The epicenter of luxury in Madrid is trembling: the Canalejas gastro gallery went bankrupt, and its flagship hotel remained in the red
In the gastronomic space of Mad Gourmets, employees at their posts work as if nothing had happened. “This is a place for beautiful people,” one of them tells a family of tourists, intending to seat them at a table. And he succeeds, despite the soullessness of the place and the fact that the dozen people passing by while eating prefer to look at the counters rather than stop to try or buy anything. This is a casual clientele, more curious than willing to dig into their pockets.
Only a few of the missing paintings provide a clue to the reality: this gourmet gallery has gone bankrupt, a major blow to one of the symbols of exclusivity and luxury in the center of Madrid. Mad Gourmets is the main tenant of Food Hall Canalejas, the gastronomic space of the Canalejas gallery, in which it occupies almost half of the premises and most of the premises. Now the company is immersed in bankruptcy proceedings and is actually bankrupt.
The company occupies up to 19 premises of the gastronomic hall, of which almost half are no longer operational, as confirmed by a source on site. In September, Mad Gourmets filed for bankruptcy at the Commercial Court No. 12 of Madrid. According to El Periódico de España, accumulated losses since its inception in 2018 exceed 2.23 million euros.
Prices at Mad Gourmets are high. This is evidenced by the 8 euros it costs for a tapa with two small pieces of tortilla covered in Bolognese sauce, 11 euros for a whiskey or 19.50 for a plate of pasta and vegetable salad with burrata. Given the clientele profile, this may not be a problem. Upon leaving the establishment, a decorated British couple living in the United States, visiting the city, assures that they “liked” the treatment. They also felt that “it wasn’t too expensive, although it was a little more expensive than other restaurants in Madrid.” When asked if they will return, they say that “unfortunately” they are leaving in a few days to return to Chicago.
Bad seasons at Four Seasons
Adding to the negative economic performance of the region’s largest luxury tourism attraction, the Four Seasons Hotel, are difficulties with the food gallery. In 2023, the Canalejas complex (which includes a hotel, about twenty luxury houses and a parking lot) reported losses of 12.3 million euros. That is up to 40% more than in 2022, when negative flows amounted to 8.9 million with a total of 21.2 million losses over the past two years. This newspaper contacted Canalejas Complex as well as Mad Gourmets to include their versions and analysis of the situation in the article. At this time they have not provided an answer.
The data suggests that “the initial bids were unrealistic,” says Antonio Giraldo, PSOE representative at the Madrid City Council’s Urban Planning Commission, in a statement to Somos Madrid. He talks about “relatively low occupancy rates, suggesting that demand for luxury in the city appears to be satisfied.” The average occupancy rate of luxury hotels in Madrid, published by the city council based on data from the National Institute of Statistics, is 65.31% in 2024.
However, this context has not stopped the flow of new clients to the area. Record company Universal Music Group, which operates the Teatro Albéniz hotel, plans to build another five-star hotel in three buildings in the area. In addition, as in UMusic Albéniz, it will be combined with a music and concert program (in this case at the Queen Victoria Theatre). Universal will pay five million euros annually in rent (a figure that could rise over time) to distribution company Pescaderías Coruñesas, which owns the block.
A new hotel, the launch of which after work may be delayed by about five years. It will have 68 “grand luxury” rooms at an average price of €821 per night, according to an economic study carried out by this newspaper. Universal plans to start its journey with annual revenue of 26.8 million and reach 40.7 million in its seventh year of operation, when hotel occupancy will be about 80% (almost 15 points above the average calculated by INE this year). Antonio Giraldo believes that “the enormous benefits predicted by the study contradict the expected real-world results.”
Four Seasons posted losses in 2023 and 2022 despite earning 60.9 million and 56.8 million euros annually respectively, although its costs are higher than Universal forecast. The average room rate is also higher at the Canalejas Complex, the second hotel in the city after the Mandarin Oriental Ritz.
The luxury sector in Madrid is “not as profitable” as Mayor José Luis Martínez-Almeida and regional president Isabel Díaz Ayuso suggest, according to a socialist councillor. He adds that some of these companies “anticipate that their business in Madrid could be ruinous, but having a presence in the center of Madrid is a bubble that is interesting to maintain because it provides brand positioning.” A bet whose most symbolic moment is the lighting of the Christmas tree on the façade of the Four Seasons Hotel. Almeida himself, along with his right-hand man, city planning council delegate Borja Carabante, attended the event in 2020.
According to Giraldo, the luxury accommodation model has also led to a shortage of supply in other types of hotels that are more accessible to the general public: “A gap has opened up that has contributed to the proliferation of tourist apartments. Where do they stay, if not all those visitors we see downtown, who, logically, for the most part do not stay in the first-class hotels that increasingly dominate the market? Sometimes it seems that these companies artificially inflate prices due to the complacency of the Madrid administration. “My concern is that we’re turning the city into something and we don’t know if it’s going to have a positive effect.”
There was a gap that contributed to the increase in the number of tourist apartments. Where do they stay, if not all those visitors we see downtown, who, logically, for the most part do not stay in the first-class hotels that increasingly dominate the market?
Gran Via was the most prominent example of this model: the Almeida government’s opening of old offices or houses led to the creation of 6,700 new hotel beds in 10 years, transforming the capital’s most important shopping street into a bustling one. a series of four and five star hotels.
In this sense, Giraldo notes that both the special change-of-use and restoration plan for the new UMusic Hotel and the previously developed Canalejas complex require an “evaluation” because they are historical buildings. “A revaluation at the level of history and heritage, which in these cases was replaced by a purely economic one. But this is also not fulfilled in this economic area, neither in hotels nor in additional rates such as gourmet areas.”
Gallery Canalejas, for sale
Mad Gourmets’ bankruptcy and Four Seasons’ negative results come as Galería Canalejas seeks a new owner. Construction company OHLA and the Mohari Hospitality fund, owned by Israeli investor Mark Scheinberg (who founded the Pokerstars bookmaker), are exploring options to get rid of the complex for an amount between 800 and 1 billion euros. However, according to the author’s research prepared by Deloitte, this amount is significantly higher than the market value, which reduces it to 539 million.
The search for new buyers comes at the same time Canalejas tenants such as Mad Gourmets are adding to their debts to OHLA and the Mohari Foundation. Between 2022 and 2023, this figure quadrupled and has now reached approximately 2.27 million euros, which the property classifies in its reports as a “doubtful collection,” notes El Periódico de España. Faced with a bubble about to burst, the less glamorous side of luxury in Madrid is becoming increasingly apparent.