The collapse of tourism this season has affected hoteliers in the Balearics who wish to sell establishments to investment funds, the majority of which are British or American.
Hoteliers are facing a liquidity crisis as well as a complex dilemma that is likely to last over the next twelve months. For this reason, prices for hotels have fallen dramatically. Whereas there might have been a price per room of up to 120,000 euros, this has now fallen to an average of 45,000 euros.
Blackstone and KKR are among the investment funds which have made Majorca one of their main priorities in recent years. Since 2015, some 2,000 million euros have been invested in buying over eighty hotels, with Ibiza also very attractive. The funds provide significant and necessary investment, and they know that hoteliers are at present not in a good position to be making too many demands. They have the potential to make hay in both Majorca and Ibiza.
Average investment has been between ten and 23 million euros, depending on capacity, hotel category and location. Leading hotel groups such as Meliá have benefited from arrangements with funds that purchase establishments and leave the hotel groups to manage them.
Real estate services firm Cushman & Wakefield has been analysing funds' strategies over the past few years and confirms that the Balearics, because of location and demand from the principal European tourism markets, will continue to have high tourism potential once the coronavirus crisis passes.