius stand out.

The increase in hotel supply is expected to remain low (it was below 2% in 2022), with a pipeline slowed by the increase in construction costs and the increase in interest ratesleading to delays and even cancellations in hotel development plans. Among the most anticipated openings in 2023 are Raffles London at The OWO, Six Senses Rome and One&Only Aesthesis in Athens but, together, hotel supply growth is expected to be less than 2.5% on the continent.

Currently, it has and several outstanding portfolios in the market such as Center Parcs in the United Kingdom and Tryp in Spain, with inflation showing symptoms of stabilization, which provides visibility and the expectation of a moderation in interest rates. The investment market can also be revived because there are some owners who experience increasing pressure to sell when faced with difficult refinancing operations and also some investment funds that must face repayments to their shareholders and need to get rid of assets. On the buyers' side, the key factors are the good performance of hotel activity, the amount of capital available for investment and the decompression of yields, which increased by approximately 70 basis points on average during the first quarter of 2023 and should contribute to reducing the difference between sale and purchase prices.

According to Bruno Hallé, partner and co-director of Cushman & Wakefield Hospitality in Spain: "The figures point to a positive evolution of investment activity in the coming months. In Spain, once the holiday season ends, which is expected to be excellent, we sense a greater negotiating capacity for both buyers and sellers due to the liquidity conditions of the market and the difficulties for debt refinancing".


Jenny Pizarro
Jenny Pizarro

International Partner, Head of Business Development Services, Spain, Portugal & Italy • Barcelona



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