The report reviews the evolution of the main hotel demand and performance indicators for resort destinations during the period from 2017 to 2019, including a total of 16 sub-destinations located in: Canary Islands, Balearic Islands, the coast of Catalonia, the coast of the Valencian Community and the coast of Andalusia.
Since 2012, the Spanish resort segment has become one of the main drivers of the country’s tourism growth. Growing from 177 million overnight stays in 2012 to 209 million in 2017, the leisure segment driven by the growth in international demand, recorded a continuous increase in demand levels and hotel profitability.
From 2017 to 2019, the main resort markets showed signs of a slowdown and a slight decrease in hotel KPIs due to both the gradual recovery of competing destinations in the Mediterranean, as well as other factors such as the decrease in demand from the UK or the bankruptcy of Thomas Cook.
The resort sector was the tourism engine of the hotel industry, representing 60% of demand in Spain in 2019, with a considerable impact on stabilizing hotel profitability and improving the quality of supply. On the other hand, in terms of investment levels, although historically the resort hotel sector had been the focus of hotel investments, in 2019 resort destinations registered 41% of the total investment volume, surpassed by investment in urban destinations.
In terms of the main indicators, and despite its seasonal nature, Mallorca was the destination that, in 2019, recorded the highest number of overnight stays (45m) with more than 90,000 hotel rooms. Ibiza and Formentera recorded the highest hotel RevPAR of the destinations analysed in the same year.
The outbreak of the Covid-19 pandemic confronted the sector with a situation never seen before, the consequences of which are detailed in the report, which analyses the evolution of demand indicators in 2020 versus 2019 for 24 Spanish tourism regions, including leisure, nature and rural destinations. A comparison of the data recorded in 2020 versus the previous year is carried out, providing an overview of how the Covid-19 pandemic has impacted travel trends during the summer of 2020.
In this context, resort hotel demand in 2020 fell by 75.9% (56 million overnight stays vs. 234 million in 2019). Secondary domestic destinations accessible by road, such as the Costa Verde, the Pyrenees or the Costa de la Luz, recorded a less pronounced drop in demand, being able to attract more domestic clients during summer 2020.
The hotel segments that were affected to a lesser extent are, on the one hand, the budget segment, able to keep establishments open with lower operating expenses, and on the other hand, the luxury segment, demand for which has continued to travel during the year.
Despite the impact of Covid-19 on the hotel sector, a large number of projects have been identified in resort destinations, with 61 projects on the Andalusian coast and 22 projects in the Canary Islands standing out. It is worth highlighting the large percentage of projects in the 5-star segment, reinforcing the commitment to quality in the main destinations with the entry of new international luxury brands.
As for the volume of investment, contrary to 2019, in 2020 the volume of hotel investment in resort destinations exceeded the level of investment in urban destinations, registering 603 million Euros (67% of the total investment volume), with a large part of the transactions in primary markets in the Balearic Islands, Canary Islands and Costa del Sol.
As a result of the impact that Covid-19 has had on our society and our lifestyle in the last year, some trends are emerging as possible drivers of the long-awaited recovery: greater flexibility, digitalisation, micro-segmentation, repositioning or sustainability.
Inmaculada Ranera, Managing Director at Christie & Co in Spain and Portugal, comments: “We wanted to publish a snapshot of the state of the resort sector in Spain, as an essential part of a tourism industry that has gone from representing 12.4% of GDP in 2019 to 4.3% in 2020. The market consensus is that destinations essentially oriented towards the resort segment will recover faster than destinations oriented towards MICE and business tourism. This recovery will depend on multiple factors, some related to demand, while others will depend on the effectiveness of government support measures, such as the modalities of repayment of loans granted, access to bank financing, as well as the potential restrictions imposed by the authorities both in our country and abroad. Despite these unknowns, there is an enormous eagerness on the part of international investors and chains to enter or consolidate in the Spanish vacation market, demonstrating the confidence and optimism of the sector's players in its medium-term future.”
Note: This report was finalized before the UK Government included the Balearic Islands in the “green list” of the safest destinations on June 24.