It appears that it is not only the German market which is having a wobble in the Balearics.
The Balearics accounted for 14% of hotel investment in Spain during the first half of 2025, despite being 30% below the volume recorded in the same period last year, according to data from The Hotel Property Telescope 2025. Beyond the strong performance of tourism, the entry of new luxury brands and the repositioning of hotels in recent years have driven up sale prices, limiting the interest of investors seeking double-digit returns.
In this context, they explained, the creation of continuation funds by venture capital firms is emerging as a relevant dynamic given the lack of institutional capital with a “core” or “core plus” profile.
Spain accounted for 21% of hotel investment in Europe in the first half of the year, consolidating its position as the continent’s main investment destination and reflecting the growing interest in the hotel segment in southern Europe.
The interest rate cuts that began in June 2024 and improved financing conditions, including increasingly relevant alternative debt, have favoured the return of institutional capital, which accounted for more than 40% of the total investment volume in the period. However, operators continue to lead the activity, accounting for 42% of investment. In the Balearics, local operators have begun to diversify into other destinations, for example, Grupotel, which acquired the Barceló Conil Playa in October 2025.
Likewise, the creation of joint ventures between large national operators and institutional investors, such as the one recently closed between Meliá and Banca March, is emerging as another trend to follow in the coming months, especially among hotel chains that are committed to co-investment and asset-light models. These conclusions are included in the 2025 edition of the report “The Hotel Property Telescope - Balearic Islands Edition”, prepared by the Real Estate team at EY-Parthenon.
The document also highlights the slowdown in tourist demand in the Balearics and Spain, both with 1% increases in overnight stays compared to 2024 in the first nine months of the year. Despite this, the fundamentals of the sector remain solid, albeit with a trend towards normalisation. Up to September, the Balearics received 13.7 million international visitors, who generated expenditure of €18.4 billion, representing increases of 3% and 6%, respectively.
The direct air link between Palma and New York, established in 2022, has doubled the number of American tourists compared to 2019, reaching nearly 250,000 visitors in the first three quarters. Future routes to Canada and Abu Dhabi, planned for 2026, will further boost the arrival of American and Asian tourists, who have the highest average expenditure. The moderation in the growth of overnight stays in the Balearics was mainly due to the decline in domestic tourism. The number of domestic visitors fell by 9% compared to the previous year, standing at 1.2 million until September.