Madrid vs. Barcelona: Competition for tourism and hotel demand

Madrid and Barcelona are in an intense competition to attract travelers to their hotels. Madrid, the landlocked Spanish capital, is a popular business and MICE (Meetings, Incentives, Conferences, and Exhibitions) destination, while Barcelona is a coastal city and is the capital of Catalonia. Before the pandemic, Barcelona suffered from overtourism, while Madrid is trying to attract more tourists.

Both cities rely heavily on event and MICE-driven demand, which is evident in their occupancy index. Barcelona's occupancy recovery has generally outpaced Madrid's, but not by much. Madrid, on the other hand, has been running 20-30% ahead of pre-pandemic levels in terms of average daily rate (ADR) and has been consistent in holding rates regardless of market events.

While Madrid outperformed during the worst of COVID, Barcelona's occupancy typically runs 4-8 percentage points ahead of Madrid in the pre-and post-pandemic eras. However, the ADR premium that Barcelona holds over Madrid has been cut roughly in half since 2017. Madrid has pushed into the luxury segment to drive high-end tourism and maintain strong business demand, which is impacting the total market ADR.

Almost every class of hotel in Madrid reports better rate indexes than Barcelona. Madrid's push to attract more tourists hasn't paid off in terms of straight demand yet. However, the hotel performance premium that Barcelona has long held over the capital has slowly started to erode, driven by ADR in the short-term and occupancy in the longer term.