The five-star hotels in Spain are revalued by 10% in 2018, despite the economic slowdown

The sector should influence hotel improvements to adapt to more moderate growth, according to Tinsa

Five-star hotels were revalued by 10% on average in Spain in 2018, despite the context of international slowdown, compared to 4% in the case of four-star hotels and the reduction of 7% experienced by three-star hotels , according to the report ‘Hotel Market 2019’ presented today by the general director of Tinsa, José Antonio Hernández Calvín, and by the director of services of studies of Tinsa, Rafael Gil.

The path of growth in the tourism sector has been continued even in the period of crisis, favored by the events of the Arab Spring and driven by the subsequent economic recovery.

In the last decade destinations such as Madrid, Barcelona and the archipelagos have experienced growth of 30% in the number of travelers, as well as an increase in hotel beds.

However, Gil said that “after several years of economic growth, a slowdown is being perceived, so that the forecasts for 2019 have been progressively moderate in recent months, which will affect the tourism sector.”

The analysis places at 171,625 euros the average value per room of five-star establishments in 2018 in Spain, 33% more than in four-star hotels, where the average value per room stood at 171,625 euros, and twice as much as in three-star hotels (83,217 euros per room).

Tinsa foresees that the value per room will improve in 2019 up to 5% in five-star hotels and around 2% in the three- and four-star categories, despite the moderation of economic growth and tourist influx.

BEACH HOTELS PRESENT A BETTER BEHAVIOR

Beach hotels registered 2018 at the national level and for all categories, a value per room higher than that of urban establishments, where the average investment per room has stagnated, decreasing its weight with respect to the value per room.

By geographical areas and category, the five-star hotels on the Mediterranean coast are the ones that registered the largest increase in 2018, registering an increase of 22%, to 184,574 euros per room. It is followed by establishments of the same category on the islands, with an average value of up to 129,284 euros per room, 19% more.

At the other extreme, among the locations and categories where the value of the most establishments has suffered in the last year, four-star hotels stand out in the area called “the rest of the peninsula”, where it fell by 14% annually in 2018, followed by of three-star establishments on the islands, with a reduction of 10% per year.

THE INVESTMENT, STATED IN ALL THE CATEGORIES

As for the investment needed to build a hotel, which measures the cost of material implementation per room including fees and expenses and discounting the value of the land, the report reflects that it remains staked out in all the categories of recent times.

“The evolution of average rates and occupancy has increased the valuation of real estate above what the replacement cost has done, thus increasing the profitability of the investment,” said Rafael Gil.

Regarding the investment per room, Tinsa foresees that in all the categories the figures are very similar to the previous ones, with “discrete positive variations”.

The report assures that in 2019 the hotel investment transactions will be numerous again and the investment in improvements of existing establishments “will be a frequent strategy favored by the decrease in the ratio between costs and value of the activity in recent years”.

“The tourism sector should influence hotel improvements to adapt to a few more years to come in their growth,” Gil concluded.