Iberia: Revenue Strategy for the World’s Most Visited Tourism Destination

If Iberia were a country it would be the most visited tourism destination in the world. Combined, Spain and Portugal attract more than 100 million visitors each year, surpassing that of France, the world’s No. 1 tourism destination, which attracted 88.9 million overseas arrivals in 2017.

2017 proved a stellar year for hotels in Spain and Portugal. Hotels in Spain saw RevPAR up 10.6% in the first three quarters of 2017 while Portugal saw RevPAR jump 18.3%.

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Home-grown hotel brands, such as Meliá International, NH Hotels, Palladium Hotel Group and Pestana Hotel Group, now boast global portfolios, and continue to grow from strength to strength.

What is pushing the market in Iberia and is it set to continue? After talking to those working in the field we’ve discovered five trends impacting the market.

Five Trends Impacting the Iberia Hotels Market

Tourism transference

According to the ECM-MKG Destinations Observatory, tourist arrivals have continued to grow throughout the Iberian Peninsula following tourism transference from Mediterranean destinations affected by terrorist attacks, such as the French Riviera, Turkey, Egypt and North Africa.

However, this growth is not expected to continue. Euromonitor’s Travel In Spain report states that the recovery of competitor countries such as Egypt, Turkey and North African destinations is likely to reduce arrivals to Spain in 2018 and beyond.

Increased investment

2017 proved a record year in terms of hotel investment in Spain, with the country seeing investment volumes increasing by 228% to €2 billion for the first half of 2017, according to CBRE

Hotel real estate transactions hit record levels in Madrid, with the sale of Villa Magna, one of the most luxurious hotels in the city, achieving a price per room of €1.2 million.

Segmentation

Iberia is no longer being seen as just a leisure destination for those seeking out the sun and sea.

Spain’s largest hotel company Melia International posted positive results for the first nine months of 2017, with its hotels in Spain seeing significant growth. The company cited growth in both the MICE and bleisure segments as instrumental in its strong performance in key markets such as Madrid, Barcelona, Palma and Seville.

The “bleisure” market is providing another fruitful avenue, as business travellers look to extend their stays and maximise on their travel opportunities.

Online bookings

Online bookings in Spain have doubled in the last five years. Spain earned €7.3 billion from bookings made through the Internet in 2017, up 98% on the €3.7 billion registered from Internet-based hotel bookings in 2012, according to data from SiteMinder and Euromonitor International.

According to SiteMinder, direct hotel bookings have increased 113% in the last five years. Conversely, bookings via third-party sites like online travel agencies have been dropping, although they still make up 57% of online hotel sales for the country.

New markets

Europe has long remained the No. 1 inbound market for Iberia, but new markets are taking notice. 2017 saw the launch of new air links between Barcelona and Seoul and Hong Kong, while Madrid welcomed new airline routes from India and China. Similar developments were seen in Portugal, with Capital Airlines now linking Lisbon with Hangzhou in China.

Those hoteliers that diversify in their segmentation and distribution channels should continue to see uplift in both occupancy and revenue in 2018. This is certainly a very exciting time for the Iberian market as it shifts gears away from its “mass tourism” stereotype and continues to develop a mature, diverse tourism offering that is truly market leading.

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Michael McCartan, Managing Director, EMEA

Michael joined Duetto as Managing Director for Europe, the Middle East and Africa in 2014 to spearhead the rollout of the Revenue Strategy technology company throughout the region. Before joining Duetto, he served as CEO of eRevMax. Michael has an engineering degree from the University of Cape Town and a business degree from the Open University.

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