How Gibraltar will grow its hotel options

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O’Callaghan Hotels is set to embark on a €100-million investment program across its estate, including what it described as “significant” investment in its Gibraltar property.

The British territory, known colloquially as The Rock, sits off the tip of Spain and—while only 2.6 square miles in size—is a key talking point in the Brexit debate and, with its neighbor showing itself territorial over Catalonia, could find itself caught up in political strife.

The six-strong O’Callaghan Hotels group said that it was upgrading its estate, including the Eliott Hotel in Gibraltar, which opened in 1996. The group said that, once completed, the four-star site would be “the most exciting place to stay in Gibraltar.”

The refurbishment is in line with the sector in neighboring Spain, which has been seen as a safe haven from the political issues, and where a number of hotels have been upgraded in recent years, in preparation for competition from the now-recovering markets in Egypt and Turkey.

Spanish Demand

Spain has not gone untouched by political upheaval. In reporting results for the first nine months of the year, Meliá Hotels International last week reported that, in Spain, it was “monitoring the impact of the political tensions in Catalonia after an increase in the number of cancellations.”

Gibraltar, which is known for legal online gambling, tax-free shopping and financial services drawn to its liberal tax regime, is looking to expand its hotel offering. In October, the government called for expressions of interest for the re-development of the Queen’s Cinema and Queen’s Hotel site, with a number of hotel groups thought to be pitching for the site, which must, the authorities said, include a theatre.

One of the area’s only globally branded hotels, a Holiday Inn Express, is due to open in the second quarter of 2018 under a franchise agreement with G. & J. B. Hotels 2014. “As well as being a tourism destination, Gibraltar has an established reputation as a financial center,” Franco Ostuni, executive director, G. & J.B. Hotels 2014, said. “Coupled with its excellent location in the city, the hotel is well placed to attract strong demand from business and leisure guests.”

So pressed is The Rock for beds, particularly at the luxury end of the market, that last year saw its first five-star hotel open in the form of super yacht Sunborn, permanently docked in the heart of Gibraltar’s Ocean Village marina development. The 189-room Sunborn includes a casino, restaurant, pool bar, spa and fitness center.

Gibraltar’s position as a British territory is being closely watched in the current Brexit negotiations. At the beginning of November Brexit secretary David Davis responded to concerns raised by peers in the House of Lords, that the government must remain alert to any attempts by Spain to advance its claims over Gibraltar once the UK “is out of the room” after Brexit.

“We are clear that future EU legislation or wider policies could not weaken or undermine the legal basis in international law for British sovereignty over Gibraltar,” Davis said.

Gibraltans most recently rejected proposals for Spanish sovereignty in a 2002 referendum, but with Madrid showing great vehemency in its opposition to the recent vote in Catalonia, there are fears that it may also see Brexit as a chance to reclaim the territory it lost in 1704, a move which may see The Rock lose the attractions that have attracted so many to its craggy outcrop.

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

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