HOTEL BUSINESS TODAY: MARKET SITUACIÓN… SPAIN 2026. By José Aleixandre Caballero
We are caught in a major economic trap that will be difficult to escape unless it happens through selective crisis.
I’m referring to the current situation of the tourism business in Spain… over the last sixty years, the evolution in the accommodation segment has seen a constant sale of assets, with each transaction experiencing an increase in speculative market prices, which is now leading us to the end of an era… soon hotel sale prices will be priced out of the market. The investor’s basic logic of obtaining a minimum 5% net return on invested capital forces the operator to price their services out of the market. The first symptoms are the exaggerated prices charged for large events, the low prices offered when those events don’t exist, and the decline in quality and quantity of services that customers always suffer.
Let’s take Barcelona as an example: a 20-room hotel can be bought for around €8.7 million depending on the area and category… in the city center you can pay up to €800,000 per room depending on location and category.
It’s easy to conclude that, given this outlook, these types of hotels or aparthotels are headed for a negative operating result.
Those hotel developments that were built or acquired 40/50 years ago and are still held by the same owners or lessors with low rental contracts are the ones surviving with very positive results. In my opinion and way of thinking, many owners, if they act intelligently, have two bright futures, among others: one, sell the properties now at the current sky-high prices… and wait for the new buyers to go bankrupt in order to buy back or invest in the new emerging global markets that will follow the same process over time.
Let’s look at some approximate and random figures that can occur in hotel operations as a consequence of the current situation of the tourism market in Spain, according to my notes from AI… a four-star hotel located in a capital city like Barcelona or Madrid.
The owner has invested about €435,000 per room and asks for 5% net rent per year, equivalent to €21,750 per room per year. (We calculate an average annual occupancy of 80%) The real cost per room per day is €59.58 per day in rent.
Now we add a “running cost” average of about €150 per day per room, which puts us at approximately €209.58 average daily cost per room. Note that according to the Barcelona Hotel Guild, the average revenue per available room per day is about €210 gross…
(I should clarify that these simple numbers, extrapolated from real statistical information, are only an example and not directly applicable to an operation as such, since many different factors and characteristics must be taken into account to arrive at real budgets).
Of course… no one wants to lose money, and to achieve that prized 25/30% gross profit per room per day we desire; we still have a long way to go to obtain it and very little room before losing money… we will only achieve it by increasing occupancy and reducing costs and expenses, playing with pricing freedom upwards as much as the market allows until it breaks…
Let’s not fool ourselves… large fairs and congresses are accepting such “irritating” rates for two main reasons: the attendees don’t pay their bills… the companies or the organization pay them, and the event organizers, in order to retain them… are generously subsidized by local governments.
The tangle is somewhat complicated to unravel, and European competition continues to lurk.
The free market is a fact and, in principle, a great advantage. Perhaps it’s the current market circumstances or the possible good use we all make of that freedom and the measures we take.
José Aleixandre Caballero :
Technical Director Consultant of Tourism Companies and Activities
