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5 KEYS MADRID Vs BARCELONA MADRID

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5 KEYS MADRID Vs BARCELONA MADRID 5 KEYS MADRID vs BARCELONA MADRID Madrid closed 2018 with an historic record of both overnight stays (19.7 million) and occupancy levels (76.8%) confirming the favourable moment from the tourism point of view. However, the city continues to present a significant divergency in average price with respect to other comparable European destinations. The supply has adapted to the increase in demand, with noteworthy refurbishments and openings, especially in the luxury sector, and the entry of major international brands. The outlook for 2019 remains positive, with a good line-up of conferences and cultural and sporting events over the year. BARCELONA In 2018, RevPAR in Barcelona fell for the first time in eight years, due to slack demand in the first nine months. The uptick in tourism in the last quarter suggests that the situation is returning to normal. The most sensitive niches to the situation in Catalonia were domestic and luxury tourists, while international tourists remained strong, with more than 20 million overnight stays. The limitation of the growth of supply in the city centre is leading to new developments in the peripheral areas. Market recovery and the gradual normalisation of the political situation have rekindled the interest of investors and chains. 01 DEMAND MADRID Tourism demand in Madrid performed positively in 2018, though growing at rates below the average of the period 2013–2018 (3.2% growth in travellers in 2018 vs a CAGR of 5.2% over the abovementioned period). Madrid remains the leading urban destination for tourist arrivals in Spain. In terms of nights spent, however, it lies second, behind, Barcelona, which has a better average length of stay per traveller (2.5 days vs. 2.0 days in Madrid). International tourism continues to be the main growth factor (+46% growth in the last five years) and already accounts for 61.3% of total nights spent. The main source markets were the United States, Italy and France. The markets that grew most in 2018 compared to the previous year were China (+17%), Mexico (+10%), the United States (+5%) and France (+5%). China (which already exceeds 200,000 visitors) remains strategically important on account of its enormous potential as a source of visitors with high average expenditure. Another great opportunity is the Latin American markets which have great cultural similarities, are well connected to Spain by air and have been shaping up as important source markets of luxury tourism. One of the main factors supporting Madrid’s development as a destination is the growth of business tourism: Madrid has made a qualitative leap in its capacity to host large events, partly because it is regarded as the second safest European capital1. This positive trend is expected to continue during 2019, with the city acquiring major new events, including the European Dermatology Congress, to be held in October (more than 12,000 expected participants), and the Farmaforum, to be held at the end of March (more than 5,000 expected participants). The IFEMA exhibition centre has thus consolidated its position as one of the main drivers of MICE tourism, hosting a total of 720 events in 2018, 21% more than in 2017. Furthermore, in terms of business tourism, Madrid has benefitted from the instability and uncertainty afflicting rival European destinations. The exodus of companies from Catalonia and of international companies from United Kingdom due to the uncertainties of Brexit (most notably the European headquarters of American Express and of Uber) has helped Madrid position itself as a key venue for business meetings. Madrid has also greatly improved and strengthened its position as a leisure destination. The good transport and hotel infrastructure, the wide range of culture and leisure activities and the closeness to other major heritage destinations have all assisted Madrid’s rise as a tourist destination. One indicator that confirms this good positioning is the recognition of the Madrid brand in social media, where Madrid holds sixth place worldwide, with 31 million # in Instagram. Nevertheless, Madrid with 61% of international demand (5.1 million travellers) and 2 days of average stay, still lags far behind Barcelona’s 6.5 million international travellers and 2.5 days of average stay, which shows that there is still great potential for growth. Madrid 2013 2014 2015 2016 2017 2018 CAGR '13 - '18 Travelers 7,520,832 8,384,306 8,894,518 9,068,040 9,409,386 9,711,884 5.2% % annual change -5.1% 11.5% 6.1% 2.0% 3.8% 3.2% National 3,832,575 4,356,412 4,472,588 4,457,227 4,414,795 4,535,409 3.4% International 3,688,257 4,027,894 4,421,930 4,610,813 4,994,591 5,176,475 7.0% Overnight Stays 14,848,663 16,520,205 17,818,431 18,138,279 19,331,896 19,715,570 5.8% % annual change -3.9% 11.3% 7.9% 1.8% 6.6% 2.0% National 6,583,531 7,479,028 7,777,065 7,574,099 7,591,983 7,630,321 3.0% % of total 44.3% 45.3% 43.6% 41.8% 39.3% 38.7% International 8,265,132 9,041,177 10,041,366 10,564,180 11,739,913 12,085,249 7.9% % of total 55.7% 54.7% 56.4% 58.2% 60.7% 61.3% Average stay 2.0 2.0 2.0 2.0 2.1 2.0 0.6% % annual change 1.3% -0.2% 1.7% -0.2% 2.7% -1.2% Source: compiled by the author with data from the Spanish National Statistics Institute (INE) CAGR: Crecimiento Anual Compuesto 1. According to the report of Safe Cities published by The Economist Five keys: Madrid vs Barcelona 4 01 DEMAND BARCELONA After being held back by social-political tensions in 2017 and the start of 2018, the growth of tourism demand in Barcelona recovered in the last quarter of 2018, reaching levels similar to those last seen before 1 October 2017. In 2018, Barcelona received more than eight million travellers, an increase of +5.2% compared to 2017. Barcelona’s recovery is not reflected in the number of domestic travellers, which has fallen to below the levels of 2016. Nevertheless, the city’s good reputation outside Spain allowed persistent brisk growth in the numbers of international travellers, setting another record in arrivals (+7.0% vs 2017). Social media are currently one of the key tools for promoting tourist destinations and Barcelona maintains an excellent position in this respect, with 47 million # in Instagram, making it the third most popular city in the world. Barcelona has established itself as a top tourist destination, featuring once again in 2018 among the world’s ten most popular cities according to TripAdvisor. In a list headed by Paris, Barcelona ranks sixth (up one place compared to last year). It is also the fifth most popular city at the European level in terms of overnight stays and the year’s leading destination in the national ranking. Barcelona attracts visitors with very different profiles and diverse origin and motivation. In 2018, nights spent reached the extraordinary figure of 20.3 million, 86.5% of which were international tourists, illustrating Barcelona’s worldwide popularity. The diversity of profiles has led to a deseasonalisation of the city’s tourism activity and has made the destination resistant to economic cycles. As has occurred in Madrid, the growth in number of travellers in 2018 was greater than the increase in number of nights spent, resulting in a decline in the average length of stay, to 2.5 days. One of the segments that has suffered most has been business tourism, which has lost relative importance and is at lower levels than in previous years. According to the Gremi d’Hotels, in 2013, corporate tourism accounted for 50% of the volume of total demand; in 2014, it fell to 40%; and in 2017 and 2018, it slipped to 30%, as against 70% for leisure tourism. This decline is not attributable to any loss of large events and conferences, where Barcelona is positioned ahead of Madrid (in fact, Mobile World Congress has maintained its strength, reaching a new record of visits in 2019). Rather, it is caused by the decision of some companies to reallocate their headquarters, companies which no longer hold their meetings and gatherings in Barcelona, and cancellations by groups of incentives and companies, looking for alternative destinations. Barcelona 2013 2014 2015 2016 2017 2018 CAGR '13 - '18 Travelers 6,563,285 6,728,640 7,090,244 7,484,276 7,656,747 8,055,374 4.2% % annual change -1.0% 2.5% 5.4% 5.6% 2.3% 5.2% National 1,316,117 1,407,027 1,463,593 1,567,798 1,537,833 1,509,645 2.8% International 5,247,168 5,321,613 5,626,651 5,916,478 6,118,914 6,545,729 4.5% Overnight Stays 16,630,808 17,535,214 18,537,357 19,590,241 19,688,076 20,251,548 4.0% % annual change 2.5% 5.4% 5.7% 5.7% 0.5% 2.9% National 2,477,411 2,706,362 2,811,311 2,980,826 2,883,224 2,726,368 1.9% % of total 14.9% 15.4% 15.2% 15.2% 14.6% 13.5% International 14,153,397 14,828,852 15,726,046 16,609,415 16,804,852 17,525,180 4.4% % of total 85.1% 84.6% 84.8% 84.8% 85.4% 86.5% Average stay 2.5 2.6 2.6 2.6 2.6 2.5 % annual change 3.6% 2.8% 0.3% 0.1% -1.8% -2.2% Source: compiled by the author with data from the Spanish National Statistics Institute (INE) Five keys: Madrid vs Barcelona 5 MADRID AIRPORT Madrid Barajas Adolfo Suárez Airport is Spain’s main international airport, with 218 direct connections and 57.9 million passengers in 2018, +8.4% more than in 2017.
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