Barcelona still a hot luxury hotel destination despite ban on new accommodation

Barcelona (CNA).- Barcelona, the Catalan capital, is a “desired” place for investors from the most prestigious hotel chains in the world. This is according to consulting firm Aguirre Newman, which has recently published a report that puts the total amount of 5 star and luxury accommodation in Barcelona at 9,150 beds from a total of 70,000. Barcelona has a higher percentage of luxury accommodation than other top tourist European destinations such as London or Paris, where 10% and 7.5% of beds are in 5 stars establishments.  

The new mayor of Barcelona, Ada Colau, introduced in July a one-year moratorium on new tourist accommodation to regulate the influx of visitors to the city that has affected eight of the eleven new luxury projects in Barcelona. However, neither the number of beds on offer nor the ban have reduced interest from international businesspeople, whom continue to see the Catalan capital as a “very attractive” place to invest, especially in the long-term, according to experts.

The Catalan capital is one of the top three destinations for tourist investment, together with current rivals London and Paris. Despite being a much smaller city, growth in overnight stays in Barcelona has reached 42% since 2009. The differences, however, are still wide, with London having 57 million overnight stays per year, Paris 36 million and Barcelona 17 million.

The luxury tourist sector is growing in Spain, but especially in Barcelona, the only city where profitability has reached and even eclipsed pre-crisis levels. Indeed, profits are now 0.7% higher than before the economy plummeted. Five stars hotels, however, are growing at a slower pace than four star hotels, which have jumped by 12% in the last four years, according to Joan Gallardo, from BRIC Consulting.

Experts explained to the CNA that the eight luxury projects in Barcelona affected by the council ban on new licences try to boost quality tourism and expand it to areas beyond the city centre. One of the projects is a hotel on Plaça de les Glòries, which is now waiting for a report from the council to see if it can go ahead. Experts think the reason behind the local council ban – to try to rationalise tourism with a clear strategy – is positive, but regret the fact that the moratorium is too long. Some argue that more flexibility is needed to avoid creating unease among investors.

Jordi Castiñeira, from KPMG Spain, told the CNA that in the last few months there has been “a lot of interest in operations related to five stars hotels and luxury chains”. Investors are especially interested in creating hotels in iconic buildings of the city such as the Agbar Tower, where Hyatt is planning one, or the old Deutsche Bank building, in the central area of Passeig de Gràcia, and Diagonal, where Four Seasons would also like to open an establishment.

According to Castiñeira, the luxury sector “has the potential to continue growing” because demand is still increasing and Barcelona is a city which is “very attractive for all kind of tourists”. However, some of these projects are now on hold, while others will go ahead. Those which already have the green light are the KHH project next to the Santa Caterina market, the ‘Soho House’ project on Plaça Duc de Medinaceli, which will only have 100 rooms, and the new less than 50-room hotel by ‘The Wittmore’ next to Via Laietana.

The one-year ban on tourist accommodation licences was justified by Mayor Ada Colau as a tool to avoid “turning into Venice”. The council thinks that tourism in the city should be regulated more carefully, especially considering complaints from many residents living in the city centre, where most tourist establishments are located. The strategy is to analyse the current accommodation on offer, its social and economic impact, and then decide about future projects. Investors might have to wait a little bit longer than usual but, according to Colau, this is for the best because entrepreneurs “want their businesses to be a success” and to be able to achieve growth “without risk” of an oversaturated market.