Spanish Hotel Mergers Expected as Pandemic Keeps Tourists Away
Spanish Hotel Mergers Expected as Pandemic Keeps Tourists Away
(Bloomberg) -- Spanish hotels, blighted by empty beds during the pandemic, may find their best way out of the crisis is to sell up or buy rivals, industry officials said.
“There are going to be opportunities to sell and the hotel chains are going to be very attentive to that,” said Javier Jimenez, head of Spain’s Association of Hotel Directors in the Costa Blanca region, which includes the resort towns of Benidorm, Denia and Torrevieja.
Pummeled by a health emergency that has seen spending by international tourists plunge 71% in the first six months of the year, hoteliers are doing what they can to survive. For investors and larger hotel chains with sturdy balance sheets, the pandemic presents a chance to snap up smaller establishments that are struggling to weather the storm, said Jimenez.
That view is in line with a survey published by Deloitte Spain, in which 40% of hotel-sector executives said they thought investors would seize on the crisis to buy establishments in difficulties.
Before the pandemic hit, Spain was the second-most-visited country in the world after France, with 84 million international tourists last year, according to the National Statistics Institute.
Consolidation was already underway as the industry emerged from Spain’s financial crisis of a decade ago. Blackstone Group LP bought Hispania Activos Inmobiliarios, which owned 13,100 rooms, in 2018 as part of a run of deals that made the firm a major operator of Spanish hotels.
As the pandemic eased after its spring peak, some tourists had returned.
Fresh Surge
But infections are now surging again, prompting several European governments, led by the U.K., to tell holidaymakers to quarantine when they get home.
The hotels that have suffered the greatest drop in revenues – and are therefore likely candidates for tie-ups – are city-based establishments with between 70 to 80 rooms that haven’t been running for many years, said Chema Herrero, chief executive officer of data company BedsRevenue.com. The majority of the nearly 25,000 hotels in Spain have fewer than 100 rooms, he said.
Executives that rent rather than own their hotel properties will be under even greater pressure to sell their businesses to chains or investors, he said. He estimates that fewer than one third of hotels are rented.
Despite the pain, the historic crisis will create chances to grow, some executives have said.
With only 12% of its rooms open, Melia Hotels International suffered a 95% drop in second-quarter revenue. Even so, the Majorca-based chain’s Chief Executive Officer Gabriel Escarrer said last month it would emerge ready to “leverage all the opportunities in this new stage of reinvention” of the global hotel industry.
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