The hotel business in Spain, if properly organized, can be very profitable, since this country with an excellent climate is very popular among tourists. In this article we will look at the key aspects that need to be considered if you are planning to open a successful hotel business in Spain.
First of all, it should be noted that there are three ways to open a hotel business in Spain:
Which option should you prefer? This decision depends solely on your capabilities, finances, aspirations and desires. Each option has its own advantages and disadvantages. The second important aspect is what type of hotel you plan to open. This is also determined by two main factors: the size of the investment and your goals. Below is a list of the main types of hotels that exist in Spain.
The second important question to decide is whether you will manage the hotel yourself or outsource it to a professional company. The second option is much more popular, as it frees you from the need to understand the intricacies of the local market and think about how to optimally organize your business. All these tasks will be performed by the management company, and you can simply make a profit.
Of course, when choosing this option, you will have to take into account income, taking into account the payment for the services of the management company, but in the end you will win much more than you invest. This applies not only to finances, but also to your time and energy. In addition, by transferring management to a competent company with a good reputation and solid experience, you significantly reduce risks and increase the chances of receiving a stable and high income from the hotel business in Spain.
Hotel
This is the most popular type of tourist accommodation among those who prefer a comfortable holiday. Hotels provide private rooms and a wide range of additional services, including entertainment, business services and much more.
Hostel
This is a more affordable option compared to a classic hotel. Hostels can offer both private and dormitory rooms, as well as family rooms with private toilets and showers. In other cases, these amenities are usually located on the floor. Hostels are aimed at unpretentious travelers and provide only the essentials, which explains their low prices.
Apart-Hotel
A hotel designed for long-term stays. Instead of rooms, they provide full-fledged apartments with a fully equipped kitchen.
Boutique Hotel
These are premium hotels with a limited number of rooms and unique designs, often themed.
Bed and Breakfast (B&B)
These places are houses adapted to accommodate guests, where sleeping rooms are provided, and the kitchen, toilet and shower are shared. They are usually called "bed and breakfast", which indicates minimal service and affordable prices. In Spain, these hotels, known as Casa Rural, are often located in small picturesque villages, near lakes, rivers or mountains, and are cozy houses in a traditional Spanish style with many bedrooms. Hosts often live in the same house with guests, creating a homely atmosphere. Such places are especially attractive to those seeking solitude in nature and a tranquil outdoor environment. When purchasing such a hotel, you are purchasing not only housing, but also a business. In addition, subsidy and financing programs for the acquisition of rural hotels are available in all regions.
Parador
These are hotels located in ancient mansions, monasteries, castles and palaces, often found in Spain and Portugal. They are especially popular among tourists who are looking for something unusual and unique.
Albergue
These hotels translate from Spanish as “shelter” or “sanctuary.” They are intended for the humble traveler and pilgrim along the Camino de Santiago. This is usually just a place to sleep in a room with several bunk beds.
Requirements for permits and licenses to open a hotel in Spain vary depending on the autonomous community and sometimes even the province. Let's look at the example of Barcelona.
The first and main document is the license to operate. After obtaining a license, you must register with the tourism department or the Regional Council (Consell Comarcal). To do this, an inspection of the property will be carried out to confirm its suitability for the provision of hotel services. If the hotel provides additional services, such as restaurants, recreation areas, business services, etc., then appropriate inspections will be carried out for these premises and appropriate documents will be issued confirming their suitability for the relevant activities.
If you're planning on building a hotel from scratch, there are a few key things to consider. In the case of Barcelona, the municipality has developed a Special Urban Plan for Tourist Accommodation (PEUAT), which determines that the site for the construction of a hotel must be suitable for the purpose. Therefore, it is extremely important to obtain an “informe de compatibilidad urbanística” (urban compatibility report) before starting work, which confirms the possibility of starting construction.
After obtaining all the necessary prior permissions from the municipality, it is necessary to obtain permission from the Catalan Tourism Department or the local Regional Council (Consell Comarcal).
Here are the main documents required to open a hotel business in Spain:
In international practice, the indicators RevPar (revenue per available room) and GOPPar (gross operating profit per available room) are used to assess the profitability of the hotel business. RevPar helps evaluate the efficiency of room management, and GOPPar demonstrates the profitability of each room.
RevPar is calculated as follows:
RevPar = total revenue from room sales / total number of rooms
or
RevPar = ADR (average room rate) * occupancy factor
It should be taken into account that this indicator reflects only income from the sale of rooms and does not include income from additional services such as restaurants, spas, entertainment, business services and others.
GOPPar is calculated as the average gross operating profit for each available hotel room, taking into account income not only from the accommodation itself, but also from additional services such as spas, restaurants and other services. This indicator allows you to evaluate the overall efficiency of the hotel, including all its services, and not just guest accommodation.
The Spanish tourism and hotel sector has been hit hard by the pandemic, but the current situation has opened up new investment opportunities in the market. Large investment funds (such as Blackstone, Azora, Hesperia and others) and private investors are showing interest in these opportunities. They are confident that in the long term, the hotel sector in Spain will recover and the business will become profitable, especially given the availability of bargain prices on the market at present.
The plans of large investment funds such as HIP, Grupo Hesperia, Colliers International Spain and others confirm that interest in the hotel sector remains at a high level. Every day, investor confidence in the recovery of the tourism segment in Spain in the medium and long term (over the next 3-4 years) increases, which stimulates further growth of this interest.
For example, Juan Garnica, head of the hotel sector at Savills Aguirre Newman, expresses confidence that by 2023-2024, the Spanish tourism sector will return to levels comparable to the period before the crisis.
David Alonso, head of research at BNP Paribas Real Estate in Spain, predicts an increase in investor activity in 2021. This growth will be driven by the need for hotel business owners to sell their assets due to financial difficulties.
Jordi Ferrera from Hesperia notes that the market mainly offers for sale hotels belonging to small family businesses facing financial difficulties, as well as large companies that intend to improve their financial performance by selling off part of their assets.
The Brainsre.news portal reports that there are currently more than 160 hotels for sale in Spain, located mainly on the coast, on the Canary and Balearic Islands, as well as in major cities - Madrid, Barcelona, Seville and Valencia.
Juan Garnica is confident that if the sanitary situation improves, a period of opportunity will open, which is called the “window of opportunity.” It is important not to miss this moment. Therefore, experts advise investors who are ready to invest available funds not to delay the decision and start investing in the near future.
