Extremadura may not be a secret for much longer. A value-add opportunity away from the compressed yields of Spain’s tourist leisure destinations, the western Spanish region bordering Portugal might offer a compelling proposition but last year’s announcement by luxury hotel group Rosewood and investor Blasson has put the area on the investment map.
The partners announced that they had chosen Extremadura to develop a major tourism and residential project within the rural Dehesa landscape, which will include the creation of a boutique hotel with 65 rooms and 150 country homes set within nearly 2,000 hectares on an estate between Navalmoral de la Mata and Casatejada.
This initiative, led by Blasson, represents a huge investment of €450 million and construction of the complex is expected to take 24 months once planning approvals get the green light as Blasson Iberia President Francisco Meliá described Dehesa Espadañal as a "unique project", that he predicted would become "a world reference for luxury tourism and rural tourism".
The scale of the project is probably a sign that Spain's extraordinary success as a holiday destination really has reached all corners of the country, with Extremadura emerging as a quieter play on experiential tourism, heritage-led hospitality and rural luxury.
While Rosewood’s proposed entry is by far the largest investment, it is not the only one and is set against the broader backdrop of another extraordinary year for Spanish hotels. According to Colliers Spain, hotel investment volumes in the country reached €4.3 billion in 2025, the second-highest total on record, with 194 transactions completed across existing hotels, conversion projects and development land. Agent CBRE said that hotels accounted for almost a quarter of all Spanish real estate investment last year, underlining the sector’s appeal.
And investment is becoming more geographically diverse. Colliers noted that the five largest Spanish hotel destinations accounted for only 68% of total investment activity in 2025, the lowest post-pandemic concentration level, highlighting growing investor interest in alternative regional markets.
Extremadura emerges as affordable opportunity
For its part, Extremadura has historically lagged Spain’s tourism hot spots in visitor volumes but that has become part of its attraction. Cities such as Cáceres and Mérida have become increasingly prominent on cultural tourism itineraries, combined with the region’s national parks, vineyards and UNESCO heritage sites.
The conversion of historic buildings into boutique hotels has become one of the region’s defining themes. Across Extremadura, investors are targeting monasteries, palaces and heritage estates for adaptive reuse schemes aimed at affluent leisure travellers seeking authenticity and lower-density experiences.
For the moment, development activity in Extremadura remains relatively modest, but pipeline growth is visible in several segments. Rural luxury resorts, wellness retreats, wine tourism projects and boutique urban hotels are all expanding, often supported by regional tourism incentives and EU-backed regeneration funding, while Extremadura’s regional government has increasingly focused on positioning tourism as a strategic economic growth sector.
One of the latest examples is The Hotel Palacio de Godoy Cáceres, Curio Collection by Hilton, which opened in September 2025 following the restoration of the Palacio de Godoy, built in 1563 as the residence of Francisco de Godoy, founder of Lima, Peru in the 16th century.
The project, developed by SCIPION Real Estate, saw an investment of over €14 million for a hotel that now has 73 rooms on Plaza de Santiago, Cáceres, managed by domestic operator Panoram Hotel Management. The regional government provided nearly €3.8 million of grants to help with the restoration.
The Director General of Business, Celina Pérez Casado, highlighted the importance of the support provided by the regional government of Extremadura, “so that strategic projects like this one can be realised in our region,” upon the project’s inauguration earlier this year.
She stressed that "the role of the regional government is key in the promotion, processing and monitoring of these state aid programs, facilitating the arrival of investment in Extremadura and translating it into employment and development."
Extremadura currently has 54 regional incentive projects in its portfolio, representing a total investment of over €1 billion, with €167 million in subsidies and the planned creation of more than 1,200 new jobs.
Rural hotels offer slower pace
Similarly, the Palacio Haza de la Concepción, owned by the Provincial Council of Cáceres and managed by Extremadura-based Lalamala, opened as a four-star green, rural hotel and haute cuisine restaurant last year following a €4 million renovation.
Located in the Monfragüe Biosphere Reserve, the hotel currently has 14 rooms and capacity for 28 guests, with plans to expand to 36 guests with the future addition of two more apartments.
Part of the appeal is that land and acquisition costs remain significantly below those in other parts of Spain, allowing developers to create upscale hospitality concepts at substantially lower entry pricing. Meanwhile, the region’s proximity to Portugal — particularly the growing tourism appeal of Lisbon and the Alentejo region — is helping drive greater international visibility. Improved road infrastructure between Portugal and western Spain has also strengthened Extremadura’s accessibility for self-drive tourism.
At the same time, the rise of slow tourism and sustainability-focused travel is benefiting the market. Unlike Spain’s overtourism-challenged urban and coastal destinations, the region has positioned itself around space, authenticity and environmental quality.
Right now, domestic Spanish capital — particularly family offices and regional hotel groups — continues to dominate activity in the area and in the wider country. Colliers says domestic investors accounted for 63% of total Spanish hotel investment in 2025 and 72% of all transactions completed. Spanish hotel chains were among the most active buyers last year, completing 43 transactions worth over €1.43 billion.
The meetings and events segment could also present an emerging opportunity. Badajoz, located close to the Portuguese border, has been gradually strengthening its role as a cross-border business and conference destination, particularly for Iberian corporate events.
Perhaps the most significant opportunity, however, lies in conversion and repositioning. Spain’s broader hotel investment market has seen sustained interest in conversion projects, with Colliers reporting nearly €160 million invested into such opportunities in 2025 alone
In regions like Extremadura, where historic building stock is abundant and acquisition costs remain relatively low, adaptive reuse offers a particularly attractive development route.