Luxury hotels spot opportunities in Spain thanks to short-term rental bans

As Spain continues to attract record numbers of tourists, authorities are taking steps to shift the focus towards high-end tourism. This includes promoting the expansion of luxury hotels while cracking down on short-term rentals, which have sparked protests in several areas.

Balancing Tourism and Local Concerns

The surge in short-term rentals has led to concerns about rising housing costs and overcrowding in popular tourist destinations like Barcelona and the Canary Islands. Local governments have implemented restrictions on these rentals to address these issues. For example, Barcelona has pledged to ban short-term holiday rentals like Airbnb by 2028.

Spain aims to position itself as a premium destination for international travellers. By encouraging the development of luxury hotels, authorities hope to attract higher-spending tourists and improve the overall quality of the tourism experience. 

Part of the perceived problem in tourist hotspots is the profile of travellers attracted by low-cost flights. The hope is that creating more exclusive areas will discourage low-spending tourists and attract a more attractive profile of tourist. 

Investment in Luxury Hospitality

The timing for this shift is favourable, as Spain has surpassed Britain as Europe’s top market for hotel investment, particularly in upscale properties. Investors are actively acquiring older hotels and converting them into luxury establishments. This is a tactic already largely pursued in destinations like San Sebastián, which has seen the development of many luxury hotels over the years at the same time as imposing a number of restrictions on short-term holiday lets.

Luxury Hotels See Growth Potential in Spain

Hyatt Hotels has identified significant growth opportunities for luxury and lifestyle segments in Spain. Manuel Melenchon, managing director for Europe, Africa, and the Middle East, stated that the group aims to expand its presence in Spain beyond its current 50 hotels, especially as American tourist arrivals increase.

Melia, Spain’s largest hotel group, shares this sentiment, emphasising the importance of quality in the tourism sector. Gabriel Escarrer, Melia’s CEO, noted that the company’s focus on the high-end segment has contributed to increased revenues.

Madrid has successfully positioned itself as a luxury destination, attracting upscale tourists and driving higher spending. In July, visitors to Madrid spent an average of 317 euros per day, surpassing the national average of 195 euros and Catalonia’s 220 euros.

Barcelona’s efforts to attract high-spending tourists have shown some success, with hotel investments reaching 285 million euros in the first half of the year. However, the city faces challenges in maintaining its position as a luxury destination.

Balancing Economic Goals and Local Concerns

While the focus on luxury tourism can boost the local economy, it may also contribute to rising prices and gentrification. Protests against the America’s Cup sailing competition highlight concerns about the impact of high-end tourism on local residents. Ultimately, Spain’s success in attracting high-end tourists will depend on its ability to balance economic goals with the needs and concerns of local residents.

What Do You Think?

Do you think Spain should try to attract a more exclusive type of traveller? What do you think will be the impact of building more luxury hotels in your area? Let us know in the comments!