BARCELONA—With property prices low and visitor figures relatively high in Barcelona amid the broader euro crisis, global hotel brands see this as the perfect moment to develop and invest in the stable international tourist destination.
Figures from the Barcelona Hotel Association for the first quarter of 2012 show a year-on-year hike in roomnights of nearly 3% (from 3,004,285 to 3,092,263), while the number of visitors rose by 2.4% from 1,510,150 to 1,546,688.
Tourism Barcelona, the official tourism promotion body, said average occupancies rose from 74.8% in 2010 to 77.5% in 2011. The group expects growth to continue throughout 2012 and 2013.
International 4- and 5-star hotel groups are busy buying into Barcelona’s buoyancy. Capping off a series of newcomers in 2010 and 2011—including the Hotel Novotel Barcelona City, Pullman Barcelona Skipper and W Hotels Barcelona—was the April opening of the 211-room Renaissance Barcelona. And in June, the first Spanish property for the Austrian K+K Hotels Group, the 96-room, 4-star K+K Hotel Picasso near the Parc de la Ciutadella, run by brothers Heinrich and Bernard Koller, opened.
Over the past two years, the number of 4-star properties in the region rose from 130 to 163 and 5-star hotels rose from 21 to 29. Of the nine hotel openings between April 2011 and 2012, many are foreign players and 1,818 more rooms are in the pipeline, according to STR Global, sister company of HotelNewsNow.com.
“The opening of the Mandarin Oriental at the end of 2009 and then the W Hotel really started the current international boom,” said Marie-Therése Pachmann, marketing manager at the W Barcelona, adding the hotel is a microcosm of Barcelona’s blossoming internationalism and innovation.
Adding to its panoply of luxurious fittings and stylish services, the 473-room property— a glass sail poised right near the breakwater at the end of the port area—has just opened a new private beach club.
Far from having cold feet about entering Spain during volatile economic times, CEO of K+K Hotels Heinrich Koller said the crisis presented a perfect investment opportunity.
“The real-estate bubble in Spain enabled us to realize the project in Barcelona, as price of land and construction costs have become affordable, and it is much less risky than many other European cities,” he said.
The 473-room W Barcelona is a glass sail poised right near the breakwater at the end of the city’s port area.
“City tourism, corporate and (the meetings, incentive, conference and events) segments are developing well despite the recession-driven decrease between 2009 and (2011), and there is now growth in occupancy and room rates.”
An international audience
“Barcelona gets visitors from all over the world, and after recovering to pre-crisis levels in 2011, the tourist numbers are now growing, unlike the Spanish market, which appears will be affected for a long time,” said Joan Gaspart i Solves, president of Tourism Barcelona’s executive committee. Ninety-four percent of locals see tourism as the main economic engine, she added.
A June report from tourism school Universitat Autònoma de Barcelona predicted a 12.4% hike in the number of foreign visitors to the city in 2012.
The Kollers are confident that their €19-million ($23.9 million) investment will capture some of that demand as their hotel will offer modern aesthetic—something the city’s hotel landscape craves but where this is limited supply.
“We worked closely with Spanish and Austrian engineers, designers and craftsmen to produce an architectural masterpiece that blends harmoniously with the graceful arches along the Passeig de Picasso in the city’s fashionable El Born barrio (district),” Koller said.
Michel Miserez, area VP for Marriott Hotels International Western Europe, said the group is banking on Barcelona’s increasingly international clientele for the success of the Renaissance Barcelona.
“Barcelona will continue to strongly position itself as a culturally rich and attractive tourist destination. Its climate and infrastructure make it a great business locale, with good international airlift from gateway cities,” he said. “Mostly visited by U.S. travelers today, we believe there is strong, long-term opportunity for the market and that it will be discovered by travelers from emerging markets.”
“Barcelona has already become the most cosmopolitan city in Spain, with a very young, international feel to it,” the W’s Pachmann said. “That is reflected in the 40 nationalities working here (at our hotel).”
Even as the economy stumbles in Spain, Barcelona remains relatively unscathed, still providing a boon for international brands. “International brands gain more market shares in Barcelona due to the withdrawal of several national chains and the international expansion of the main Spanish hotel companies,” explained Ruth Abellán, GM of the Melia Barcelona.
The rise of refurbishment
The increasing competition and aesthetic edge to Barcelona’s branding as a destination has seen a flourish of upgrades and refurbishments at incumbent hotels.
The Hilton Barcelona, on the financial district’s Avenida Diagonal, closed for six months through May while embarking on a €23-million ($28.5-million) overhaul.
The 20-year old property was gutted to rectify major problems with air conditioning, plumbing and sound proofing; its 289 rooms and 14 suites were modernized. Italian architect Matteo Thun created a fresh new look—of towering translucent drapes and art installations—to the lobby and bar area.
Rory Campbell, director of sales and marketing at the Hilton Barcelona, said the investment was mandatory.
“You can’t rest on your laurels in the current climate. The revamp allows us to answer to the rising opposition,” he said.
“It was a brave decision to close for that time, keeping all the staff on the books, but I would hate to have been here before the company refurbished. That would have been a very tough market disadvantage.”
Campbell believes there is plenty of scope for more international players and their approach to business.
“I would still like to see more chains arriving here, because they bring with them an international mentality, especially with regards to yield management, whereas local hotels go more on volume than rate integrity, and that practice ruins the market.
Abellán also believes the industry will benefit from increased competition.
“These developments are vital for further quality improvement of the hotel supply for the city of Barcelona,” she said. “Only the properties with outstanding products and services will benefit from this innovation.”
“In Barcelona, there is a good solid demand, but we need to ensure that the market as a whole stays firm,” Campbell said. “If not, it will become known as a great destination yet with poor quality service. The properties will become increasingly tired. Who is going to invest capital in a place where the room rates are plummeting?”
With occupancies of 55% in May and 64% in June, and room rates ranging from €90 to €140, ($111 to $173) the Hilton is one of several global players aiming for higher revenue per available room by upgrading.
The market experienced a 2.3% increase in occupancy to 67.5% during May, according to STR Global. Its average daily rate and RevPAR, however, were down 4.9% and 2.7%, respectively, in U.S. dollar terms.
STR Global predicts Barcelona will experience short-term RevPAR declines in 2012 after recording €81.68 ($102.76) in 2011. The data company also projects a possible 0.7% drop in occupancies before recovering in 2013 on the heels of improved MICE business.
Last November, Le Méridien chose Barcelona for the unveiling of its new art-and-café filled lobby concept Le Méridien Hub; the hotel has just finished adding 70-square-meter (approximately 753-square-foot) suites to its property on the pedestrian strip, Las Ramblas, and a luxury spa is on its way. Such innovations are in line with the city’s new focus on the design industry.
The Majestic Hotel & Spa’s shift from 4-star to 5-star last year with new rooms and suites was crucial, as Barcelona establishes itself as an important tourist capital on a global scale, said Emilio Pecharromán, Catalan spokesperson for the Spanish Concierge Association Las Llaves de Oro (Keys of Gold).
Most of the city’s high-end hotels are proving crisis-proof he said. “We're lucky, we are an island. Every day the hotel is full.”
The revamped property near the shopping avenue, Passeig de Gràcia, blends high-tech, business and urban style with seven meeting rooms (for a total 491 square meters, or 5,285 square feet), 24-hours fitness center, executive guestrooms and rooftop bar for private functions.