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Visitors to Barcelona Continue to Rise
But Hotel Performance Heads South
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April 2006 - Barcelona is the ideal all round destination with sand, sea and sunshine on the doorstep of a city rich in culture and tradition. Over recent years the number of visitors to the city has risen significantly. However, despite this hotel performance has been struggling. Figures from the HotelBenchmark™ Survey by Deloitte show that in 2005 revenue per available room (revPAR) fell to its lowest level in five years. 

Hotel performance falters

The graph below shows the performance of a consistent sample of hotels from 2000 to 2005. During this time revPAR has fallen by 10%. This has predominately been driven by occupancy, which has declined each year – moving from 82% in 2000, to 72% in 2005. Average room rates have also been struggling since 2002, however these are still marginally above the levels achieved in 2000. 
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Barcelona revPAR 2000 - 2005

Source: HotelBenchmark™ Survey by Deloitte
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Over-supply takes its toll

One of the main factors taking its toll on hotel performance in Barcelona has been the spate of new hotel openings over recent years. While visitors may have welcomed the choice of accommodation, hotel performance has undoubtedly suffered as a consequence. 

As can be seen in the graph below 68 new properties opened in Barcelona between 2000 and 2004. This represents a 36% increase in the number of hotels and a 43% rise in the number of available rooms in the city during this time. But the building frenzy has not stopped there. New openings in 2005 included the 45-room Eurostar Gaudi in June, the 433-room Hilton Diagonal Mar in August, and the 147-room Grand Hotel Central in November. 

It is anticipated that over 40 more hotels will enter the market over the next three years. So far this year Hesperia have opened their 9th hotel in the city, the 280-room Hesperia Tower. Marriott also plan to open the 260-room Renaissance at the airport, later this year.
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Barcelona hotel supply and available rooms 2000 - 2004

Source: Turisme de Barcelona (Barcelona Tourist Office)
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Barcelona competes against cheaper European destinations

In addition to the challenges of over-supply, the city has also faced increased competition from other low-cost European destinations, particularly those outside the euro-zone. Of the 37 cities tracked by the European edition of the HotelBenchmark™ Survey, Barcelona had the 12th highest average room rate in 2005 - higher than Vienna, Copenhagen, Brussels and Budapest. However despite this, Barcelona remains a much cheaper destination than the likes of London, Paris, Rome or Moscow. 

Visitor arrivals and airline routes continue to expand

Despite issues with over-supply and increasing competition from other European destinations, Barcelona has seen tourist arrivals rise dramatically over recent years. According to the Turisme de Barcelona the city welcomed over 4.5m visitors in 2004, an increase of 33% on 2000. 

Similarly the growth in airport arrivals has increased each year, with 27m visitors arriving at Barcelona airport in 2005 up 35% on 2000. The growth of low-cost airlines over recent years has been a key influence here. Over the last three years easyJet, Ryanair and SkyEurope have added new routes to their schedules. easyJet currently operates 13 routes to the city and Ryanair offers numerous routes to both Gerona and Reus airports located just outside Barcelona. Recently Ryanair launched a new route from Glasgow to Barcelona in December 2005. The company also plans to increase the frequency of flights from Dublin to Barcelona this summer and within the next two years Spain’s national airline Iberia also plans to launch a low-cost service. 

Conferences help raise Barcelona’s profile

Turisme de Barcelona is continuing to promote Barcelona not only as a holiday destination but also a key conference city. This is further endorsed by the fact that the International Congress and Convention Association (ICCA) announced that Barcelona was the most popular city for international meetings in 2004. 

While Barcelona has been a popular conference destination for some time, over recent years both the facilities and the calibre of conferences taking place have improved. May 2004 saw the opening of the city’s new international convention centre, the Centre Convenciones Internacional (CCIB). The CCIB has a total floor space of 67,000 m² and the capacity to seat 3,200 people in the main auditorium. In November 2005 the CCIB hosted the European Union’s Euro Mediterranean Summit welcoming representatives from 25 European Union member states and 10 Mediterranean countries in November 2005. 

One of the main exhibition and conference venues in the city is the Fira de Barcelona. This is split into two key areas - Montjuic which consists of seven exhibition halls plus congress centre and the Gran Via M2 which is still under development. The Gran Via M2 is due for completion by 2009, costing an anticipated €320m, this will give Barcelona an additional 355,200m² of exhibition space and make it the second largest venue in Europe.

With new conference facilities come new customers. In November 2004, after 16 years in Geneva, the Global Meetings and Incentives Exhibition (EIBTM) hosted its first event in Barcelona. According to EIBTM the event drew over 8,500 exhibitors and visitors to the Montjuic facility at Fira de Barcelona.

EIBTM is not the only new event to relocate to Barcelona. In July 2005 the “Bread and Butter” fashion show took to the Barcelona catwalk for the first time. The show’s organiser has signed a contract to stage the show at the Fira de Barcelona twice a year until 2008. The event attracts over 45,000 visitors and 700 exhibitors. 

The chance to find its feet

Over recent years, both over supply and competition from cheaper destinations have taken their toll on Barcelona’s hotel performance. And, with over 40 new hotels planned to open over the next three years there are concerns about the continued impact this will have. Whilst new openings are likely to hold performance back in the short-term, the longer term prospects for the market look good, because the tourism industry is in good shape. Visitor arrivals are continuing to grow, fuelled by low-cost airlines offering cheap flights to the city. This trend looks set to continue in 2006 and beyond with more new routes being added. With the fresh emphasis on conferencing and the city attracting new high profile events - the development of the new Gran Via exhibition centre will only add to Barcelona’s appeal as a key European conference destination. 

Notes: All analysis in Euros 

The HotelBenchmark™ Survey contains the largest independent source of hotel performance data outside of North America and tracks the performance of over 6,500 hotels and 1.2 million rooms every month. Monthly surveys are produced on the following areas:

  • Four regional rate and occupancy surveys covering Asia-Pacific, Europe, Central & South America and the Middle East & Africa. 
  • Twelve country/sub region rate and occupancy surveys for Australia, Benelux, China, Germany, India, Italy, New Zealand, Nordic Countries, Qatar, Southern Africa, Spain and UK. 
  • Two city rate and occupancy surveys for London and Paris. 
  • Monthly profitability surveys on Germany and London. 
  • On an annual basis we produce profitability surveys tracking performance across all regions of the world. 
  • Daily HotelBenchmark™ tracks rate and occupancy everyday for over 20 markets across the UK, Europe and the Middle East. Coverage continues to build rapidly since launch in early 2005. 
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Contact:

Sarah Duignan
HotelBenchmark
+44 (0) 20 7007 33883
Email: sduignan@deloitte.co.uk

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Also See: Hotels in Barcelona Achieved Some of the Highest Occupancy Levels Across Europe; Conference Demand Supports Occupancy Outside the Peak Summer Months / March 2004

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