HVS Madrid Market Pulse 2024

Snapshot of the Madrid lodge market in 2024 with an exploration of tourism inquire of, lodge efficiency, lodge provide, the funding market and the market outlook.

As the capital of Spain, Madrid holds a illustrious position as a cultural, economic and political hub in Europe. Its rich history, vibrant arts scene, world-illustrious culinary offerings as smartly as its many corporate head offices and financial institutions appeal to a various fluctuate of holiday makers, along side both leisure travellers and alternate consultants. Furthermore, Madrid’s strategic location within Spain and its smartly-linked transportation infrastructure, along side its worldwide airport and high-tempo rail services and products, facilitate easy access for both domestic and worldwide travellers. The city’s tourism sector, which used to be closely impacted by the COVID-19 pandemic, skilled a gradual restoration from the latter half of 2021, buoyed by successful vaccination campaigns and the easing of trail restrictions both domestically and internationally.

Sources: European Cities Tourism, INE, Airports Council International, AENA

Economic Indicators – Germany

Source: IMF

Tourism Count on

The total option of holiday makers to Madrid recorded a wholesome compound annual progress rate (CAGR) of 2.7% from 2013 to 2023. Whereas the share of domestic and worldwide visitors used to be reasonably equal in 2013, domestic inquire of began to stagnate thereafter, as worldwide inquire of went from strength to strength, primarily driven by the USA, Italy, France and the UK. The COVID-19 pandemic very a lot impacted the tourism industry with severe worldwide trail restrictions. Home visitation began to enhance in 2021 and, with the eventual easing of trail restrictions, worldwide visitation step by step recovered and reached 97% of 2019 stages in 2023, main to total visitation in 2023 being nearly as high because the sage stages of 2019. The option of bednights adopted the same trend as visitation figures, with higher than 20 million bednights recorded in 2023. In addition-known events generated inquire of in 2024, such as Taylor Swift’s totally Spanish existing and the World Rugby Sevens Series Gigantic Closing, the city is anticipated to withhold this momentum with the Spanish Scheme 1 Gigantic Prix starting from the 2026 season and other wearing events anticipated on the newly renovated Bernabeu Stadium guaranteeing comparatively a obvious outlook for the hospitality industry.

International Visitation Leads the Restoration

Source: INE

Resort Performance

With the noticeable upward push in worldwide visitation from 2017, occupancy stages in Madrid elevated from the mid-60s to the low 70s, whereas common rate recorded a 5.2% CAGR between 2015 and 2019. Resort performances private been closely impacted by the pandemic in 2020 and 2021, and they began to arrive again to traditional from Q2 2022 onwards, with rates seemingly rising with inflation.

Occupancy Returns to Pre-Pandemic Ranges

Sources: INE

In 2023, with occupancy stages just about matching these completed in 2019, common rate noticed a valid progress of 10% over 2019, same to 26% in nominal terms. Per our analysis, the common rate of the previously existing stock grew by a median of 16-18% over 2019. The balance of the progress within the Madrid lodge market can primarily be defined by the openings of a handful of very high-conclude luxury properties. These openings included the 201-room Four Seasons (January 2020), the 194-room Madrid EDITION (February 2022) and the 139-room JW Marriott (March 2023). Furthermore, the 153-room Mandarin Oriental, which closed in 2018 for a three-twelve months renovation, reopened in April 2021 and, in October 2021, the 154-room Villa Magna reopened below the Rosewood tag after intensive refurbishment.

Luxury Resort Openings Boost Practical Rates

Sources: INE

Resort Present

Madrid’s lodge room provide skilled staunch progress from 2013 to 2023, recording a CAGR of 1.1%. The proportion of independent accommodations represented about 54% of the available accommodations and 40% of the room stock in 2023. Whereas the option of independent accommodations has remained reasonably staunch within the final ten years or so, branded accommodations private step by step elevated their share of the market. The upper tier of the market has noticed the ideal increases in quantity, either thru contemporary openings or upgrading of existing accommodations. Resort efficiency has improved alongside the gradual refurbishments, branding exercise and opening of contemporary provide. The contemporary openings within the high-conclude luxury sector talked about previously private very noticeably enhanced the common rate within the city, and the expectation is that this can enable for the value ceiling of other lodge lessons to transfer up. Other contemporary well-known openings encompass the 161-room Tough Rock Resort Madrid (July 2021), the 174-room Thompson Madrid (September 2022) which is the main of the emblem by Hyatt to start in Europe, the 330-room The Social Hub Madrid (September 2022) and the 130-room UMusic Resort (January 2023). Furthermore, three accommodations totalling just about 600 rooms private opened honest nowadays within a five-kilometre radius of the airport, increasing the local provide by 12%.

Madrid has a pipeline of spherical 2,300 rooms coming into the market in the subsequent four years, representing 5% of the hot provide. Larger than 50% of these contemporary rooms are reported to be below progress. We tag that the pipeline is mostly driven by independent properties, accounting for 75% of the proposed lodge rooms. Roughly 20% of the pipeline is lengthy-preserve flats, that can symbolize a 10% amplify of the existing provide on this category, indicating the changing landscape of trail and lodging preferences following the pandemic.

Resort Pipeline

Sources: HVS Be taught

Investment Market

In 2023, Madrid took third affirm after Paris and London in terms of transaction volumes thanks to ADIA’s acquisition of a portfolio along side six accommodations within the city. On the alternative hand, in 2022, Madrid got right here in second affirm, with the sale of some trophy sources along side the Resort Selenta Princesa, the Villa Magna and the Bless Madrid.

Madrid is amongst the cities in Europe that has noticed the ideal increases in lodge mark within the final ten years. The dynamism and the efficiency enhancements within the market give self belief to traders and attest to the liquidity of the market. For the most up-to-date mark traits, please talk over with our .

Resort Transactions – Closing 12 Months

Sources: HVS Be taught

Outlook

Madrid is anticipated to continue its restoration and solidify its position as a number one world destination for leisure and alternate travellers alike. The rising enchantment of the city used to be supported by the opening of a string of luxury properties below smartly-identified manufacturers, as smartly as a option of trendy accommodations. Count on responded favourably by elevating the common rate efficiency within the city and breaching the common rate ceiling. The capital of Spain is proving that its solid economic fundamentals, coupled with ongoing efforts to promote tourism, underscore its lengthy-term doable as a top-tier city for lodge trend and funding alternatives.

Price Trends 2023 vs 2022

Sources: HVS Be taught

 Cassandre Pene joined the HVS London affirm of commercial in January 2024 as a consulting and valuation analyst. Fluent in English and French, she holds a BSc from EHL Hospitality Enterprise College and an MSc in Scheme and Economy for Enterprise from Imperial College London. Forward of joining HVS, Cassandre won experience in both the lodge and finance industries. Her main tasks at HVS encompass valuations of single sources and lodge portfolios, feasibility analysis and market analysis all the way thru the EMEA space. For extra knowledge, contact cpene@hvs.com.

Alexandra Dumoulin is a director on the London affirm of commercial of HVS. She joined HVS on the conclude of 2023 from Hilton the set, as a senior manager within the Feasibility Department, she completed a few projections for all manufacturers in Hilton’s portfolio and across worldwide locations, primarily in Europe, performing primarily as an interior handbook for one in all the ideal worldwide lodge operators. On the origin from Belgium, Alexandra holds a Bachelors degree in legislation from the Universite Libre de Bruxelles, an MBA from IMHI and is a graduate of Chaire Immobilier at ESSEC Enterprise College, France. Since joining HVS, Alexandra has instructed on lodge funding projects and connected assignments all the way thru the EMEA space. For extra knowledge, contact adumoulin@hvs.com.