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Madrid hotels in full Movida

The Castilian Madrid has always competed against the Catalan Barcelona, which, on the hotel field, had taken the lead. But the Spanish capital is back on track, attracting more and more international groups, seduced by its dynamism. The overcapacity problems are only bad memories and the future is much brighter.

The rivalry between Madrid and Barcelona on the playing field is legendary. And the same is true in tourism between the Spanish capital and the Catalan metropolis… although things are calming down. “In the 90s we were competing when Barcelona posted a very high occupancy rate, but this is no longer true since Madrid has caught up,” assures Marisa de Navascuez, director of communications and public relations at the Hotel Ritz of the group Orient Express. In terms of figures, the primary main Iberian cities are on a par, with the number of visitors close to 6.5 million and 13 million nights. As for hotel ratios, the two competitors keep a close watch on one another with average daily rates and RevPARs that are nearly identical (115 euros for 82 euros of RevPAR in Madrid, 115 euros for 83 euros of RevPAR in Barcelona).The Gran Hotel Reina Victoria is the first born of the brand “ME by Melia”, the design branch of the eponymous Spanish group. This ex-Tryp was to become the first Hard Rock Hotel, the fruit of the joint-venture between the Spanish group and the institution of theme restaurants. The Hispanic- American partnership dissolved in 2006, but the projects to transform the property were complete. The hotel opened in October that same year under the new brand. The bar The Penthouse and the restaurant Midnight Rose with its design signed by Rande Gerber attracts the city’s fashionistas. “The ME Madrid offers our clients and the neighborhood the most exciting hotel concept Madrid has ever seen,” congratulates Guy Hensley, Senior VP of Operations for the new brand, “this exceptional product is designed to compete with the best hotels in the city”.There is one area where the Catalan city lost some ground against its rival Barcelona: the appeal of the world leaders in the luxury hotel industry. The major international groups have thrown their all into the Mediterranean metropolis. Very soon, Mandarin Oriental and W will take heir places there. And all the new recently created design brands – Armani, Missoni or the recent association between Marriott and Ian Schrager – have set their sites on this destination that is as trendy as ever. If they succeed in their quest, they will join the brands Le Méridien and Ritz-Carlton, which has been there for a long times with the hotel Arts.On an international level, Madrid has not benefited from the same media coverage. “Thanks to the Olympic games in 1992, Barcelona is known the world around,” admits Carolina Campos, deputy director of Madrid’s five-star hotel AC Palacio del Retiro. Madrid dreams of welcoming such competition. In the race for global exposure, Madrid failed in the race for 2012 but doesn’t despair. It hopes to be rewarded in 2016. In expectation, the municipality has undertaken major works to regenerate the city and improve its infrastructures.There is nonetheless one point where the Spanish capital will never equal Barcelona: the sea. This is an enormous advantage particularly in the summer when, according to Carolina Campos, “the heat is suffocating in the capital”. The shore allows the Catalan metropolis to operate on both the business and leisure sectors. This means a real difference with Madrid where business clientele continues – for now – to make up between 60 and 70% of the mix. “Things are beginning to change. The two clientele are equal now. Last August, when 5* hotels often post very low occupancy rates, our occupancy rate was 60%,” rejoices Marisa de Navascuez.This progress is logical because the city has a few assets to its advantage for the sustainable development of the Leisure segment, making it possible to lengthen the season and fill weekends. In particular an energetic nightlife and a “Triangle d’or”, bordered by the Prado, Thyssen-Bornemisza and Reina Sofia museums, a concentration of the best of culture and shopping.All these assets are designed to attract a luxury clientele. Because while Four Seasons, Raffles, Rocco Forte, Mandarin and others have not yet established themselves in bubbling Madrid, the business capital is far from being the poor cousin in terms of upscale hotels with its twenty five stars… So with Spain’s GNP largely surpassing the European average for a decade, the economic dynamism of the country encouraged intense hotel development at the heart of its financial district. With, in particular, strong growth in the number of 4 and 5* hotels to meet the demand of Spanish and international businessmen. Which has had an important impact on results .First in line the local operators – Sol Melia, NH Hotels, AC Hotels, Silken, Derby – which have significantly benefited from these development opportunities, and will soon be joined by Hospes. Within a few months, Hospes Madrid will open its doors on Plaza de la Independencia in a superb old building. Because together with the recent modern high-capacity luxury hotels such as the Melia Princessa and Castilla, the Hesperia Madrid, the Husa Princesa, the Occidental Miguel Angel or the Mirasierra Suites, opened in 2003 by Juban Hotels, most of Madrid’s luxury hotel industry has prepared itself to take a new look at its past. The great trend: the conversion of late 19th-century buildings. Thus, the intimate Hotel Orfila (32 rooms) opened in 1999 in an former private residence. Previously the residence of the dukes of Santo Mauro and then an embassy, the Santo Mauro was converted into a hotel in 1990 by AC Hotels. The group repeated the experiment in 2004 with the Palacio del Retiro, which borders on the famous Retiro Park.Although it is housed in a historic building, this hotel with its very contemporary decor is also representative of another important luxury trend in Madrid: design, design, design. “This blend of genres appeals to a clientele of young entrepreneurs,” observes Carolina Campos.Another example of a luxury boutique hotel: the trendy-artsy décor of the Hotel Urban is all the rage with its collection of Primitive Art. The Silken Puerta America went even further. A dream team of renowned architects nurtured this futurist hotel. With a façade by Jean Nouvel, then Zaha Hadid on the second floor, Norman Foster on the third, Chipperfield on the fourth and so on: Castro & Kehne, Vitorio & Lucchino, Arad, Newson, Findlay, Isozaki, Mariscal & Salas, Gluckman, Pawson... Not to mention Liaigre for the restaurant, landscapists Bourne and Bell and Isometrix Lighting for the lighting: all together, 19 architecture and design studios worked closely to make this Madrid hotel a condensation of avant- garde design and architectural concepts.The international luxury brands present in Madrid – which there are of course – are much more classic, at least for the time being. For the most part they have got a hold of several treasures of Madrid’s architectural heritage. The Westin Palace has fallen into the Starwood’s collection. This “Belle Epoque” palace was built under Alphonse XIII to provide the greats of this world visiting the Spanish capital place to stay which would reach their expectation – or perhaps even more since the building provides 417 rooms.The Ritz, meanwhile, opened in 1910 at the request of the construction king with the announced goal to rival with its Parisian homonym, went into the hands of Le Méridien aftyer which it was bought in 2003 for 125 million euros (for 167 rooms) by a joint venture Orient Express and Omega capital, a local investor.This institution that attracts official delegations and the traveling rich and famous people is “the leader on the market with its average daily rate of 375 euros – 300 in August – and its occupancy rate of 80% year round,” specifies Marisa de Navascuez. “We are preparing to celebrate the building’s centennial in three years,” she rejoices. Prior to this event, the historic building might get a facelift, with or without closing. The Park Hyatt Villa Magna, one of its main competitors together with Gran Melia Fenix and the InterContinental, is currentely undergoing extensive renovation. Part of the Chicago group since 1990, the hotel closed its doors last August for an intense rejuvenation treatment and trimming down, reducing its inventory from 182 to 151 rooms and suites, including a presidential suite. The hotel will reopen in October 2008 after being worked on by the Spanish architect designer Thomas Urquijo.AC Hotels, Silken, Hospes, Derby: can these groups that are recognized on their domestic market stand up against the lack of international recognition among American and British businessmen who are attracted by the commercial mechanisms of Hyatt, Orient Express, Starwood, InterContinental and even Sol Melia? “That could be a problem,” recognizes Carolina Campos, “it requires more extensive work to sell it in order to demonstrate the quality of our offer.” Hoteliers have, for the most part, adopted a similar solution by affiliating themselves with the upscale consortia. Orfila is a member of Relais & Châteaux. The Palacio del Retiro became a member of Small Luxury Hotels and Villa Real a member of the Derby group. Another property of the Derby Collection, the Hotel Urban, is a Design Hotel. These labels are useful for competing with the big hotel names on equal terms.The diversified offer between classic luxury and design properties, under Spanish and international brands, would appear to be right in terms of both quality and number according to the different groups. Particularly since the destination’s future appears very bright. In 2008, with the Park Hyatt back in the competition and the arrival of Hospes, Madrid’s luxury hotel supply will be good and ready for a new influx of clientele. The international airport Barajas has received a makeover and is ready for the arrival of these new tourists. With a fourth terminal and two new runways, Madrid’s airport is now one of the most modern hubs in the world. A necessary stop between Europe and Latin America, Barajas should absorb, according to all forecasts, 5% annual growth in traffic. 70 million are expected in 2015 versus 45 million at the end of last year (+8% over 2005).Hilton sniffed out the right vein and will open the Hilton Barajas Airport next January. This high capacity hotel is for businessmen who cannot afford the time to go into the city. This hotel will also benefit from the nearby exhibition park Ifema that was recently expanded. Madrid, regularly ranked between 15th and 20th position in the ICCA classification, now organizes increasing numbers of large-scale events. The perspectives for the future are heartening on this market as well. Madrid could soon come close to the Top 10 worldwide on the heels of Barcelona. With development expected on the MICE and Leisure segments, Madrid’s luxury hotels have a good future.Overcapacity: Madrid has absorbed its excess The overcapacity felt by the city now seems like just a distant memory. Madrid’s revenue per available room posted growth by 7.8% in 2006, following 2.9% growth the previous year. 2005 was marked by a “galactic” increase in occupancy rates that was close to 72% across the year. Average daily rates followed suit in 2006 (+7.4%). Demand finally caught up with a supply that has not stopped growing since Spain entered the European Union. Greater Madrid’s supply of 131 hotels in 1985 grew to 320 in 2005. In 2007, the supply of Madrid intra-muros continued to grow by 4%. And upscale hotels played an important role in the hotel boom. This expansion is understandable since it is parallel to Madrid’s local and international appeal that has been strong since the mid 90s. The Spanish have a preference for their capital. Local clientele have grown from 2 million visitors to 4 million on the same period. Madrid also enjoys distinct popularity among international clientele. Good years and bad, growth in the number of arrivals is close to 4%, moving from 1.5 to 2.5 million in less than twenty years. This game of cat and mouse between supply and demand has not always been favorable to hoteliers. The city experienced a serious setback in 2003 – but what major city didn’t? – at the start of the war on Iraq that generated a global drop in the world’s economy. Nonetheless, after this slump, the recovery was clear from 2004 thanks to Spanish clientele as the economic climate improved. Proof of this market’s potential: the murderous attacks in March of the same year only slightly slowed this continuous acceleration.Me by Melia, a new concept in hotel design The Gran Hotel Reina Victoria is the first born of the brand “ME by Melia”, the design branch of the eponymous Spanish group. This ex-Tryp was to become the first Hard Rock Hotel, the fruit of the joint-venture between the Spanish group and the institution of theme restaurants. The Hispanic- American partnership dissolved in 2006, but the projects to transform the property were complete. The hotel opened in October that same year under the new brand. The bar The Penthouse and the restaurant Midnight Rose with its design signed by Rande Gerber attracts the city’s fashionistas. “The ME Madrid offers our clients and the neighborhood the most exciting hotel concept Madrid has ever seen,” congratulates Guy Hensley, Senior VP of Operations for the new brand, “this exceptional product is designed to compete with the best hotels in the city”.

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