Large international funds and REITs with hotel exposure in the Canary Islands, such as Blackstone, Atom, and Millenium, are closely monitoring the contradictions of the islands' tourism market. The winter of 2025-2026 begins with an increase in airline seats, but with declining hotel bookings and increasingly tight margins. This combination could disrupt the profitability models of funds linked to holiday tourism. The Gran Canaria tourism cycle remains strong, but investor enthusiasm needs more actual passengers and fewer empty flights.
Data from Lurmetrika and Mabrian, held by the Gran Canaria Tourist Board and updated as of November 3rd, reveals a clear imbalance: air capacity is expected to grow by around 1% year-on-year, while hotel bookings are down between 10% and 15% compared to the previous winter. Flights are increasing, but the pace of bookings is slowing, especially in the German and Nordic markets.
The Gran Canaria market serves as a barometer of what may be coming for the archipelago as a whole. With over a million airline seats scheduled between November and March, but stagnant bookings and declining searches, the island illustrates the fragile balance between connectivity, demand, and profitability.
Canary Islands tourism has been a magnet for institutional investment over the last decade. Funds such as Blackstone, Brookfield, and Apollo—along with REITs backed by major banks, such as Atom (Bankinter) and Millenium (BBVA)—bet on a profitability model based on three pillars: high occupancy rates, increased RevPAR, and rising valuations of hotel real estate assets.
However, the drop in bookings and stagnant occupancy rates foreshadow a scenario of pressure on operating income and expected dividends. In a context of high interest rates and rising capital costs, some managers are beginning to warn of a risk of “silent over-leveraging” in REITs with assets concentrated in mature destinations.
From London, where the World Travel Market was held, a financial manager for a hotel chain in southern Gran Canaria points out that "if occupancy stabilizes or drops a couple of points, the problem isn't the hotel's profitability, but rather the financing of its structure." "Banks are more exposed than it seems, because many REITs operate with syndicated debt."
Booking reports indicate a 15% year-on-year contraction during the key weeks of December and January. And although international flight capacity is growing by 0,7%, the projected occupancy rate is around 78%, two points below the historical average. This means that hotels could only fill up by lowering prices, which erodes the profit margins demanded by investment funds. In practice, this translates into a direct reduction in the cash flow available for dividends or debt repayment.
“The return demanded by funds is 6-7%, but the real market is generating around 4%,” notes a hotel asset manager with a presence in the Canary Islands. “This could translate into selective divestments or portfolio sales in 2026.” Spanish banks are also observing the phenomenon with caution. Entities such as Banca March, Bankinter, Santander, and BBVA, with stakes or co-investments in REITs and hotel funds, could be affected if tourism revenues do not align with the season's financial projections. It is not yet a systemic risk, but it is an early warning: hotel asset valuations could be adjusted downwards, reducing accounting profits and complicating refinancing.
Paradoxically, this market correction could accelerate a new phase of consolidation. Funds with greater liquidity—such as Blackstone or Brookfield—have room to buy back depreciated assets, while mid-sized operators may be forced to sell or seek alliances. This trend aligns with the movement observed in other regions of southern Europe: tourism is becoming institutionalized, shifting from family ownership to fund ownership. But the risk, experts warn, is that this transition will occur during a period of economic slowdown and air travel congestion.
