Europe -  Madrid, Spain

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. The lack of leisure demand is mostly the result of the limited marketing of the city as a destination, given that Madrid has a wealth of cultural heritage to attract short-break visitation.

The crisis years in Spain seem to be a distant memory, and after an estimated growth of 3.1% in 2017, the EIU forecast real GDP growth of 2.7% in 2018 and a reasonable average growth of 2.1% thereafter. The new government of Mariano Rajoy, formed in October 2016, is a weak minority and is unlikely to reach the end of its term in 2020. Madrid, the financial, economic and political heart of Spain, is a market traditionally recognised for its strong corporate base, with a somewhat weak proportion of leisure.

Arrivals to Madrid increased by more than a quarter from 2008 to 2017, or a compound annual growth of 3.0%. Since 2013, solid improvements in occupancy alongside increases in average rate of close to 30.0% have resulted in an improvement in RevPAR of over 50.0% – although, these results were from a low base, marking the recovery of the market from the severe economic crisis that hit Spain in 2012.

Hotel supply has broadly kept pace with the changes in demand, although growth in overnights still surpasses the increase in rooms (hence the higher occupancy levels). However, there is positive news for Madrid’s luxury hotel market: following its acquisition in May 2015, the 162-room Ritz Hotel is scheduled to close on 28 February 2018 for a complete renovation that is expected to last for approximately 18 months, and a Four Seasons with just over 200 rooms is expected to open in 2019 close to Puerta del Sol. In addition to these projects, there are also plans for a 214-room VP Hotel and a 111-room new luxury hotel in the former Hotel Velázquez to open in 2018, a 141-room proposed W Hotel to open in 2019 and another luxury hotel with close to 180 rooms in Plaza de las Descalzas. These developments, and the recent opening of the 159-room Hyatt Centric Gran Vía Madrid, are likely to help raise the ceiling for average rates in the market in the short to medium term. Although values per room in 2017 were up by 14.0%, values are still around 6% lower than they were during the 2007 peak.

Change In Value For Market: (€Euro)

Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Madrid RevPAR Change (€Euro)

Madrid RevPAR (€Euro)

For more information, please contact:

Sophie Perret, MRICS, MBA
[email protected]
  • +44 20 7878 7722 (w)
Simon Hulten
[email protected]
  • +44 020 7878-7775 (w)