Maspalomas: tourists are spending more — yet hotel profits are being squeezed

Walk through Maspalomas, Playa del Inglés or San Agustín these days and you see a south in fine form: full terraces, renovated hotels, contented guests. And the figures back it up. According to a recent analysis by the property and tourism consultancy Colliers, total tourist spending in the Canaries has risen by around 6.8 percent, with the average guest spending about 191 euros a day. It sounds like a pure success story.

But it is only half of one. Because while revenue climbs at the top, actual profitability is under pressure at the bottom. Colliers calls it a “profitability trap”: a business takes in more, yet does not automatically keep more. Here is why that happens and what it means for the region — no finance jargon required.

The good news: guests are spending more

Let us start with the cheerful part, because there is plenty of it. The south of Gran Canaria is not only still drawing crowds, but increasingly the right ones: guests willing to pay for quality. The average room rate, known in the trade as ADR, sits at around 151 euros a night on Gran Canaria — a good 6 percent more than a year ago. And that is with occupancy barely dipping, a sign of loyal, price-resistant visitors.

RevPAR, the second key metric, is climbing too: about 131 euros per available room, up roughly 8 percent. In short, hotels are selling their nights for more without leaving beds empty. For a destination long treated as shorthand for cheap mass tourism, that is a notable shift towards more value per guest.

ADR, RevPAR and yield — one line each

Three terms keep coming up in this debate, so here is what they mean in plain words. The ADR (Average Daily Rate) is simply the average price a hotel gets per room night sold — pure pricing power. The RevPAR (Revenue per Available Room) spreads revenue across every room, empty ones included, blending price and occupancy into a more honest measure of success.

The yield, finally, is what matters to investors: the annual return relative to the capital put in. A hotel can post glowing ADR and RevPAR figures and still deliver a thin yield — if the price paid for the building was high and running costs are heavy. That is exactly where the problem starts.

Why more revenue is not more profit

Now to the heart of the “profitability trap”. A guest spending more does not mean the hotelier keeps more. Three things come together. First, costs have risen — wages, energy, maintenance, the modernisation of ageing resorts. Second, the purchase prices for hotels have shot up: a room in the south now changes hands for around 205,000 euros. Buy that expensively and you have to earn an enormous amount just to reach a decent return.

And that is where the gap opens. Investors and funds like to pencil in yields of 6 to 7 percent — in practice many are landing closer to 4 percent. Then comes a third worry: bookings for the coming winter, the south's classic high season, are running about 10 to 15 percent below last year according to industry estimates. When the strongest season softens while costs stay put, the margin shrinks further.

What it means for the south

For holidaymakers and residents this is not a doom headline but more of a compass. As long as hotels keep investing in quality, everyone benefits: nicer resorts, better jobs, a destination that no longer competes on price alone. The south, with one of the lowest unemployment rates in its history, has shown just how much rides on this tourism.

The flip side: if yields stay thin, investors turn choosier, and pricier hotels often mean higher prices for guests too. Colliers therefore advises the sector to contain supply rather than keep expanding — quality over quantity, so that standards and profitability hold up over time. For a destination busy reinventing its reputation, that may be the most important message behind all the numbers.