February 27, 2021

The great commitment to hotel luxury | Economy

The great commitment to hotel luxury | Economy

The party has started and nobody wants to miss it. He promises to be able to dance with exceptional guests. The first record of foreign visitors to Spain after the crisis was hardly necessary for hotel investment to skyrocket. With 2018, the fourth year in which figures previously unknown in this type of assets have moved is closed. The year ends with 4,807 million euros invested in the country, 35% more than in 2017 and becoming for the first time the real estate segment that attracts the most capital, ahead of offices and shopping centers, according to the CBRE consultancy. And much of this amount will go to the most exclusive business of the hotel market. The category of five stars, and especially the so-called five-star luxury, is experiencing an unprecedented boom.

In the select squares that these last establishments require, they are getting up and, above all, reconverting at least a fortnight of buildings. With the epicenter located in Madrid, where the Hotel Villa Magna, which has been recently acquired by the Mexican group BK Partners, has been left alone in the top category, while the comprehensive reform of the Ritz is being carried out and the first Four Seasons establishment in Spain will go on sale. Both with the end date scheduled for 2019.

The 210 million euros paid by Mexicans to stay with the best located hotel in the capital are a clear indication of the interest aroused by luxury hotels in Madrid. Never before had 1.4 million euros been invested per room (and no remodeling included). The Villa Magna is looking for a hotel operator and the rumors point towards the higher-end brand of the Marriott chain: St. Regis. If it were the chosen one, this would be its premiere in the city.

But the real revulsive for the sector has been the landing in Madrid of the Canadian Four Seasons, which watches with precision watchmaker's works in the great project of Canalejas (the former headquarters of Banesto, a set of seven buildings that Grupo Villar Mir bought from Banco Santander for 215 million euros in 2012). After long years in search of iconic buildings to settle in the country, Four Seasons has come up with its second location in Marbella, where it will have a hotel of 200 rooms with its luxury standards coming soon.

Mandarin Oriental also disembarks in Madrid. Like the Canadian, it is among the top ten luxury hotel chains in the world. The Asian, already implanted in Barcelona, ​​is trying not to overfill the deadline and the budget of 99 million euros expected to recover the essence of the iconic Hotel Ritz and still looking for unique properties in Spain because, according to Gonzalo Vallejo , responsible for projects for Europe, the Middle East and Africa of Mandarin, "we all want to grow, it is a moment of expansion of the sector in Europe and Spain is one of the main focuses of tourism".

Rates go up

The arrival at the party of these two prestigious brands is being an incentive for the sector, which considers that when these two hotels reach cruising speed, the prices of the rooms will pass from the current maximum in Madrid, around 400-500 euros, between 700 and 800 euros, foresees Miguel Vázquez, director of the hotel area of ​​Colliers International. "I would be surprised if they went below 600 euros per room," confirms André Gerondeau, director of operations at Meliá Hotels International. In his opinion, "Spain as a whole has between 30% and 50% of travel compared to capitals such as London or Paris, where the rates of luxury hotels reach 900 or 1,000 euros per room, compared to 400 of the Spanish capital . And this explains the number of openings that are underway. When the international flags come in, they give opportunities to the other operators to grow, "he explains.

View of the Ritz Hotel under construction.
View of the Ritz Hotel under construction.

Meliá expects to benefit from this acceleration of prices in its recently opened Gran Meliá Palacio de los Duques (Madrid), a five-star hotel that is the latest generation of the new concept of luxury that the Mallorcan company is printing in its establishments, which has to do with more with the unique experience than with excessive comfort, Gerondeau clarifies. The chain has eight top-category hotels, but recognizes that they are "one point below" the most exclusive standards of Mandarin or Four Seasons.

The advantage of brands as select as the previous ones is that they move 30 or 40 million members with their loyalty cards, says Juan Molas, president of the Spanish Confederation of Hotels and Tourist Accommodation (CEHAT), clients that follow the chain and the they become a destination in itself. "We are interested in the arrival of new tourists of high purchasing power. We are already seeing increases in the entries of Americans and Asians, "he adds.

Also Palladium Hotel Group, the company of the Matutes family, expects the revenues of this awakening of the most exclusive luxury in Madrid and in Spain in general. In fact, just this Monday opens the doors in the capital the first establishment of its new premium brand, Bless Collection, with which it also wants to respond to that modern high-end concept. "We did not have an urban and holiday luxury brand and we read the opportunity that exists in the current redefinition of the concept, today more related to the services you offer than the size of the rooms and the quality of the materials," says Jesús Sobrino, Deputy Director General of Palladium.

The old Gran Hotel Velázquez will now be Bless, it will have 111 suites, a spa, a gym with a virtual personalized training room and the entire offer of food and drinks with the seal of Martín Berasategui. With it will be born the figure of the butler of soaps, which will personalize the fragrances of each guest. The company does not provide investment figures and nor the rates at which the first exponent of its new five-star brand will be marketed, but on its website prices can be found from 257 euros. In June it will open the second Bless in Ibiza, where the company has invested 32 million euros in the integral reform of a 151-room building.

Image of the Bless Hotel, which opens on Monday.
Image of the Bless Hotel, which opens on Monday.

New concept

"And, if there is a trend that emerges in the five-star hotel market, it is the great development that boutique or lifestyle establishments are competing in prices with luxury hotels, according to Miguel Vázquez. It is the high modern range that is printing speed brands such as Marriott with its W chains (which is already operational in Madrid and works on two projects in Ibiza and Marbella) or Edition (installed in Barcelona and expected to be in Madrid, in the old Monte de Piedad building in the Plaza de Celenque, in 2020); from Meliá with ME and Innside or from Hard Rock Hotels, continues the manager of Colliers, which has more developments planned under this concept than five-star luxury.

"Four Seasons, Mandarin and Villa Magna will pull the rest of the hotels in Madrid. It is the opportunity that investors and Edition have seen to close the recent operation of Celenque for 220 million euros ", appreciates Vázquez. The establishment will have 200 rooms, which seems to be the virtuous number in the five-star hotels, whose management is based on achieving high average prices, instead of high occupancies, as in the other categories. Exclusive hotels handle average occupancy figures of between 60% and just over 70%, according to Albert Grau, managing partner of consultancy Magma Hotels.

Barcelona is the Spanish flagship city for this select segment, where there is a greater offer, buildings as emblematic as the Arts, and where the highest rates in the sector are handled: about 600 euros. Although the hotel moratorium and the smaller influx of tourists due to the independence process, have stopped their development.

There is no objective reason to justify that Barcelona, ​​the city that attracts more foreigners from the second tourist country in the world by visitors and incomes, has lower rates than cities like Milan, says Federico González Tejera, president and CEO of Radisson Hotel Group. "With the exception of Barcelona, ​​where the five stars have been more exploited, this segment of the market has not been very developed in Spain, something that is being corrected now by the country's great capacity to attract an audience that is willing to pay more that for a four star, "he continues.

Jorge Ruiz, director of hotels in the consultancy CBRE, indicates that almost 80% of the hotel offer (15,000 establishments) is three and four stars, while the rest of the categories represent the remaining 20%. "Not only are there five-star hotels, but also luxury brands with an important presence in other parts of Europe".

Radisson, which aims to have close to 25 stores in Spain in 2022, will implement its premium brand, Radisson Collection, in Seville and Bilbao, "because we detect an increase in international interest in other cities, in addition to Madrid and Barcelona. They are tourists who can pay more than a four star, "continues González Tejera.

Precisely Seville, where there is an increase in the offer of five stars, is the place chosen by the small luxury chain Mercer for its EME Catedral, an establishment with 60 rooms, to which others will be added in the Catalan Sardinia, of 25 ; in Córdoba and San Sebastián, "to compete with María Cristina", according to Pedro Molina, CEO of the company, which manages ebitdas of over 40%.

On the beach

Even Vigo has become another target market. There the first yacht of The Ritz-Carlton Collection is being built, scheduled to set sail in 2020, says Jenni Benzaquen, vice president for luxury brands at Marriott International, by email, who understands that "there is a new demand of different types. luxury in many places, which has been the key factor for the rapid growth of our brands in this segment. "

But if there is a tourist destination that has recovered brio in this exclusive market, that is the Costa del Sol. The province of Malaga concentrates 20% of the offer, according to the Colliers consultancy, and handles average rates of 400 euros per room. With Marbella, Málaga and Estepona in the lead. In this area, at least five projects of luxury hotels, mostly operated by international chains (Four Seasons, W and Ikos) are underway, which are expected to pull up prices. "In the last two years, Marbella has been reborn with the arrival of a new client profile that has a great relationship with the Arab world," explains Meliá's operations director.

The islands, as the main focus of reception of foreigners, have also been aimed at the development of high-end establishments, although with less intensity. Mallorca already has about 1,000 rooms of the highest standard, with average prices of 450 euros and a higher occupancy than Marbella in season. And although Ibiza experienced its most critical moment two years ago, with average prices of 600 euros, according to Gerondeau, now stabilizes. It is the island where more plans are counted.

Are too many five-star establishments suddenly for a country in which there is a certain decline in international demand? None of the experts consulted think so. "The market is regulated alone," says Juan Molas, while presuming that Spain is the seventh country in the world by number of top-category establishments: 335. Molas advances good prospects for the tourism business in 2019, despite not knowing the effect that Brexit can have among the main international visitors of the country (18 million) and the slowdown of German tourists. "We expect a good season, but with slower sales," he says. Because luxury has a stable demand, according to Gerondeau. In fact, it is one of the businesses that suffered the least from the economic crisis. "It will not be affected in 2019 or in the medium term," he says. Because the newest, most traveled customer, who appreciates the most detail and, of course, spends a lot more, will not stop traveling.


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