THE SPANISH RESORT MARKET: THE CONSOLIDATION AND EVOLUTION OF A GLOBAL TOURISM HOTSPOT

The Spanish tourism sector in 2023 totalled 347 million overnights, only nine million short of Italy, Portugal and Croatia combined and over three times those recorded in Greece.

Spain is one of the world's leading sun and beach resort markets and has shown a remarkable post-pandemic recovery compared to its Mediterranean competitors (Italy, Greece, Portugal and Croatia), with 2023 becoming the country’s second best year in history in terms of hotel investment volume (only surpassed by 2018 due to the sale of the Hispania portfolio), as indicated in the Hotel Investment report published by Christie & Co.

Nearly 2/3 of Spain’s overnight stays in 2023 were generated through the 14 destinations reviewed in this analysis. These destinations recorded 220 million overnight stays last year, thus exceeding 2019 volume by 1.3%, partly due to the increase in international visitors, which accounted for three in every four overnight stays (75%).

As evidenced in this study, RevPAR has increased in most destinations covered, boosted by a significant elevation of ADR, while occupancy returned to at least historical levels.

It is worth noting that in recent years there has been greater brand consolidation in resorts destinations, with brand penetration approaching 80% of the overall resort room stock, yet with marked differences across the 14 destinations.

Another notable element is the growing “deseasonalisation” that is taking place in the most internationalised destinations, where air connectivity and the presence of international brands are clear contributors to this trend.

This comprehensive report reveals that from 2019 to 2023, 18,000 rooms were added to the stock of the resort segment (4.3% increase in supply from 2019), which has been well absorbed through the growth in demand. Mallorca, Costa del Sol and Lanzarote have accounted for 50% of this growth.

In terms of investment volume, resort destinations attracted 2,721 million euros (67% of the total investment volume in Spain) in 2023, with a large share of the transactions concentrated in primary markets such as the Canary Islands and the Balearic Islands.

Market Predictions

For 2024 Christie & Co expects to see:

• Tourism is becoming an increasingly significant contributor to the Spanish economy, with growth outpacing that of the wider economy.
• Demand is expected to remain robust in the current year, with bookings for the summer season at an all-time high and YTD levels already exceeding those of 2023.
• We foresee 2024 to establish itself as a record year in terms of overnights and occupancy.
• In terms of ADR, we anticipate further growth in 2024. However, given the exceptional growth in the Average Daily Rate in 2023 and Q1 2024, it is challenging to provide an accurate outlook.
• Investment interest in Spanish resorts is expected to remain strong.
• The combination of high construction costs and the scarcity of development opportunities in established areas will lead investors to focus on assets to be repositioned.

Pierre Ricord, Head of Consultancy – Hotels at Christie & Co comments, “Logically, the prime nature and size of the Spanish resort market has stimulated interest from both travellers and investors, as evidenced by the 2023 results. While the major sunshine hubs of the Balearic Islands, Canary Islands, Costa del Sol and Costa Brava still accounted for 1/3 of Spanish resort demand in 2023 (19.7% captured by the Balearic Islands alone), supported by strong international exposure and high penetration of international brands, a number of smaller destinations are emerging and showing signs of both supply growth and robust performance evolution, including Lanzarote, Cadiz and the overall Costa de Luz and Costa Blanca. The positive performance of the Spanish economy combined with improving air access and internal connectivity may well support the further emergence of these markets and some rebalancing across the 14 destinations, both in terms of tourism trade and investment interest.”

Nicolas Cousin, Managing Director at Christie & Co for Spain & Portugal, adds: “The Spanish resort sector had a record year in 2023 and 2024 looks set to be under the best of auspices. The strength of this segment is reflected in the enormous interest shown by investors in acquiring assets in the best destinations.

To read the full report, click here