For a comprehensive review of the Europe market, click below:
HVS In-Depth Europe Hotel Valuation Index:
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Madrid is not only the centre of political life and public administration in Spain, but also a dynamic economic market for real estate, hospitality, commercial banking and higher education. Madrid’s major generators of commercial demand in the local market area are the many corporate head offices and financial institutions in the financial district to the north of the city. Thanks to the wealth of cultural heritage on offer, Madrid has been successful at promoting itself as a short-break destination over the last few years. Although Madrid is traditionally recognised for its strong corporate base, with a somewhat weaker proportion of leisure, the increasing number of luxury properties entering this market is testimony to its increasingly diversified demand base.
Occupancy in Madrid increased by 10.0% from 2015 to 2019, equating to a compound annual growth rate of around 2.4%. Over this period, improvements in occupancy alongside increases in average rate of close to 30.0%, resulted in a solid improvement in RevPAR of around 40.0%. Post-pandemic, RevPAR substantially recovered in 2022, driven by volume almost doubling and rises in average rate of more than 30%. Average rate effectively reached 2019 levels in real terms, but occupancy remained around 15.0% lower. In 2023, the Madrid hotel market saw double-digit growth in both occupancy and average rate, which resulted in almost 30.0% rise in RevPAR. Given the dynamics of occupancy remaining somewhat lower than in 2019, but rates having actually surpassed historical levels, the market is effectively in positive territory, with a real RevPAR gain of 4.0%.
Hotel supply has broadly kept pace with the changes in demand over the last few years, although growth in overnights still surpassed the increase in rooms (hence the higher occupancy levels). The luxury hotel space has developed considerably in Madrid over the last few years with a number of notable openings: the 200-room Four Seasons Madrid in 2020, the 153-room Mandarin Oriental Ritz and the rebranding of the 154-room Villa Magna to a Rosewood (both in 2021). The 200-room Edition Madrid opened in 2022 and the 139-room JW Marriott in 2023, and further create momentum for overall average rate increases. Over the next few years, the city’s hotel pipeline is expected to add 2,400 rooms to Madrid’s supply (around 5.1% of the current hotel supply). Some of the future developments include the 100-room Nobu Madrid (opening in December 2025), the 101-room ibis budget Madrid Albasanz (October 2025) and the 147-room ibis Madrid Norte Las Tablas (March 2026).
From a transactions perspective, Madrid has historically been a relatively liquid market, with several hotel transactions between 2017 and 2019. Following years with no transactions in 2020 and 2021, liquidity returned to the market in 2022. Individual transactions included the 161-room Hard Rock Hotel for approximately €65 million (€404,000 per room) and the 109-room Iberostar Las Letras Gran Via for €70 million (around €642,000 per room). In 2023, the market slowed down again, with the volume of transactions decreasing by 50.0% over the previous year. Notable transactions in 2023 included the 199-room Hotel Tryp Chamartin, operated by Melia, which sold for €34.6 million (€174,000 per key); the 50-room Hotel Palacio Del Retiro for €60 million (€1.2 million per key); the 88-room Axel Hotel Madrid for €33 million (€375,000 per key); and a 17-hotel portfolio, three of which are located in Madrid (the 115-room Hotel Madrid Centro, the 175-room Hotel Madrid Gran Via 25 and the 192-room Hotel ME Madrid Reina Victoria) which transacted for an allocated price per key of €428,000.
Hotel values in Madrid increased by 3.0% in 2023, driven by the strong performance of this increasingly sophisticated and diversified market, as recorded in our 2024 European Hotel Valuation Index. This still places values per key at broadly 3.0% below 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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