Barcelona Hotels Defy Spain's Economic Woes

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Spain's economic woes are battering almost every sector of the property market--except Barcelona hotels.

Revenue per available hotel room in Barcelona actually increased 7.6 percent in 2012 compared to the previous year, according to Jones Lang LaSalle's new market intelligence report. It was a different story in Madrid, where the revenue per available hotel room declined 3.7 percent in 2012. JLL cites weakening corporate demand as the primary culprit for Madrid.

"The resilience of Barcelona's hotel industry is a result of the growing popularity of the city among international tourists who accounted for 84 percent of total bed nights in 2012, cementing Barcelona's strong position as a leading tourist destination," Jones Lang LaSalle reports.

It was the second straight year of positive results for Barcelona.

Overall, Barcelona and Madrid hotels remain attractive for investors, Jones Lang LaSalle concludes.

"Interest for well-located properties in Spain is still high, with international investors keeping their eyes on the country's main cities and waiting for distressed opportunities that offer high-performing assets at affordable prices," JLL reports.

Banks looking to jettison property assets and raise capital may put hotel properties on the market, the consultancy predicts. Hotels in main cities with steady cash flows are likely to draw international interest.

"In Spain transaction activity will likely remain weak as investors face higher risks as the recession in Spain continues in 2013, with investment volumes likely to be similar to 2012 at circa €400 million," Luis Arsuaga, national director for Spain and Portugal for JLL's hotel and hospitality group. "We expect many international investors to follow a 'wait and see' approach and focus on key tourist destinations with strong trading fundamentals such as Barcelona and Madrid."