• Spain set for worst of pain in Europe

Spain looks set to suffer the worst fallout from the credit crunch in Europe with a residential property market in meltdown and a corresponding slump in consumer confidence.

NH Hoteles this week acknowledged the challenges it faces both in its home market and elsewhere by reviewing its plans to add 18,000 rooms by 2009.

The company said in its half-year results that it would not be purchasing new hotels unless offered at significant discounts to current market prices. It was currently working to update the business plan it presented at the start of 2007, although it was already more than half way to its objective having opened 9,939 rooms in 59 hotels in the 82 weeks since the start of 2007.

Hotel sales in Spain and Portugal were down 3.5% for the first six months of this year compared to the same period in 2007. Italy too was weak, down 1.6%.

In contrast, Central and Eastern Europe was strong at 16.3% and Germany also showed resilience with a rise of 9.7%.

The wider outlook for Spain also looks weak with this week's release of figures showing that retail sales in the country plunged by a record 7.9%. And Spanish tourism officials do not believe things are likely to improve. This week the country's tourism minister said total tourism spending might drop, year-on-year.

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