SPAIN: As pandemic-related travel restrictions started to relax in the spring of 2021, international visitors returning to Madrid found that the city’s downtown had undergone a facelift.
An area once recognised for its budget hostels, kitschy souvenir shops, and congested roads now have wider sidewalks, pedestrian-friendly zones, and streets that Madrid’s town hall claims are cleaner and safer.
This extensive makeover was part of the city’s strategic initiative to attract a series of prestigious five-star hotels, aiming to carve out a share of the luxury tourism sector. This sector, until now, had been largely dominated in Europe by cities like Paris, Milan, and London.
In the heart of Spain’s capital, upscale hotels are springing up everywhere. After renovating seven buildings, including a former bank branch, Four Seasons Hotels Ltd. constructed a hotel close to the bustling Puerta del Sol. The 1,500-square-metre complex has a shopping centre with high-end stores like Dior and Hermes.
Marriott International reopened the Santo Mauro Palace following renovation work done during the period of the pandemic, and in June, it started to renovate the Westin Palace, which will add 400 rooms. Universal Music has chosen Madrid for the opening of its first five-star hotel.
Marriott’s vice president for Southern Europe, Richard Brekelmans interacted with the media, he gave an explanation of why Madrid was selected. He claims that it has long been underrepresented in the luxury sector. He explained the reason, while citing the city’s plethora of art museums, theatres, and restaurants as its main allure.
Madrid is betting that the luxury market will allow it to collect the same amount of revenue while avoiding the saturation witnessed in Barcelona or the Balearic Islands. In contrast, Barcelona is limiting the construction or extension of hotels in its downtown to deal with an uncontrollable influx of tourists.
Madrid will have over 2,700 deluxe hotel rooms by the end of 2023, climbing up to 50% from a decade ago, as per a report by commercial real estate services firm JLL.
33 new hotels are planned for the city, half of which will be in the upscale market, as opposed to 13 projects in Barcelona, as consulting company Colliers stated in another report. Madrid invested a record 802 million euros in hotels in 2022, three times more than Barcelona.
Carlos Erburu, general director of the first Thompson hotel in Europe for Hyatt Hotels Corp., which launched in Madrid in late 2022, said that the commitment the authorities in Madrid have shown for hotels versus that of Barcelona is much greater. With the arrival of luxury hotels, room rates have reached a new peak.
Partner at the Santo Mauro Palace Antonio Catalan stated that the most expensive accommodation rates there had increased from 400 euros ($437) per night before the pandemic to 1,200 euros per night at this time. According to six hotel managers who spoke to the UK-based media portal, occupancy has held steady despite rising room rates.
Three managers of upscale hotels stated that they anticipate price increases will be greater in the years to come. Restaurant franchises are following in their footsteps.
Managers stated that affluent Americans are joining Latin Americans in including Madrid on their European travel itineraries. According to official figures, there were 25% more Americans travelling to Spain in April than there were in the same month in 2019. Some managers have also noticed a rise in Asian tourists.
Spending reflects the bet on luxury. In April, foreign visitors to Madrid spent 336 euros a day there, which was double the national average.
Airlines have begun to catch on to this. Air China has recently raised flights to Madrid from one to four per week, while Spain’s Iberia increased its flights to the United States and Latin America this summer by 15% compared to 2019. From this month on, China Eastern will operate five flights a week to Madrid.
The result is more employment. In contrast to the national growth rate of 5.4%, employment in Madrid’s tourism industry has increased by 15% since 2019. The majority of that rise is in four- and five-star hotels stated Jose Maria Martinez of the labour organisation CCOO.
While some businesses have discovered that it is preferable to wager on more lucrative formats, the Spanish tourism industry has always attempted to compete with other places on low rates, according to him.
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