Spain has traditionally been one of Europe’s leading tourist destinations and, consequently, one of its most important hotel markets. Tourist demand regularly reaches new highs. It is therefore not surprising that international investors continue to show great interest in Spanish hotel properties. However, a look at the current market figures shows that price dynamics are increasingly being driven by another factor: limited supply.

Limited supply boosts existing hotels

According to the National Institute of Statistics (INE), Spain welcomed more than 17.5 million visitors from abroad in the first quarter of 2026 alone. This marked the strongest start to a year in the country’s history. For the first time, the 100-million mark could be exceeded for the year as a whole.

However, in many Spanish markets, high tourist demand is met by a supply that is growing only slowly. Although, according to CBRE, around 260 new hotels are expected by 2028, the project pipeline is concentrated primarily on established destinations such as Madrid, Málaga, the Balearic Islands and the Canary Islands – and almost exclusively on the high-end four- and five-star segment. New capacity is therefore being created selectively, rather than on a massive scale.

Key destinations such as Mallorca have deliberately restricted further hotel construction. This makes the development of new hotels increasingly challenging: regulatory requirements, a shortage of land in central locations, and rising construction and financing costs are limiting the number of new projects in many places. Consequently, supply in the regions concerned is growing more slowly than demand. This imbalance between strong demand and a stock that is expanding only gradually is the structural driver that has fuelled the performance of Spanish hotels in recent years.

Barcelona illustrates this trend particularly well and is now regarded as a prime example of a market benefiting from a shortage of supply. The Catalan capital has been restricting the construction of new hotels for years through the so-called Pla Especial Urbanístic d’Allotjaments Turístics (PEUAT), or Special Urban Development Plan for Tourist Accommodation. This instrument allows the city to control the total number of tourist accommodation units and to prohibit new licences in certain neighbourhoods. Since it came into force in 2017 and following several amendments, numerous areas have been classified as ‘critical’, where new hotel licences are effectively no longer possible. The aim is to curb ‘overtourism’, which in some neighbourhoods competes with people looking for traditional housing and is held (partly) responsible for rising rents. Yet, at the same time, tourists continue to visit.

This creates an attractive market environment for existing hotels. They enjoy significant pricing power, as alternative accommodation in central locations cannot easily be replicated. The scarcity thus acts as a natural safeguard for the profitability of existing properties.

Favourable market conditions are reflected in the key figures

The limited supply is also evident in the operating key figures. In the first quarter of 2026, the average occupancy rate for Spanish hotels stood at around 62 per cent. At the same time, average room rates – and thus revenue per available room (RevPAR) – continued to rise compared with the previous year. The average daily rate (ADR) reached €116.73, whilst RevPAR stood at €71.49.

Another positive factor is the shift in the structure of demand. Demand is increasingly spread throughout the year, stabilising occupancy rates at many hotel locations outside the traditional peak seasons. Cultural and city tourism, dining options and events ensure that hotels in Spain’s cities are less heavily reliant on the summer months.

Investors are focusing on quality

In the first quarter of 2026, hotel properties worth around 700 million euros changed hands. This meant that the transaction volume was around 20 per cent higher than the previous year’s figure. The positive market conditions are therefore also clearly reflected in investment activity. In terms of historical investment volume, Spain is the second-largest European hotel market after the UK. On average over the last five years, around 2.3 billion euros has been invested in Spanish hotels.

Investors’ focus is clearly on high-quality properties. Around 90 per cent of the capital invested was in hotels in the four- and five-star segments. Properties with strong operators in good locations and stable long-term earnings prospects are particularly in demand.

Alongside the traditional holiday regions, urban markets are also continuing to gain in importance. Madrid and Barcelona benefit from a broad base of demand from leisure and business travellers, as well as international visitors. This combination ensures a high degree of resilience and makes both locations particularly attractive to investors. Other cities such as Valencia, Seville and Bilbao are also increasingly coming into focus, as they combine attractive destinations with solid fundamentals whilst still having a relatively limited supply.

Conclusion: Local expertise counts

Spain’s hotel market is a classic case of growing excess demand. However, not every location is developing at the same rate, and not every hotel benefits to the same extent from the positive market conditions. 

Real I.S. has been represented in Spain for many years through its own branch office, where it contributes its long-standing hotel expertise. This local presence enables direct access to market information, transactions and local partners. Last year, for example, Real I.S. further expanded its position in the Spanish hotel market with the acquisition of the four-star ‘Barceló Raval’ hotel in Barcelona’s old town.