If you’re considering capitalizing on the thriving European hotel investment market, Spain should be at the top of your list. As one of the world’s prime tourist destinations, Spain’s hospitality sector is experiencing record-setting investment activity, making it an attractive hub for investors seeking solid returns and long-term potential. Let’s break down the latest trends, figures, and forecasts for Spain hotel investment and see why this market is standing out in Europe.

Spain: A Powerhouse in the European Hotel Investment Market

According to the latest Savills report, the European hotel sector saw a total investment of €21.9 billion in 2024, marking the highest level since 2019 and a staggering 47% year-on-year increase. Among all European nations, Spain continues to shine, ranking as the second largest hotel investment market in Europe, just after the United Kingdom.

• Spain attracted €3.3 billion in hotel investments in 2024, about 14.2% above the annual average of the past decade.
• The UK led with €6.83 billion, but Spain’s steady growth further cements its strategic importance in the continent.

Record Hotel Investment Activity in Spain

While European hotel investment market are largely fueled by cross-border funds (with 58.6% of capital coming from international players like Blackstone and KKR), Spain bucks the trend. In 2024, domestic investors drove the market:

• Spanish investors contributed 58% of all hotel investments, amounting to a record €1.938 billion.
• Domestic capital dominated approximately 73% of hotel investment transactions in Spain last year.

Significant deals include the Swiss Partners Group’s acquisition of a majority stake in BlueSea Hotels (€275 million) and several large individual trades, leading to an all-time high of €2.452 billion in individual hotel investments.

Where Is Hotel Investment Concentrated in Spain?

Spain’s hotel investment is mainly focused on four hot destinations, accounting for 80% of all money spent:

1. Canary Islands: The region led the hotel investment pack with 20 transactions totaling €664 million.
2. Madrid: Spain’s capital city attracted €605 million across 19 deals—highlighted by the Hotel Miguel Ángel sale to Lopesan for €200 million.
3. Barcelona: With €572 million from 21 investments, including the notable €80 million purchase of the AC Barcelona Forum hotel, Barcelona remains a prime target.
4. Balearic Islands: More than 20 deals brought in €553 million, including the Six Senses acquisition for €200 million.

What’s Driving the Investment Surge?

Several factors underpin Spain’s robust hotel market:

• Strong Tourism Demand: Spain’s status as a top global destination underpins demand for hotel accommodation.
• Market Stability: Both economic indicators and structural growth in the tourism sector signal a secure environment for capital.
• Diverse Investor Base: While domestic investors are especially active, institutional and international funds are increasingly taking positions.
• Favorable Currency Dynamics: A strengthening dollar versus euro is attracting U.S.-based private equity into European assets.

European Hotel Investment Market Outlook for 2025

Looking ahead, optimism abounds. Colliers forecasts that Spain’s hotel investment volume may reach €3 billion in 2025, maintaining the positive momentum of recent years. Key trends to watch:

• Continued Dominance of National Investors: Domestic real estate capital is likely to remain the backbone of the market.
• Rising Interest from Institutions and Sovereign Wealth Funds: Expect greater participation from larger and more diversified investors.
• Growth in Private Equity Involvement: Private funds remain keen, especially as tourism numbers rise and returns stabilize.

Laura Hernando, Managing Director of Hotels at Colliers, anticipates a “very diversified profile” of investors in 2025, with “…national real estate investors maintaining an active role, and a rebound in private and institutional capital drawn by the sector’s resilience and growth potential.”

Why Invest in Spanish Hotels Now?

Driven by record peaks in investment, strategic regional focus, and favorable market fundamentals, now is an opportune time for hotel investment in Spain. As Europe’s second-biggest market, Spain combines robust tourism demand, stable macroeconomic conditions, and strong investor appetite—a recipe for attractive, long-term returns. Whether you’re an institutional, private, or local investor, Spain’s hotel sector stands out as a smart play within the European hotel investment market for 2024 and beyond.

Thinking of investing? Now’s the time to consider Spanish hotels for your portfolio.