The world famous La Manga Club resort in Murcia, a popular destination with celebrity footballers from Real Madrid and Manchester United, has been forced to seek protection from its creditors. One of Spain’s flagship holiday and residential resorts, La Manga Club is the first Spanish resort of its calibre to succumb to the economic crisis.
In seeking protection from its creditors, La Manga Club, which is owned by the Spanish developer Medgroup, hopes to gain breathing space to sort out its finances and return to business as normal. “This decision will not affect La Manga Club, which will continue to run as normal,” a spokesperson told Spanish Property Buff. “The management team is already working to bring the company out of a state of lack of liquidity and operating deficit in order to stabilise and guarantee its continuity.”
The La Manga Club, via the companies La Manga Club, S.L. and Inmogolf, S.L, has debts of 97 million Euros, and assets estimated at 170 million Euros. As a result of the credit crunch, the companies have been unable to refinance their debts, triggering Medgroup’s decision to put La Manga Club into voluntary administration.
La Manga Club, which includes 3 golf courses, 28 tennis courts, 8 football pitches, a spa, and a 5-star Hyatt Regency hotel, is one of Spain’s best known, luxury resorts. It’s great sporting facilities and good climate make it a popular winter training destination for professional sportsmen, though the resort has also been in the news for the scandalous behaviour of some of its celebrity football guests.
Though largely completed as a residential development, the developer Medgroup still has some leaseback property investments for sale, and there is a wide selection of villas and apartments available on the resale market. Given the resort’s upmarket identity, holiday homes in La Manga Club are some of the most expensive in Spain, with Villas often carrying price tags of various million Euros.
This is not the first time that La Manga Club has run into financial difficulties. Established in the late 1970s by Las Vegas businessman Greg Peters, it was sold to P&O when it went bankrupt in 1978. P&O then sold it to Barcelona-based developer Medgroup in 2004 for 146 million Euros. Medgroup, which develops other resorts in Spain, such as Bonmont (Costa Dorada) and Play Macenas (Mojacar), is partly owned by billionaire financier George Soros’s real estate investment fund. Medgroup itself is not seeking court administration, contrary to some reports in the Spanish press
Financial problems at La Manga Club send a worrying signal about the health of the tourist sector in Spain. It is no secret that the Spanish property sector is in deep trouble, but as a mature, largely completed resort, and despite being owned by a developer, La Manga Club is essentially a tourist business.
“The general crisis being suffered by Spain has particularly affected the high-level tourist sector, with significant reductions in bookings and the number of night stays in high-quality resorts such as La Manga Club; this fall in sales has meant that the company has not been able to comply with the business plan expected for 2008,” explains a press release from Medgroup.
Problems at La Manga Club herald trouble for tourist businesses in other parts of Spain. That means more bad news for the Spanish economy, and ultimately the Spanish holiday home market.