Investors looking to snap up hotels for sale on the Costa del Sol due to Covid crisis

Investors focus on Costa hotels.
Investors focus on Costa hotels. / EP
  • Hoteliers' representatives are fearful that the funds' focus on return on investment could shorten the length of season

In the wake of hotels being forced to close early this season due to a lack of demand, investment funds have started to turn their attention to the Costa del Sol, looking to buy hotel properties in distress. It heralds a potential shift in emphasis in the business model for the area.

The president of the Costa del Sol Hoteliers Association (Aehcos), Luis Callejón Suñé, said this week that his group is receiving an average of four proposals a week from these funds, who are looking for a bargain as a result of the coronavirus crisis.

For the time being, local specialist advisers to these funds have only confirmed that there is a steady drip of enquires when asked by SUR. Although deals have not yet been done, they say that there are up to 12 hotels who are prepared to negotiate a sale.

So far, no hotelier is admitting to anything concrete, but many haven't ruled out putting up a For Sale sign at a later date. They point out that the season this year only lasted three or four months, not reaching more than 40 per cent occupancy on average. Many have not announced a reopening date next year yet.

Callejón Suñé explained that the investors look for high annual return on investment and their arrival on the Costa would mean a change in model.

"It would put an end to long-term, seasonal fixed contracts and see a move to short-term six- month contracts, and so fuel increased seasonality in the next three or four years. These funds are only motivated by return on investment," he said, adding that the crisis could mean 20 per cent of hotel properties go that way.

Big spending power

The investment funds have a lot of faith in the Costa and some have up to 100 million euros to spend, said experts, although those actually looking on the Costa is so far just a trickle.

Carlos Ramallo, of Ramallo Abogados lawyers, told SUR that foreign investors had recently been looking for buildings in Malaga city as well as the Axarquía, where there is more on sale and better prices.

Another firm of experts recognised that the level of debt of hotels is very high and it is a good time for investors to look on the Costa del Sol.

There are also established hotel groups looking to capitalise on the opportunity and expand their portfolio. In July, the founder of the progressive Room Mate chain, Kike Sarasola, told SUR he was looking for deals or joint ventures to take over the management of more properties.