There is every sign that the big corporate Spanish hoteliers are going to ride out their oversupply problems.
In particular, NH Hoteles last week defied sceptics by delivering a bumper 8.6% rise in revpar for the first four months of this year at its hotels in Spain and Portugal.
The strong trading meant that NH was able to report hotels EBITDA up 66.7% on a comparable basis for the first quarter (which excludes April and the weaker Easter period).
The performance is particularly impressive given the overall market conditions. The last three years have seen tough times in the main Spanish cities.
According to HVS International, Madrid, the biggest city hotel market in Spain, has seen a compound annual growth rate of 5% in room supply between 1999 and July 2005. This was ahead of most measures of demand growth and the three years 2003 to 2005 have been notably tough with declining revpar numbers.
There has been a similar situation in Barcelona, the number two city market, with a CAGR of 10% in room supply since 2000 and revpar declines since 2002.
So do the NH numbers indicate that the pain in Spain is over? Not so fast. HVS says that Madrid is expecting a 22% increase in room supply and Barcelona 23%.
What does seem to be happening is that some hotels are feeling a disproportionate amount of pain, mostly independents or small chains that do not have a coherent brand.
It appears that, at last, the branded hotels are pulling away from the pack. When Sol Melia reports this Thursday, further light should be shed on the situation.
The big international brands are certainly still charging in. The next couple of years will see a Renaissance, a Mandarin Oriental and a W in Barcelona alone.
Despite its oversupply, the Spanish market remains an attractive place, especially when compared to Germany which has both oversupply and limited demand growth. Here, NH's hotels have failed to make much headway, with revpar rising just 1.7% in the first four months of the year, still yielding a dismal Eu35.20 on average, which compares very unfavourably to the Eu55.00 for Spain and Portugal.
The star growth market for NH is Italy, with revpar up 13.6% in the first four months. It is not surprising then that NH has wooed Framon, an acquisition it expects to complete in a month or so.
This gives NH 75% of 27 hotels in Italy, some of which are still under construction.
And NH is continuing to pursue Italian chain Jolly in which it has a 20.5% stake. NH said it had tried to forge a closer relationship with Jolly but so far, Jolly's management team, which completed a buy-out last year, has refused.