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Market dynamism in hotel investments

Market dynamism in hotel investments

Hotel investment has exploded into the world and every year record numbers are broken. All market segments show great dynamism, but within the hotel segment, during the first six months of 2017, investment has skyrocketed, more than doubling that registered in the same period of the previous year and constitutes the best record of investment […]

Hotel investment has exploded into the world and every year record numbers are broken. All market segments show great dynamism, but within the hotel segment, during the first six months of 2017, investment has skyrocketed, more than doubling that registered in the same period of the previous year and constitutes the best record of investment at a historical level.

The hotel investment business

The hotel sector is being an important reason for attraction to invest in the real estate sector. We are knowing how to take advantage of the investment environment to consolidate the position of some destinations as one of the most attractive hotel markets at the moment.

Hotel establishments are properties that can be objects of investment by different economic agents, from hotel investors themselves to investors with a more financial focus. Hotel expansion has brought with it a deepening of the consideration of investment activity in hotels and the relationship between the different economic agents that develop their activity around a hotel establishment. At the same time, the entry of new international investors into the market has caused management and franchise contracts, those preferred by Anglo-Saxon operators, to gain weight among hotel management models.

What is this business about?

The hotel investment business lies in the ownership of the property, the change in investor profile is the most significant one that has been experienced after the crisis since we are seeing how money comes from international markets, both North American and European, the Middle East or Asia. The origin is not the important thing now, the decisive thing is that the investor is already an expert in the hotel business or, in any case, he surrounds himself with professionals who are. This means that operations are studied in greater detail than a few years ago and that the analyzes respond to elements related to the financial variables of the hotel business and not only to the characteristics of the asset or property that is to be purchased or the plot of land on which it is desired. build.

In fact, most operations are carried out on existing hotel establishments or buildings that have growth potential in a process that usually includes changes in concept and positioning, in order to increase future profitability by making that asset rotation is much more agile in the new market conditions.

What is the profile of investors in hotel assets?

As happened in 2015 and 2016, international investment exceeds national investment in the case of hotel asset transactions. Specifically, foreign capital rose to 2,379 million, 61% of the total, while national capital represented 1,528 million, 39% of the total, with 70% of the investment coming from European countries.

The volume of international tourist arrivals is a key factor for the concentration of demand in those countries that concentrate the highest percentages. The sector is growing and there is still very high investment interest from international funds, and there is no talk of new projects but rather the repositioning of existing hotel assets, as we have mentioned previously, and the projects focus on hotels with good locations that require investment or a change of corporate image.

The type of assets has been largely in the vacation sector, which accounted for 69% of the total investment, compared to 3% for urban hotels. In this way, the trend of 2014 and 2015 has been recovered, which is explained by the concentration of the main portfolios in this type of products.

The onset of the crisis meant that many hotel projects and land investment decisions came to a halt. In recent years, it has been ensured that the return of confidence on the part of investors and operators towards the sector is based on the consolidated results and the good macroeconomic data that surrounds it.

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