by Cheryl-Anne Sturken | March 16, 2016

A joint venture to invest in the Spanish hospitality market has been formed between Starwood Capital Group, a global private investment firm headed by founder Barry Sternlicht, the former CEO of Starwood Hotels & Resorts Worldwide, and hotel investment and asset management firm HI Partners. The agreement is subject to the approval of the European Union Merger Control Office.

Starwood Capital Group will own 70 percent of the company, while HI Partners will own the remaining 30 percent. HI Partners -- majority-owned by Banc Sabadell, the fifth-largest banking group in Spain -- will serve as the manager of the joint venture, which is expected to invest approximately €500 million (roughly US$553 million) in the Spanish hotel sector over the next three years.

The joint venture will focus its investment strategy on 3- and 4-star leisure-hotel assets with more than 200 rooms in Spain's primary tourist destinations -- including the Balearic Islands, Canary Islands, Costa del Sol, Costa Dorada and Costa Brava. The group also plans to consider special investment in high-quality urban hotels in Barcelona and Madrid.

"Starwood Capital Group is the best partner for HI Partners, as it is one of the global investors with the most prestige and experience in the hotel sector, and we share its vision of value generation through innovation and creativity," said Alejandro Hernandez-Puértolas, founding partner and CEO of Barcelona-based HI Partners, in a statement announcing the deal. "The signing of this agreement positions HI Partners as one of the most relevant players on the hotel investment scene in our country."

"We are excited to team up with such a premier hospitality operating partner as HI Partners to bring world-class local operating expertise to the joint venture's assets," added Keith Evans, vice president at Starwood Capital Group. "We view the Spanish hotel market as extremely attractive, due to its positive fundamentals, strong demand from both national and international guests, and the steady recovery of the broader economy. We look forward to building a high-quality portfolio of hotels representing the top resort and urban destinations in Spain."

The joint venture with HI Partners highlights Starwood Capital Group's growing presence in Spain, which is the world's third-most-popular country in terms of foreign tourist arrivals, according to the United Nations World Tourism Organization. In June 2015, Starwood Capital Group and leading Spanish hotel operator Meliá Hotels International completed a joint venture to acquire a collection of hotels across key resort locations in the country. The initial portfolio for the joint venture consisted of seven beachfront hotels comprising 2,933 rooms. These two investment strategies will provide Starwood Capital with an extensive footprint in Spain.