Mallorcski: Hotels for sale

The Eden Playa hotel in Playa de Muro, as I have previously mentioned, has been sold to a German hotel chain. Financial pressures may have forced the sale, but does it represent the beginning of a change to hotel ownership not just in Playa de Muro but also in other resorts in Mallorca?

The Eden Playa is a four-star hotel. One could consider it the jewel in a small crown that is Eden Hotels. Modern and airy, it opens out directly onto the beach. There is another four-star in the Eden portfolio, the Eden Lago just over the border into Alcúdia, but this isn't a beachside hotel. The company has lost what was really its flagship establishment.

The acquisition via the Allsun hotel group by the German tour operator Alltours is most unlikely to be an isolated case of foreign purchase. It is being reported that German and Russian buyers are on the lookout for hotels in all of the main resort areas in Mallorca - Alcúdia bay, Calvià and Playa de Palma, Cala Millor and Cala d'Or.

The type of establishment these investors are said to be interested in conforms very much to the Eden Playa. Four-star, relatively large (the hotel has 298 apartments) and preferably with some financial issues. When the hotel association for Alcúdia and Can Picafort refers to investment which depends on a particular hotel's financial situation, it isn't implying that this situation has to be strong. Quite the opposite.

On the bay of Alcúdia, I can think of a number of hotels that might fit the bill, certainly where size and star rating are concerned. What is unknown (unknown within the public domain, that is) is the financial health of specific hotels or hotel groups. But Eden is not the only group with financial concerns which may find it necessary to divest itself of at least one property.

Mallorca's hotels are primarily Mallorcan or Balearic-owned by any number of hotel groups, some of them, like Eden, comparatively small with few establishments within their portfolios. Behind the scenes, there is foreign ownership and investment, and there has long been foreign involvement. Riu, now 50% owned by TUI, is an example of such involvement. Another of Mallorca's hotel chains, and one I won't identify, makes a virtue of drawing on foreign investment; it is said to actually put relatively little of its own capital into ventures.

On the face of it, though, hotels are Mallorcan and can be pointed to, with justification, as being representative of local entrepreneurship and business acumen. They are symbols of island pride and perhaps also a certain parochialism. There is, one often feels, an ambivalence, not to say antipathy, towards foreign investment and ownership in Mallorca.

Such attitudes are, however, going to have to change. Away from the main resort areas, there are clear examples of foreign investment, as with the Jumeirah in Sóller and the Middle-Eastern money that is meant to be behind the village hotel complex in Canyamel together with the involvement of the US Hyatt group. These are specific luxury developments, though. They are not the more regular bread and butter of the resorts, the target of German and Russian investors who can sense potential bargains.

We are witnessing a shift in the hotel scene in Mallorca. Larger hotel chains, such as Melià, are clearly committed to ongoing investment in Mallorca, but they also have plenty of opportunities overseas, so offering the possibility of greater inward investment to Mallorca from abroad. But this investment appears to be interested only in the higher end of the middle market, i.e. the four stars. So, where would this leave all the three stars?

If smaller hotel groups, without major financial clout, are unable to fund the types of modernisation that the new tourism law envisages and are also unable to attract buyers either locally or from abroad, then their futures might be uncertain. The foreign investment that is being spoken about in the main resorts is one of cherry-picking.

Would this investment mean a change also to the overall tourism profile of Mallorca? Possibly it would. Russian investment is already established, as with TUI's largest single shareholder being Russian, while more direct investment in hotel real estate would be with an eye on the anticipated huge expansion of Russian and eastern-European tourism.

Greater foreign ownership might not play well with an insular mentality, but it shouldn't come as a great surprise were it now be a feature of Mallorca's tourism. This tourism is in its mature stage of a classic product life cycle. There are only certain ways in which tourism can continue to develop in such a circumstance, and one of these is what appears to be happening - acquisition by foreign investors, seeking to exploit the new tourism markets that will fundamentally change Mallorca.


Any comments to andrew@thealcudiaguide.com please.