Spanish Hotel Market Suffering Greater Declines

24 September 2009 1:51pm

With visitor numbers expected to drop 10 percent in 2009, the Spanish hotel market is suffering greater year-on-year declines in performance than some of its European neighbors.

Visitors from major source markets such as Germany, the U.K. and France are in decline, with U.K. travelers further deterred by the 20-percent weakening of the sterling against the euro during the past 12 months and the increased competition from Turkey and Egypt.

Data from STR Global, the leading provider of market data to the global hotel industry, shows that through July 2009 compared to 2008, Spain’s performance is worse than several of its Mediterranean rivals.

Decreasing occupancy (-13.5 percent) at Spanish hotels has led to heavy price cutting (-11.8 percent), which together have dragged revenue per available room down by -23.7 percent.

Poor performance compared with international neighbors is one thing, but Spain is also suffering from the impact of the economic crisis on the domestic market. The abrupt decline of the real estate industry and an unemployment rate of 19 percent, the highest in Europe, make for tough times across the country.

Spain’s two biggest markets, Madrid and Barcelona, may still have higher rates and RevPAR than the national average, but both are in more significant decline. Madrid’s RevPAR through July 2009 has fallen 32 percent compared to 2008, a rate of decline only exceeded by Moscow amongst Europe’s capital cities.

STR Global’s reach in Spain is significant with more than 730 hotels representing some 123,000 rooms sampled across the country. In line with global hotel performance, select Spanish cities are experiencing contraction across the board, highlighted by the double-digit declines in year-on-year occupancy in all but three cities (Bilbao, Cordoba and Marbella).

The 59.4-percent fall in Zaragoza’s RevPAR is dramatic and can only be attributed to the buildup to the International Expo “Water and Sustainable Development”, which took place from June to September 2008.