The international consultancy firm specialising in the hotel sector, Christie & Co, has published its analysis of hotel business models in Spain. Specifically, the report shows that the main hotel chains are adopting an expansion strategy based on management or franchise models instead of ownership.
In this regard, the report addresses the notable growth in the number of hotels operating under rental, management and franchise contracts since 2016.
As reported by Christie & Co, during the period from 2016 to 2022, more than 500 leasing, management or franchising contracts have been formalised under national and international brands. This new business model is driven by the continued professionalization of the sector, which is driving a transformation in the models operating today, with an increasing demand for more flexible contracts and higher returns on investment.
The analysis reflects that major hotel groups are adopting an asset light strategy focused on management and franchising models rather than ownership.
In this context, in the time period between 2019 and 2023, a 39% growth in franchised rooms has been observed. For its part, the management model has also been boosted, reaching 30%.
This expansion of the model away from owned accommodation is also accompanied by an increase in the presence of national and international brands in Spain. International groups have increased their presence in the Spanish market, especially by signing management and franchise contracts, improving their market penetration.
This business model in particular has started to see notable results in this year’s financial year. Whereas in 2016, of the 6,960 hotels in Spain, only 17% had operating contracts, by 2023 this had reached 23% of the 7,517 assets in operation.
Undoubtedly, the mobility restrictions during the pandemic and the new expectations of tourists have generated major changes in the hotel sector over the last few years. In this sense, some of the large hotel chains took their first steps towards this business model after the end of the pandemic.
As a result of the changes that have been taking place in the industry, large Spanish hotel companies such as Meliá and Barceló have evolved from owning the property and managing the hotel to focusing their business model mainly on hotel management. This has led to the sale of some of their assets to investment funds in exchange for management. Moreover, this business is becoming increasingly attractive for hotel groups as it allows them to gain greater visibility at an international level due to the growth of their respective portfolios in management models.
Nicolas Cousin, Managing Director of Christie & Co in Spain and Portugal, said: “In an increasingly competitive landscape, hotel owners are faced with strategic decisions regarding their hotel operations. Selecting the right model and the right partner is key to increasing the value of their assets.”
For his part, Alberto Martin, associate investment director for Christie & Co in Spain and Portugal, comments, “This report is intended as a guide to support hoteliers in their growth and professionalisation strategy. It also reflects the change that the hotel sector is undergoing, as well as the attractiveness of the sector to attract leading companies and position us as a global leader.
“Christie & Co’s investment team has had a very active year, managing projects ranging from the search for an operator or franchise to the sale of hotel assets in different destinations. Our extensive experience in the Spanish and European markets is a guarantee for an increasingly professionalised sector, which values the benefits of the advice of an experienced consultancy firm such as Christie & Co.”.