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Analysis

Madrid hotel performances: Back in the race

In May, hotel performances of the Spanish capital were boosted by the Madrid International Auto Show. This new rise in performances confirms a positive year-to-date trend: Madrid has shifted gears and jumped in the bandwagon of rebounding Southern European hotel markets.

Like other countries of Southern Europe, touristically speaking Spain is not bogged down in the crisis any more, and this positively impacts the hotel market of its capital. Since the beginning of 2014, Madrid's hotel performances are back on track. Although average daily rates keep decreasing by 1.9% year-on-year, the strong rebound in occupancy more than compensates lower prices: the rise in occupancy rate by 4.7 points leads to a 6% increase in the RevPAR (Revenue per Available Room). In fact, while pricing policies remain very conservative, the bounce back in occupancy is the current engine for the improvement in hotel performances.

The Spanish capital benefited from a favorable event calendar, notably in May as the city hosted the Madrid International Auto Show. Held between May, 20 and May, 25, it gathered about 264,000 attendants in its Exhibition Centre (Ifema). This biennal event naturally boosted hotel performances in Madrid, which soared by 8.3 points over the full month. Average daily rates followed a positive trend as well, rising by 1.3%. Occupancy and rates combined into a 14% rise in the RevPAR over the month. All hotel segments post positive results, with the economy segment taking the fast track (+18.4% increase in RevPAR).

These sound performances enable Madrid hoteliers to enter the summer season with renewed confidence. Their pole position bodes well for the rest of the year: Spain as a whole is expected to break its 2013 record of 60 million international tourist arrivals.
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