
The European resort market’s rapid bounce back to pre-pandemic levels has reactivated local and international investor appetite in Southern Europe’s vacation hotel sector. By Paul Allen
Attractive differential returns and an appealing risk/return balance have made Europe’s vacation hotel sector a prime target for international investment funds, an appetite sharpened by the strong holiday market rebound seen in 2022 and global tourism growth trends. New investment patterns are emerging, though.
Once synonymous with mass market tourism, Spain has become a hotspot for luxury hotel investment. The presence of luxury and ultra-luxury hotels in Spain – and Southern Europe in general – is still limited, with significant room for growth, notes Laura Hernando, Managing Director, Hotels with agent Colliers. The prime urban destinations of Madrid and Barcelona, along with the Costa del Sol and Balearic and Canary Islands, are a particular focus for investors.

Sun, sand and luxury hotels offer appealing prospects for investors
“The latest openings in urban and beach destinations – for example the Four Seasons Madrid Canalejas, Ritz Madrid, Rosewood Villa Magna, Six Senses Ibiza and Nobu Ibiza – have proven their ability to operate at rates between €700 and €1,200 even in difficult times,” says Hernando. “This has reinforced the idea of it being a more resilient segment than others, and certainly liquid, given the limited supply and strong investor appetite.”
The presence of luxury and ultra-luxury hotels in Spain – and Southern Europe in general – is still limited, with significant room for growth.
While Spain remains a core market for investment manager the Azora Group, pent-up demand for travel post-Covid has increased the appeal of the sun and beach hotel sector across the Mediterranean, Javier Arús, Senior Management Partner, Hospitality and Leisure, observes.
Already active in Iberia and Italy, Azora’s August 2022 acquisition of the five-star Sheraton Rhodes Resort marked its entrée into Greece. As well as being an established major market for European tourists, with a growing US tourist base, the limited institutional capital targeting Greece and the country’s pro-business-oriented policies “provide an optimal investment environment to consolidate our presence in the market,” Arús explains. Future investments will target repositioning opportunities from undermanaged assets or those requiring intensive capex in the most consolidated Greek islands, including the Dodecanese, Cyclades, Ionian Islands and Crete, he notes.
Drive-to destinations are attractive alternatives
Drive-to destinations are a further growing trend, says Roland Paar, Managing Partner with developer and investment manager SORAVIA. Close to metropolitan centres and accessible by train or car, developments that incorporate modern concepts – often with an upscale offer – can tap into customer demand for authentic, individual leisure experiences, as well as the meetings, incentives, conferences and exhibitions (MICE) market to create year-round destinations, he explains.
Union Investment’s resort hotel strategy is currently focused on popular beach and mountain destinations in Germanspeaking countries, and on well-established leisure destinations in Spain and Portugal. Above-average building quality and sustainability are crucial to us, in particular with respect to branded hotel products. Our latest acquisition, bought from Soravia, is the about-to-open, sustainably developed Marriott Bonvoy Autograph Collection boutique hotel on Bavaria’s Lake Tegernsee. The resilient resort sector has great growth potential, making it an attractive target for us as an investor.
Specialisation comes in many forms
SORAVIA’s LOISIUM brand, for example, targets Europe’s wine regions. It mixes upscale hotel and spa facilities in beautiful locations with quality wine and culinary experiences. “Wine edutainment – educating guests while having fun – is a big focus for us,” Paar says. Year-round attractiveness also makes such concepts more economical and sustainable, he adds.
By Paul Allen