Year-round tourism and promising ROI are driving investments in
high-growth resorts and city destinations across the area, from Spain to
Greece.
INTERNATIONAL REPORT — As hotel
performance in southern Europe outstrips the rest of the continent, according
to STR data, investor interest is focused on key resort and city destinations
in Spain, Italy, Greece and Portugal.
“We are very interested in southern
Europe in general and making significant investments across Spain, Italy and
Portugal,” said Inès Haack from Paris-based Extendam’s hotel investment team.
The group’s expanding portfolio of more than 340 mid-range business hotels in Europe includes about 40 properties in
Spain and Portugal. Extendam’s partner, DG Invest, asset manages many of the hotels.
“The area is attractive because it
allows the creation of value-added investment opportunities,” Haack added.
“Acquisition prices are relatively lower than in northern Europe, so it’s less
expensive. Demand is growing and there is a lot of demand that has not been
met.”
The area is attractive because it allows the creation of value-added investment opportunities. Acquisition prices are relatively lower than in northern Europe, so it’s less expensive. Demand is growing and there is a lot of demand that has not been met.
Inès Haack
Extendam’s latest acquisitions in
southern Europe include the Sofitel Roma Villa Borghese in Rome and Sofitel
Lisbon Liberdade, which Haack negotiated.
A swell in tourism underpinned by
new air and train connections is propelling hotel investment opportunities in
the Mediterranean basin, she said.
RevPAR and ADR in Spain were up by
8% and 11%, respectively, in 2024, according to CBRE. In Portugal, both
rose by 7%. Hotel investments on the Iberian Peninsula accounted for 15% of the
total volume in Europe from January to September, with Spain representing most
of that share.
Hack said three Madrid properties
are set to open, while Andalusia is a flourishing investment market. Extendam
has just announced the 2026 opening of a new-build, 96-key Ibis Budget Cordoba –
the first international brand hotel in the region’s fourth-biggest city.
Connected to the Spanish capital in
under two hours by high-speed train, this is just the tip of the iceberg for
Cordoba, according to Haack.
“We are in the process of signing
more projects in Andalusia. There are lots of sites to visit, it’s attracting
lots of international tourists and getting a year-round visitation.”
Record performance, undersupply
A lack of hotel supply and record
hotel performance continue to boost investments in Spain, said Gonzalo
Gutiérrez, managing director of hotels at Colliers, Spain. Madrid and Barcelona
still lead the way.
“Both cities benefit from robust
MICE demand and growing international leisure demand, and rank among the top
European cities for RevPAR growth. As prime targets for hotel investment, both
show a similar performance averaging €600 million and 20 deals in each city.”
Beyond these gateway cities,
Gutiérrez said, “Spain’s
remarkable year-round tourism phenomenon presents a
compelling opportunity for investors looking to capitalize on evolving travel
patterns.
“Improved connectivity and a
growing appetite for off-peak travel have driven strong results in key resort
destinations like Costa del Sol, the Balearic Islands, and the Levante region,”
he said.
However, increasing competition
from domestic investors who are now the main players is shaking up the
investment market, Gutiérrez added. (CBRE said national buyers represented over
half of the transactions in 2024, double that in 2023.)
“Fueled by strong tourism-driven
cash reserves, this has put pressure on institutional investors and private
equity firms whose higher capital costs are making Spain less attractive. This
trend is seeing many international investors redirect their focus to other
Mediterranean markets, where returns are more appealing,” he said.
Brands seek value-adds
One of the value-add markets is Greece,
where tourism demand and the promise of high occupancy rates and attractive
returns are driving investments.
Hotel performance surveys by
Athens-based GBR consulting show year-on-year revenue in Greece grew by 11.1% in 2024, while resort hotels recorded a 3.4% jump in occupancy and a 10% revenue
hike.
Luis Picas Asmarats, senior
director of investments at Barcelona-based Hotel Investment Partners (HIP),
said the group’s largely high-end leisure hotels in Greek beach destinations
experienced a 10% increase in revenue in the latter part of 2024.
Meliá's 5th Greek property, Meliá Elounda, Crete, is flagged to open on July 1.
“For 2025, the business on the
books is up 20% compared to last year… The market is still strong. I am also
quite optimistic about the decrease in the base rate of the Euribor (the
average interbank interest rate for lending). That financing cost will help
investors get the leverage on returns… So, generally, I see a very positive
outlook.”
HIP is a key investor in leisure
hotels in southern Europe with more than 22,000 rooms across 73 assets in Spain,
Italy, Greece and Portugal. It will be the asset manager of three hotels
recently acquired by Blackstone, including the Grand Hyatt Athens, one of
Europe’s fastest-growing hotel markets, Picas said.
Blackstone reportedly plans to sell
its 65% share in HIP, a €6.5 billion company (Singapore’s GIC owns the rest),
something Picas confirmed.
Greece on Meliá’s
radar
As it accelerates its global
expansion, particularly in the luxury sector, Meliá Hotels International is
honing in on Greece, said Nikolas Kafetzidakis, the group’s head of development
for Greece and Cyprus.
“We believe the market is right for
us because we see the current tourism growth. Paired with the right
infrastructure and investments from developers, we can implement our model
successfully," Kafetzidakis said. “We want the leisure industry. We
want the luxury industry to bring it to Greece and expand the big brands
there.”
Kafetzidakis believes all of
Melia’s nine brands can fit perfectly in the Greek market depending on the
destination, the deals they have, the micro-location, the existing asset and the
investor or landlord.
With its focus mostly on resorts
and some urban locations, Meliá is looking at franchise and management
agreements, as well as new properties and developments, Kafetzidakis said.
The group’s fifth property in
Greece, the redeveloped and rebranded INNSiDE by Meliá Elounda, is scheduled to
open in Crete on July 1.
Kafetzidakis also sees the shift
away from seasonality as a huge opportunity, with some of the group’s resort
properties now operating as late as November.
He also feels Meliá’s combination
of a family business with international hospitality expertise aligns with the
Greek market.
“I think we can bring value into
the market to any asset or any developer or investor. And as an international
group… we can always be pushing for a better price for investors.”
As for Extendam, Haack said it
is also looking at opportunities in Greece.
“Unfortunately, there have been no
acquisitions yet, but negotiations are underway at a very advanced stage.”