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25 April 2018 | Hoteles

Madrid, a city with potential

Driven by a significant increase in arrivals, a continuous ADR uplift and a growing occupancy, the Spanish hotel sector is experiencing one of the best moment of its history, breaking records in terms of hotel investment (€3.9bn in 2017).

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Driven by a significant increase in arrivals, a continuous ADR uplift and a growing occupancy, the Spanish hotel sector is experiencing one of the best moment of its history, breaking records in terms of hotel investment (€3.9bn in 2017). A refurbished hotel supply in key markets as well as growing demand of overseas tourism have led to a sustained annual RevPAR growth, up by 9% in 2017.
 
Leading the RevPAR growth in the country, Madrid achieved in 2017 a RevPAR annual increase of 18%, positioning itself above key destinations such as Malaga, Marbella, Valencia or Seville. The widespread development of the hotel supply as well as the continuous increase in the promotion of cultural and leisure activities also contributed have set Madrid as one of the most competitive and profitable destination at a European level.
 
To properly analyse this context, Christie & Co interviewed Mr. Gabriel García Alonso, owner of both Orfila and Principe Pio hotels, located in Madrid city centre. Moreover, Mr. Gabriel holds the positions of President of the Asociación Empresarial Hotelera de Madrid (AEHM) and Vice-president of the Confederación Española de Hoteles y Alojamientos Turísticos (CEHAT). 

From the “Jardin de Orfila” restaurant, managed by Chef Mario Sandoval, Mr. Gabriel explains us his point of view about the current situation of the city centre hotels as well as the potential impact of the new supply entering within the next few months.

The city Council of Madrid has started the renovation works of the Gran Via, which are supposed to be finished by December 2018. How do you think this period will affect to the hotel performance in the area? 
 
It is clear that the next months are going to be very tough and all the entrepreneurs of Madrid, from whatever sector, are really worried about it. The application of the new Sustainable Mobility Plan will not only cause difficulties to the supply of products to the stores and businesses but it will also affect to the accessibility and the provision of public services for the citizens.
 
As hoteliers, we confirm our commitment to the sustainable development which has been demonstrated for several years, complying with the high level of environmental standards and meeting the demands of the current society which is increasingly more aware of the natural environment, trying to improve the mobility and the air quality of the city.
 
Madrid has achieved a RevPAR growth of 18% in 2017. Do you think that the city has reached a peak?
 
Not at all, Madrid still has a lot of potential and the city is currently taking off. Looking at what Madrid performance is at today, I would say the city is far from its peak. 

The thing is, to ensure work continues along those lines in order to position ourselves among the best European capitals, Madrid needs to be promoted. We need to promote our culture, our gastronomy and, especially, to create and extend our own brand identity. This is our target at the moment from the AEHM and other hospitality institutions to which I belong. 
 
The new openings of emblematic brands such as VP, Four Seasons, W, RIU as well as the refurbishment of the Mandarin Oriental hotel will add more than 1,300 keys in the city centre. What is your view on this? How you think that it will affect Madrid hotels’ performance?
 
I do not think that this situation is going have a negative impact on the hotels in the area. I just have one concern and that is the quality of the future competition.
 
The problem is not the volume, as Madrid tourism is experiencing noticeable development, however, the issue might be for those establishments to fail achieving expected price range.
 
To be honest, I think Madrid is a city with a huge potential and the increase in hotel supply of quality players will attract many more tourists, therefore, it will benefit to all of us.

The Interviewee​

Gabriel García Alonso, President of the Asociación Empresarial Hotelera de Madrid (AEHM) and Vice-president of the Confederación Española de Hoteles y Alojamientos Turísticos (CEHAT). ​

Gabriel_Garcia_Alonso.jpgGabriel García Alonso studied a Law Degree at the University of Madrid and holds different positions in the associative environment. He is member of the Executive Committee of CEIM, Vice President of the Tourism Council of CEIM, President of the Asociación Empresarial Hotelera de Madrid (AEHM), Vice President of the Confederación Española de Hoteles y Alojamientos Turísticos (CEHAT), member of the Executive Committee of Relais & Chateaux Spain and Portugal and Member of the Board of Directors of Ibermutuamur.
 
As a hotel entrepreneur, he owns the Orfila Hotel, Príncipe Pío  Hotel and the recently inaugurated Heritage Hotel, all located in the centre of Madrid.




The Author 

Javier Bravo, Hotel Broker, Christie & Co España y Portugal

Javier_Bravo.jpgJavier holds a Business Management Degree from the Carlos III University of Madrid and has been working in both financial and hospitality sectors for different international consulting companies.

Before joining our team, he worked for JLL Hotels & Hospitality Group, where he took part in several investment and consulting projects, including hotel valuations, buy-side and sell-side transactions, operator searches and feasibility studies.






 
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