BarcelonaAuthorities in Barcelona have announced a ban on new hotels or visitor apartments opening anywhere in that city’s center, calling into question the future of its tourism and travel growth. 

The ban even extends to not replacing any hotels or apartments that close, with the local government calling for a better balance between tourism and the local community. Hotel groups and associations have issued a joint statement accusing the local government of trying to demonize the industry.

The legislation is set to push Barcelona into the top three cities in Europe in terms of occupancy by 2018, according to PwC, which is predicting that the city will oust Amsterdam to come in third behind Dublin and London at 80 per cent.

The move has already seen a number of hotel plans in the city suspended, with Hyatt’s conversion of the Agbar Tower rumored to be among them, and attention is turning elsewhere. “Barcelona is a complete waste of time in terms of trying to do anything,” Ivar Yuste, partner, PHG Hotels and Resorts, told Hotel Management. “Madrid is now the focus of attention. It is the capital and all the brands want to be in the city. The owners are looking to lease, to get the best returns, but very few of the brands want to do them, but they will have to do so for access.”

Inmaculada Ranera, Managing Director, Spain and Portugal, Christie & Co, agreed. With regards to the actual planning situation in Barcelona, Ms Ranera said that since there are now entry barriers to the city (no new licenses within the central area mean that the only way to have a hotel is either purchasing an existing property, which would likely drive prices up, or reaching a lease or management agreement with a hotel owner), some companies might not be ready to pay the premium. This, Ms Ranera said, may divert their interest to other gateway cities like Madrid where, despite prices still being high and with few opportunities on the market, it might be easier to enter. On the other hand, other secondary cities like Málaga or Valencia are attracting the interest of both investors and operators, she said.

Is Madrid next?

While the brands and investors look for a more flexible home, rumors are building that Madrid is considering following suit. “There are rumors that Madrid could be considering a similar ban to Barcelona’s,” Ms Ranera said. Still, for the time being, Christie & Co. considers these rumors to be a result of “the media trying to create news where nothing is really happening, at least at the moment,” she said.

“Officially, nothing has been said, but I have spoken to several players in Madrid who have said that trying to convert offices into hotels is coming with a lot of caution on the part of the local government,” Mr Yuste added. “It’s not happening formally, but both Barcelona and Madrid have left-wing governments who see hospitality as capitalism and feel that the city is for the people. 

“Spain is about the right assets in the right place, so the local investors are looking elsewhere, looking outside the two cities and looking for small hotel groups to use as platforms to grow.”

Meanwhile, back in Barcelona, hoteliers are complaining that the ban does not address the issue of apartments being listed illegally on sharing platforms such as Airbnb. The nightly camp-outs on the city’s beach may not be getting too overcrowded just yet. 

Katherine Doggrell is an editor at Hotel Analyst, the UK-based news analysis service for hotel investors.