For a comprehensive review of the Europe market, click below:
HVS In-Depth Europe Hotel Valuation Index:
2025
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2001
Madrid is not only the political and administrative heart of Spain, but also a vibrant and diverse economic hub. The city boasts a dynamic real estate market and thriving sectors in hospitality, commercial banking, and higher education. A key driver of local commercial demand is the concentration of corporate headquarters and financial institutions in the financial district to the north of the city.
In recent years, Madrid has successfully positioned itself as an attractive short-break destination, thanks to its rich cultural heritage and world-class attractions. While traditionally known for its strong corporate presence and a relatively modest leisure segment, the rising number of luxury properties entering this market reflects its increasingly diversified demand base.
From 2015 to 2019, hotel occupancy in Madrid rose by 10.0%, reflecting a compound annual growth rate of 2.4%. This steady increase in occupancy, combined with an almost 30.0% rise in average rate, led to robust RevPAR growth of around 40.0% over the period. Following the pandemic, Madrid’s hospitality market demonstrated a swift and resilient recovery. By 2022, the city had regained 84% of its 2019 occupancy levels, with average rates already returning to pre-pandemic levels in real terms, despite the sharp rate decline in 2020 and a high-inflation environment. By 2024, occupancy had fully recovered to 2019 levels, while average rate continued to climb, bolstered by two consecutive years of double-figure growth. This strong performance has been largely driven by the expansion of Madrid’s luxury segment. The addition of approximately 850 rooms under prestigious luxury and upper-upscale brands – including Four Seasons, Rosewood, Mandarin Oriental, EDITION, and JW Marriott – has significantly contributed to the upward momentum in average rates. As a result of these favourable market dynamics, Madrid’s RevPAR in 2024 exceeded 2019 levels by more than 20% in real terms.
Madrid’s hotel supply has expanded in tandem with rising demand, though at a more measured pace, contributing to the city’s strong occupancy performance. Between 2015 and 2019, hotel supply in Madrid grew at a compound annual rate of 1.3%, followed by a slightly higher growth rate of 1.4% between 2019 and 2024. Since 2020, new hotel openings have been increasingly concentrated in the luxury segment, which helped sustain upward pressure on average rates. Looking ahead, Madrid’s hotel pipeline is set to add approximately 3,100 rooms, equivalent to 6.4% of the city’s current supply. Upcoming additions include the 101-room ibis budget Madrid Albasanz and the 148-room ibis Madrid Norte Las Tablas, both slated to open in autumn 2025; the 64-room Soho Boutique San Blas, scheduled for June 2026; and the 100-room Nobu Madrid, opening in 2026.
Madrid is generally considered a relatively liquid hotel investment market. While transaction activity slowed significantly during the pandemic – as seen across many European cities – it rebounded notably in 2022, with ten hotel sales recorded that year. Momentum continued in the following years, with 11 properties transacting in 2023 and nine in 2024. Notable transactions in 2024 included the sale of the 110-room AC Aravaca for €16 million (January), the 245-room Rafael Hoteles Atocha for €81 million and the 85-room Hotel Room Mate Alba for €32.5 million (both in July), as well as the 241-room Hotel Miguel Ángel Occidental for €205 million and the 19-room Montera 9 for €9.5 million (both in November).
Hotel values in Madrid rose by 6.8% in 2024, according to our 2025 European Hotel Valuation Index. This increase was largely driven by exceptional average rate growth fuelled by the surge in tourism, which helped offset rising operating costs. As a result, values per key now stand approximately 4.0% above 2019 levels.
The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide.
Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the
hospitality investment market.
In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely
insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related
restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.
Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with
an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide
insights on the likely trajectory of decline and recovery for hotel values.
For the Latest Information and Analysis on the Impact of COVID-19Click Here
If you’d like to speak to someone personally to review details of our most current analysis, please don’t hesitate to contact
us directly.
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