The fall of tourism primarily affects the hotel industry

Covid and the subsequent fall in tourism, which accounts for almost 15% of GDP, has hit Spain hard and a loss of EUR 106 000 million is expected for 2020. Activity has fallen back to 1995 levels. Spain, which received more than 80 million foreign tourists in 2019, has now lost less than 30%.

Airlines, hotels, restaurants and bars are the most frequently mentioned, but there are, of course, many other sectors that suffer directly and indirectly.

It is clear that it was not Spain nor his government , but the Covid pandemic, that was to blame for the paralysis of mobility throughout the world, but it is clear that, particularly in the western world, wrong political and sanitary measures were taken.

After a total lockdown of more than three months an irresponsible complete return of freedom was decided instead of controlled relaxing measures during the holiday months, and caused a brutal resurgence, which may be even worse than the first wave.


The worst summer in the history of Spanish tourism ends with the solvency of the hotel industry and the waterfall of sales is already a fact. It is only necessary to look on the Internet to observe the reality of the sector: in Milanuncios, something like the bargain newspaper, a web of advertisements that are very focused on second-hand products and not very used to the listing of important economic products, offers of hotel properties reach 50 per hour, with large bargains and also without geographical distinction.

For example, you can read advertisements such as , “hotel for sale in Madrid with less than 200 rooms and a price of more than 150 million euros” or in the province of Malaga, “hotels for sale on the Costa del Sol, 3, 4 and 5 * of 90. 140, 170, 280, and up to 400 rooms, located in Fuengirola, Marbella Puerto Banus, Estepona and Torremolinos”.

The vultures are lurking to take over hotels. They are waiting patiently for their time because there is going to be bankruptcy this year and in any case next year. It is clear that the revival of tourism will not be immediate.

Most observers assume that the hotel crisis will continue until 22, that it will be possible to break even in 2023 and that profits will only be made from 24 onwards.

Family businesses and smaller hotel groups will therefore have to look for financing or lease back operations. And here lies the great opportunity for investors. Indeed, banks are not going to lend money to the horecas sector and alternative financing is unaffordable (12 to 15% and even more).

Investors are already making bids to hotel owners in need to buy the properties at a heavy discount between 30 and 50% of the pre-Covid market value. They are giving the operator the opportunity to continue the operation and pay a rent with an option to buy back within 3 to 5 years at the purchase price increased by 20 to 30%.

The advantage for the owner is that his rent will not be so high because the new owner will be satisfied with a normal return on the invested capital.

A horrible solution but always better than bankruptcy.

Rik de Ridder co founder Quintessence International Real estate.