Dedicated server provider lying about servers location?
Solution 1:
Geolocation is not an exact science. The databases are full of errors and misinformation.
Note: OVH do not appear to have a Spanish DC.
Who is passing on terminological inexactitude I wouldn't like to say.
Looking at the output of mtr to both of the IPs listed, it appears that both systems are likely located in the OVH Gravelines DC in France.
sudo mtr -c10 -r -n 51.254.154.225
[sudo] password for iain:
Start: Mon Feb 27 12:58:53 2017
HOST: fedoraws Loss% Snt Last Avg Best Wrst StDev
1.|-- 192.168.1.2 0.0% 10 0.3 0.3 0.2 0.4 0.0
2.|-- ??? 100.0 10 0.0 0.0 0.0 0.0 0.0
3.|-- 31.55.185.181 90.0% 10 11.8 11.8 11.8 11.8 0.0
4.|-- 31.55.185.180 0.0% 10 13.0 12.9 12.7 13.5 0.0
5.|-- core1-hu0-17-0-1.colindal 0.0% 10 12.0 12.2 11.9 12.4 0.0
6.|-- 195.99.127.81 0.0% 10 13.9 13.6 13.2 13.9 0.0
7.|-- ??? 100.0 10 0.0 0.0 0.0 0.0 0.0
8.|-- be10-1193.gra-g1-a9.fr.eu 0.0% 10 15.6 19.6 15.2 49.0 10.4
9.|-- vl21.gra-g1-a75.fr.eu 0.0% 10 15.6 15.9 15.6 16.3 0.0
10.|-- vl5.gra-3a-6k.fr.eu 90.0% 10 15.0 15.0 15.0 15.0 0.0
11.|-- host-es.ipadicto.com 0.0% 10 14.9 15.2 14.9 15.5 0.0
and
sudo mtr -c10 -r -n 51.254.154.158
Start: Mon Feb 27 13:00:04 2017
HOST: fedora Loss% Snt Last Avg Best Wrst StDev
1.|-- 192.168.1.2 0.0% 10 0.2 0.3 0.2 0.4 0.0
2.|-- ??? 100.0 10 0.0 0.0 0.0 0.0 0.0
3.|-- 31.55.185.181 80.0% 10 12.0 12.1 12.0 12.3 0.0
4.|-- 31.55.185.188 0.0% 10 12.1 12.4 12.1 12.7 0.0
5.|-- core2-hu0-17-0-1.colindal 0.0% 10 13.3 13.1 12.8 13.3 0.0
6.|-- 62.172.103.19 0.0% 10 13.5 13.4 13.1 13.8 0.0
7.|-- ??? 100.0 10 0.0 0.0 0.0 0.0 0.0
8.|-- be10-1193.gra-g1-a9.fr.eu 0.0% 10 15.2 15.4 14.8 15.9 0.0
9.|-- vl21.gra-g1-a75.fr.eu 0.0% 10 15.5 15.6 15.5 16.0 0.0
10.|-- ??? 100.0 10 0.0 0.0 0.0 0.0 0.0
Solution 2:
There is another way to check, which is to query some BGP looking glasses.
This is generally more reliable than GeoIP (as mentionned by @Jacob, GeoIP databases vary in quality and freshness), since BGP is the protocol for routing the ranges across the cyberpipes (or is it interwebz).
Generally, you'll need to check a few locations to make sure you aren't seeing aggregated routes, BUT, ultimately, every IP belongs to AS, and that AS can easily be traced to a company.
Per the Hurricane Electric looking glass (http://bgp.he.net/ip/51.254.154.0#_ipinfo), OVH indeed owns that /24, and its supernet (51.254.0.0/15). Checking a Spanish looking glass, http://www.rediris.es/red/lg/lg.pl, seems to confirm as much (but this is nothing more than a quick check on my part).
Your traceroutes/mtr outputs seem to confirm as much: the IP is owned and announced by OVH, and routes, at least, via them (if not to them).
tl;dr: it seems your provider is using a French provider, and their data centers/infra. This isn't 100% certain, but seems the most likely explanation.
Edit: to be clear, the fact OVH is AS to which the IP is allocated doesn't necessarily mean anything about specific locations. Sadly, neither necessarily does mtr-output - even if (as seems to be the case) OVH are pushing out the whole /24 your provider is a part of with a peer in France, some internal transport (e.g. MPLS) could still be used. That wouldn't necessarily be the most sensible way of doing all this, but it isn't impossible.