Cushman & Wakefield presents the report "Marketbeat Hospitality - management of hotel assets", which is prepared through a survey of 100 hotel chains, both national and international, with a presence in Spain. The result studies the composition of the asset portfolios of the different hotel groups, which allows an analysis of the evolution of business models, investment and expansion strategies and future trends in the hotel industry.
THE HOTEL INVESTMENT MARKET
The purchase and sale transactions made by the participants in the report in 2018, 76% were purchases, while 24% were sales. The average value per room in the purchase operations was € 152,000 and the sale transactions in € 121,000.
In relation to the year 2017, the operations of purchase of hotel assets between € 120,000 and € 150,000 have increased by 16 percentage points while purchases between € 60,000 and € 120,000 have fallen by 10 percentage points. This figure shows that the assets continue in an upward cycle, rising prices especially in prime areas and cities such as Madrid and Barcelona.
This trend is also confirmed in sales operations. In 48% of sales, the average value per room was between € 120,001 and € 180,000, 13 percentage points more than in 2017. Over € 180,000 have closed 19% of sales operations (6 percentage points more than in 2017) and, instead, 33% have fallen below € 120,000, 7 percentage points less than in 2017.
By location, 73% of the purchase operations carried out have taken place in Spain, 17% in countries of the European Union and the rest of Europe and 6% in the Caribbean and 4% in the rest of the world.
THE EVOLUTION OF BUSINESS MODELS
In 2018, the hotel groups interviewed reported that 37% of their hotel assets are owned, 36% are under lease contracts, 23% in management and the remaining 10% in franchising.
Rental contracts increased 22 percentage points in 2018 among the companies interviewed. The trend since 2013, the year in which the first study was conducted, is that the hotels for rent and property increase, while the management model stagnates and the weight of the franchise decreases
In terms of operations, equities continue to be the protagonist, accounting for 39% of total contracts signed in 2018, 12 percentage points more than in 2017. For their part, transactions with fixed rental contracts have also grown by 10 percentage points. with respect to the previous year.
Of the rental operations carried out in 2018, 64% were signed under the variable rental format (variable rental and fixed rent contracts are included under this heading) and the remaining 36% under the formula of fixed rent.
72% of rental contracts, fixed or variable, have been signed for a period of between 11 to 20 years, 18% for periods of less than 10 years and the remaining 10% have been for contracts over 20 years. Average incomes have continued to rise during 2018 as evidenced by the fact that those with a price above € 9,001 grow by 18% compared to 2017.
The participating chains are increasing their presence in Europe, which is already at 17% of their total assets. The weight in the portfolio of assets located in Spain has been reduced from 67% in 2016 to 55% in 2018.
PERSPECTIVES AND TRENDS
Socimis and investment funds continue to lead corporate operations. In 2019, we consider it unlikely that large-scale operations will be closed with purchases of large portfolios. We foresee more operations of individual character, with greater selection on the assets. These transactions will most likely occur in secondary markets, both in the urban area (Zaragoza, Alicante, Córdoba, Granada ...), as holiday (Costa Blanca, Costa de Almeria, Costa de la Luz ...). In these destinations, the assets with a good location and with prices that still allow a revaluation route will be rewarded
68% of the hotel chains interviewed believe that there will be some merger, integration or operation of purchase / sale between companies during the year 2019 in Spain.
Other investment operations will arise from the discarding of those assets that have not been included in the large corporate transactions, or from the divestment of assets that are already in the second cycle, that is, already repositioned and in operation. Investors are also showing interest in "green field" projects, with development from urban planning or with a license, but prior to construction, in beach front locations of touristically consolidated destinations.