Buying a hotel in the South of Spain? Make sure you know the locations and possibilities of the areas.
Are you looking into investing in hotel business? Choosing the southern regions of Spain is a great decision. Each year the turnover in hotel business is growing, thanks to the developed tourist industry. Thousands of affordable flights down from each part of Europe during the peak season are bringing millions of guests. A variety of hotels and accommodations to chose from which are all fully booked during the summer. Newspapers constantly report improvement in hotel business.
However, if you are considering to become a part of this movement, make sure you are knowledgeable about the laws of Spain and the specifications of its regions. Before choosing the location for your hotel, discover how diverse the areas of Spain are and which one will make your business flourish. This post will help you understand the real estate market and tourist demands in various parts of the sunniest part of Spain: Calatonia, Balearic Islands, Valencian Community, and Andalusia.
The Always Crowded South
The entire Mediterranean coast of Spain from it’s South-East boarders with France to the closest points to Africa is an attractive place for visitors from all over the world. Big cities like Barcelona and Valencia are crowded even during winter. The snowy curves of the Catalan Pyrenees and the Sierra Nevada open ski resorts for Christmas holidays. Most of the resorts are open only for high season, from April to October, and undergo renovation during wintertime. However, even in the South hostels and simple B&B with central locations can run all year round with a good profit. Before looking into locations, answer the questions:
- Do you want the hotel to run the whole year round or just 6 months?
- What kind of lifestyle should your hotel represent?
- Should it be located close to the beach or high in the mountains?
- Would you like to own the business or run it on rental terms?
The last question is also important. Most hotels are on the market on two terms, se traspasa and se vende. If you would like to run a business yourself, buying a limited time contract would reduce the starting costs and responsibilities as you will not be owning the property but will be fully able to use it. Read more about the difference between buying and renting a hotel business in our blog.
Barcelona is the second center of tourism in Spain along with Madrid, often beating the capital in numbers of visitors. Although the recent fight for independence has been affecting dramatically the touristic and business sector, Catalonia is still doing great all year round. Bringing in treasures of ancient and modern architecture, Barcelona is also the boiling point for youth culture, fashion, art, food and more. Easy access to the beaches and one of the major amusements parks in Europe, Port Aventura, makes Catalonia attractive for families. During wintertime, skiing resorts in the Pyrenees give many possibilities for an active vacation. Apart from that, Barcelona is a big transport hub on the way down to the Balearics and Canarias.
Running a hotel in Barcelona area and Catalonia is profitable though expensive. The level of competition in the hotel sector is comparable to the Madrid area. However, the numbers show a stable raise in demand of both hotel and guest house accommodations throughout Barcelona. The level of occupancy of hotels does not fall lower than 54% even during low season.
Barcelona and the surroundings is a great choice to run both boutique hotels and simple B&B or hostels due to the high demand of accommodation.
Population: 7.5 mln
Valencia – the Center of Culture
Although Valencia is not in the top 3 of most visited locations in Spain, it’s still one of the centers of business, science and tourism in the South of the country. There are 5 major Universities in Valencia, 34 museums and a rich historical background of the city that makes it attractive for international visitors. Apart from that, Valencia is traditionally popular within the local travelers. The Valencian port is the most loaded sea port in Spain. The majority of occupants of hotels in the city are Spanish.
The Valencian Community is a big region that also includes one of the most promising areas of resort tourism in Spain, Alicante. Having it’s own international airport, being located right on the coast in a semidesert terrain, Alicante is famous for warm and dry weather and tends to grow in vacation tourism every year. The newer cities such as Torrevieja still show lower prices in real estate but stable growth in the international tourism sector. Being more affordable than the expensive areas near Malaga such as Marbella, the region still gives a lot of possibilities for small and medium businesses, as well as for returning customers enjoying the same Mediterranean sea, sand and sun for less expenses. Running a hotel in the Alicante area gives a great perspective of a prosper business for years ahead.
Population: 4.9 mln
Murcia: The Window to the Future
The small area of Murcia is not the most popular destination for global tourists yet, but the significance of this region gives great openings for the future. First of all, unlike many other regions, Murcia consists just of one province and is ruled by a central government. It is one of the strongest communities in the agricultural sector of Spain. The prices for real estate and hotels in the Murcia region is lower than in Andalusia. For those visitors who seek for hidden treasures, Murcia has Lorca with it’s castle, the port city of Cartagena with an ancient Roman theater and the beach of La Manga, a strip of land 21 km long. The Murcia San Javier airport is small and operates flight merely from the UK. So far focused more on individual travelers rather than tour agency programs, Murcia gives a lot of freedom of building a successful business from scratch.
Population: 1.4 mln
Andalusia: The Endless Coast
When speaking about Southern Spain, Andalusia is the region. Highly developed for tourism, it presents growth in economic numbers and takes the 4th place as the most visited part of Spain. From the busy hub of Malaga all the way down along the coast tourists can find a variety of options for accommodation during the vacation season. Costa del Sol is never boring. Only a few minutes up to the mountain terrain brings the visitors to small incredible towns and villages like Mijas Pueblo or Ronda with the famous spectacular Puento Nuevo bridge. Always crowded but never overwhelming, Andalusia was visited by averagely 10.000 tourists in 2016, the double compared with the year 2000. The continuation of the coast brings the travelers to the British territory of Gibraltar and the Tarifa port where tourists can easily continue to Morocco. More highly attractive places in Andalusia include the capital of the region, Sevilla, also Cadiz, Cordoba, Granada which all have a touch of the Arabic civilization while being highly developed European cities.
Running a hotel in Andalusia gives a number of advantages to the owner, just to mention that this region is one of the few in Spain that does not have a “second official” language, thus all legal matters are solved in castellano, Spanish.
Population: 8.4 mln
Balearic Islands: The Tourism Headquarters
Mallorca and Ibiza are the two islands of the Balearics that keep the leading position as the most visited in Spain ever since they started welcoming international tourists in the 1970s. With hundreds of ships docking to Palma every month between April and October and more than 26 million passengers in the Palma airport in 2016, the Balearic Islands are a high demand destination during the peak season.
During the past few years the politics over the tourism sector in the islands have become more strong. In 2017, the government of the Balearic Islands passed a restriction law on private vacation rentals and also postponed issue of new licences for hotels in Palma. By putting control over the illegal rentals and giving more support to authorized tours, the government is trying to regulate the number of visitors to the islands that are experiencing rapid growth of population during the summer season.
Mallorca annually hits records of the most expensive location to go and live in. To be running a hotel business in Mallorca or Ibiza, one must calculate at least 20% more to put in investment compared with other regions of Southern Spain. However, a stable turnover is an insurance for owners of hotel businesses in the Balearics.
Population: 1.1 mln