Irish Hotel Market - Sherry FitzGerald

Irish Hotel Market
End of Year Review 2014 Outlook 2015
Introduction
Following a strong opening half to 2014
for hotel transactions, momentum
accelerated during the latter half of the
year. The volume of hotel sales soared in
the third quarter in particular, bringing
total sales in the year as a whole to
€555 million across 60 hotels.
A strong resurgence in the tourism industry in Ireland
was witnessed in 2014, driving demand for hotel
services. The total number of overseas trips in the
year reached 7.6 million, an annual increase of 8.9%,
while projected total tourism revenue is expected to
reach €6.5 billion, representing an annual increase of
10%.
Demand for Irish hotels was strongest in Dublin,
accounting for 59% of hotel sales in the twelve month
period. This was followed by the South West and the
South East.
Transaction activity, however, was dominated by small
to medium assets, with 75% of overall sales sub €10
million in value.
2014 saw demand for hotels strongest among foreign
buyers, accounting for over half of overall transaction
activity. Overseas hotel transactions were dominated
by US buyers with an 87% share of the international
sales.
Looking to 2015, activity in the Irish hotel market is
expected to continue, with notably €102 million of
hotel transactions sale agreed at the end of 2014.
2 Irish Hotel Market
Economic Overview and Tourism Performance
The Irish economy is now well in recovery
mode, expanding notably in 2014 with strong
performances in both exports and investments
and an expected resurgence in domestic demand
for the end of the year.
The Department of Finance projects that GDP growth for 2014
will come in at 4.7%, and 3.9% in 2015, with strong contributions
from both domestic demand and exports. GNP is expected to
grow by 4.1% in 2014 and 3.6% in 2015. Meanwhile, following a
prolonged period of decline, personal consumption is expected
to have returned to annual growth in 2014 on the back of
improved employment levels and consumer sentiment and this is
forecast to continue for 2015 and 2016.
Consumer sentiment in Ireland increased notably in 2014,
reflecting an uplift in consumers’ confidence with regard to
their current and future finances. The latest available KBC Bank
Ireland/ESRI Consumer Sentiment Index figures for the month
of January 2015 revealed that the sentiment reached its highest
point in nine years, 101.1, up over 10 points on December’s
reading and the first time it exceeded 100 since February 2006.
Furthermore, the 3-month moving
average increased from 87.1 in
A weaker euro
December to 92.3 in January.
makes Ireland a very
attractive location as However, performance in the
a tourist destination Eurozone economy remains
subdued, with annual growth for
2014 preliminarily estimated to be
0.8% and inflation levels remaining
negative, forcing the European Central Bank to roll out a
quantitative easing programme of bond buying to stimulate
growth in the Eurozone. That said, low interest rates means that
Eurozone economies are more attractive in terms of investment
opportunities.
A core feature of the economic recovery in Ireland in 2014 was
the significant reduction in unemployment levels. The latest
CSO Quarterly National Household Survey saw an annual
increase in employment of 1.5%, or 29,100, in the year to the
fourth quarter of 2014, bringing total employment to 1.94
million. Employment levels rose by 0.5% compared to the
previous quarter, representing its 9th consecutive quarterly
increase. Furthermore, the seasonally adjusted standardised
unemployment rate fell notably to 10.4% in the final quarter,
from 11.1% the previous quarter, the first time standing below
11% since quarter 1, 2009. It has been falling steadily since the
February 2012 crisis high of 15.1%.
As the numbers in work are increasing, so too is employment
in the tourism industry; the latest available CSO figures reveal
that the numbers employed in the Accommodation and Food
Service Activities Sector in the fourth quarter of the year was
138,400, an increase of 1,400 jobs when compared with the
same period in 2013. Job creation has proven to be a clear
result of the reduced VAT levels for goods and services in the
hospitality industry, providing almost 1 in 3 net new jobs since
its introduction, and this is set to continue following the Budget
2015 announcement that this measure will be retained for
another year. Furthermore, the increasing number of hotels
previously closed, under refurbishment and set to reopen,
together with expanding hospitality companies such as Airbnb,
should aid additional job creation this year.
3 Irish Hotel Market
The total number of overseas trips to Ireland during the period
October to December 2014 increased by 7.3%, or 114,800,
to 1.69 million visitors compared to the same period in 2013.
This brings the total number of overseas trips in the year to
7.6 million, an annual increase of 8.9% and the highest level
since 2008. The UK, Ireland’s largest tourist market, accounted
for 42% of all overseas visitors in the year, while residents
of Europe accounted for 35% and the USA and Canada, 18%.
On an annual basis, trips by residents of the USA and Canada
increased by 14.7% while trips by UK residents increased by
8%. Furthermore, a significantly weaker euro at present makes
Ireland a very attractive location as a tourist destination. Fáilte
Ireland projects an increase of 6% in overseas tourists in 2015.
The latest CSO figures available on domestic trips taken by Irish
residents reveal that in the nine months to September 2014,
trips taken increased by 2.7% to approximately 5.7 million when
compared to the same period twelve months earlier, with the
estimated number of trips for the year expected to come in at
7.3 million. Furthermore, 40% of all domestic visitors in the nine
month period stayed in hotel accommodation, highlighting the
importance of hotels for the domestic tourism market.
In terms of tourism revenue for 2014, spending by overseas
tourists reached €2.8 billion in the first 9 months of the year,
an annual increase of 9.2%, and is expected to come in at €5
billion for the year. Domestically, revenue from trips within
Ireland reached €1.14 billion in the first nine months, an annual
rise of 4.4%, and is estimated to reach almost €1.5 billion for
the year. Combining overseas and domestic visits to Ireland
for the year brings projected total tourism revenue to arrive
at approximately €6.5 billion, an increase of 10% compared to
2013. According to Fáilte Ireland, holidaymakers in Ireland are
increasingly finding value for money; of those surveyed, 60%
believed they got value for money in their vacation in 2014,
compared with just 29% in 2009.
Irish Hotel Market
Following a number of challenging years for
the Irish hotel market, the market stabilised in
2012 and strengthened in 2013, underpinned
by an array of both domestic and international
investors showing strong interest in Irish
hotels.
While strong performance was witnessed in the opening
half of 2014, momentum in the Irish hotel market gathered
speed in the latter half, boosted significantly by the volume of
transactions in the third quarter. Transaction activity reached
€555 million (excluding loan sales) in 2014 as a whole, over
double the level of activity recorded in 2013.
Approximately €182 million worth of hotel sales transacted
in the first half of the year, however, activity strengthened
in the latter half. The volume of spend in the six months to
December stood at €373 million and accounted for two-thirds
of overall activity.
Hotel sales in the
latter half of 2014
accounted for over
two-thirds of overall
activity in the year
Approximately 60 hotel
transactions took place in the
year, an uplift of approximately
50% on the number of
transactions in 2013 and the most
active year for hotel sales since
the height of the market. This is
also in stark contrast to the mere
2 hotels sold in 2009.
The most significant transaction in the year as a whole was
The Shelbourne, a 5 star hotel in Dublin 2 to Kennedy Wilson
for €120 million, following the group’s acquisition of loans
attached to the same hotel earlier in the year. Notably, one
deal has the ability to skew results and this standout deal
boosted activity in quarter three and accounted for 22% of
the overall volume of transactions in 2014. Kennedy Wilson
was a prominent player in the Irish hotel market in 2014, also
purchasing the 4 star Portmarnock Hotel & Golf Links for
€29.8 million earlier in the year.
A core feature of the market in 2014 was the rising number
of portfolios brought to the market by NAMA and other Irish
banks, giving investors the opportunity to acquire large hotels
either as individual lots as an entire portfolio. “Project Venue”
which consists of 3 hotels including The Malton, a 4 star hotel
in Killarney, which was sold for €18.1 million to Cork hotelier Joe
Scally in quarter four, the 4 star Kilkenny Ormonde Hotel which
was acquired by Connaught and Whitehall Capital Ltd. for €11.5
million in the final quarter, and the 3 star Gresham Metropole in
Cork which was still available at the end of the year.
Ulster Bank brought “Project Nadal” to the market during the
year also, a portfolio of 8 hotels including the 4 star Clayton
Hotel, Co. Galway, and 4 star Whites of Wexford, both sold to
Dalata Hotel Group for a combined value of €31.7 million in the
final quarter. The portfolio also included the 4 star Dunboyne
Castle Hotel & Spa in Co. Meath, which was sold for €8 million.
The remaining Irish hotels in the portfolio consisted of loan sales.
NAMA’s “Project Crystal” is also a key portfolio on the market
for 2015, while a number of further portfolios are expected to
appear in the year ahead, particularly outside Dublin, as NAMA
continues to exceed its targets and increase its disposal of Irish
property.
Figure 1
Hotel Sales, 2014
Other notable deals in 2014 included The Westin, a 5 star
hotel in Dublin 2, and the 4 star Hilton Dublin, Charlemont
Place, Dublin 2, which sold for approximately €60 million
and €30 million respectively to US investor John Malone.
Furthermore, the 4 star Citywest Hotel & Golf Resort was
acquired by Brehon Capital Partners (BCP) for €29 million.
BCP has considerably increased its stock of Irish hotels this
year, also purchasing 4 star Mount Juliet in Co. Kilkenny for
a reported €15 million, Killashee House Hotel & Villa in Co.
Kildare for €13 million and Mount Wolseley Hotel, Spa & Golf
Resort in Co. Carlow for €7.5 million. BCP’s interest does not
lie solely in Irish hotels, also purchasing Jacob’s Inn Hostel in
Dublin 1 for approximately €7 million, reflecting the investor’s
interest in opportunities across a number of sectors.
The largest deal outside of Dublin was the sale of the 4 star
Limerick Strand Hotel in the final quarter for over €20 million
to John Malone, adding to his significant purchases earlier
in the year of The Westin and the Hilton Charlemont Place,
considerably growing the investor’s interest in both the Dublin
and regional hotels markets in Ireland.
4 Irish Hotel Market
Source: DTZ Sherry FitzGerald Research
Irish Hotel Market
Irish Hotel Market
A number of significant off-market transactions took place in the
year; these include the 5 star Aghadoe Heights in Co. Kerry and
4 star Mount Juliet in Co. Kilkenny. Notably the 3 star Maldron
Hotel Parnell Square, Dublin 1, was transacted in the final quarter
of the year and features in the top ten deals.
Activity is expected to continue in 2015, with approximately €102
million of hotels sale agreed at the end of quarter four and due to
close in the opening half of 2015.
Top hotels sale agreed include the 5 star Adare Manor Hotel in
Co. Limerick which was sale agreed for a reported €30 million,
Top
hotels
sale
agreed
include
5 star
Adare
Manor
in
Loan
also
increasingly
Loansales
salesininthe
theIrish
Irishhotel
hotelmarket
marketwere
were
also
increasingly
the
3 star
Temple
Bar
Hotel,the
Fleet
Street,
Dublin
2, Hotel
sale agreed
Limerick,
which was
sale
agreed
forthe
a reported
€30Hotel
million,
prevalent
that
is is
expected
to to Co.for
prevalentin
inIreland
Irelandinin2014
2014and
andare
area afeature
feature
that
expected
approximately
€28
million,
and
4 star Pillo
& Spa
thein3Galway
star Temple
Hotel,
Street,
2, sale
agreed
continue
attached
to The
Shelbourne,
separate
continueinto
into2015.
2015.Loans
As well
as the loan
sale
of The Shelbourne,
whichBar
was
sale Fleet
agreed
for aDublin
reported
€10.5
million. At
for
approximately
€28
million,
and
the
4
star
Pillo
Hotel
and
from
the
€120
million
asset
sale,
were
transacted
in
2014
as
well
loans attached to The Mercantile in Dublin 2 were also sold in the
least twenty more hotels were sale agreed at the end
of Spa
the year
in Galway
wasmillion.
sale agreed for a reported €10.5 million. At
as
loans
belonged
to Hilton
The Mercantile
in Dublin 2.the
Moreover,
theBlu
year.
Moreover,
the
Hotel Kilmainham,
Radisson
for lesswhich
than €10
Hilton
Hotel Kilmainham,
the Radisson
Blu Hotel
Golden
Lane,
thethe least twenty more hotels were sale agreed at the end of the year
Hotel Golden
Lane, the Radisson
Blu Hotel
Dublin
Airport,
and
which
were brought to the market in 2014 and still
forTop
lesshotels
than €10
million.
Radisson Blu Hotel Dublin Airport, and the Arlington Hotel were
Arlington Hotel were all loan sale transactions in Ulster Bank’s
all loan sale transactions in Ulster Bank’s “Project Nadal”.
available at the end of December include the 3 star Premier Inn
“Project Nadal”.
Top hotels which were brought to the market in 2014 and still
Dublin Airport, guiding €9.6 million; 4 star Waterford Castle
available at the end of December include the 3 star Premier Inn
The remarkable uplift witnessed in the second half of the year
The remarkable uplift witnessed in the second half of the year
Hotel & Golf Resort, guiding €4.5 million; 3 star Hotel Clybaun
Dublin Airport, guiding €9.6 million; 4 star Waterford Castle
was likely enticed by the Capital Gains Tax (CGT) incentive which
was likely enticed by the Capital Gains Tax (CGT) incentive which Hotel
in Co.
Galway, guiding €2.4 million; Westlodge Hotel & Leisure
and Golf Resort, guiding €4.5 million; 3 star Hotel Clybaun
was not extended beyond 31 December 2014. The phasing out
was
not
extended
beyond
31
December
2014.
The
phasing
out
Centre
in West
Cork,
guiding
€2Westlodge
million andHotel
Gallaghers
Hotel in
in Co. Galway,
guiding
€2.4
million;
and Leisure
of this relief saw purchasers keen to close sales before the end
of 2014.
this relief
saw purchasers
keentotoreduce
close sales
beforeofthe
end
Letterkenny,
Co. Donegal,
guiding
million.
Centre
in West Cork,
guiding €2
million€1and
Gallaghers Hotel in
of
However,
this is not likely
the outturn
hotel
of 2014.
However,
thisisisexpected
not likelyto
toremain
reduceasthe
outturn
of hotel Letterkenny, Co. Donegal, guiding €1 million.
sales
for 2015;
activity
debt
holders
Both domestic and international interest remain strong while
sales for
2015; activity
is expected
to remainasset
as debt
holders
further
deleverage.
Moreover,
non-distressed
holders
are
liquidity
will and
playinternational
a key role ininterest
influencing
hotel
saleswhile
for the year
Both
domestic
remain
strong
further
deleverage.
Moreover,
non-distressed
asset
holders
now
beginning
to bring
their hotels
to the market,
as prices
areare
ahead
with
an
improving
availability
of
finance
for
both
existing
liquidity will play a key role in influencing hotel sales for the year
now beginning
bring
their hotels
to theinmarket,
as prices
are
rebounding
and to
there
is value
to be found
hotels again.
Hotel
and with
new an
investors
entering
the market.
ahead
improving
availability
of
finance
for
both
existing
rebounding
there is
value totobe
found in hotels
again. Hotel
prices
shouldand
therefore
continue
strengthen
in 2015.
and new investors entering the market.
prices should therefore continue to strengthen in 2015.
Activity is expected to continue in 2015, with approximately €102
million of hotels sale agreed at the end of quarter four and due to
close in the opening half of 2015.
Table 1
Table 1
Top 10 Hotel Transactions (Sold), 2014
Top 10 Hotel Transactions (Sold), 2014
Hotel
County
Star
Rating
Price
(Approx.)
Quarter
Price per
Room
(Approx.)
Purchaser
Origin
Type of Sale
THE SHELBOURNE
Dublin
5 Star
€120m
Q3 2014
€452,830
US
Trading Asset
THE WESTIN
Dublin
5 Star
€60m
Q3 2014
€380,368
US
Investment
HILTON DUBLIN
Dublin
4 Star
€30m
Q1 2014
€155,400
US
Trading Asset
PORTMARNOCK HOTEL
& GOLF LINKS
Dublin
4 Star
€29.8m
Q2 2014
€217,391
US
Trading Asset
CITYWEST HOTEL & GOLF
RESORT
Dublin
4 Star
€29m
Q3 2014
€37,468
Irish
Trading Asset
LIMERICK STRAND HOTEL
Limerick
4 Star
€20m
Q4 2014
€108,696
US
Trading Asset
THE MALTON
Kerry
4 Star
€18.1m
Q4 2014
€105,233
Irish
Trading Asset
CLAYTON HOTEL
Galway
4 Star
€17m
Q4 2014
€61,538
Irish
Trading Asset
MALDRON HOTEL PARNELL
SQUARE
Dublin
3 Star
Off-market
Q2 2014
-
Irish
Trading Asset
WHITES OF WEXFORD
Wexford
4 Star
€14.5m
Q4 2014
€63,694
Irish
Trading Asset
Source:
DTZ
Sherry
FitzGerald
Research
Source:
DTZ
Sherry
FitzGerald
Research
5
5 Irish
Irish Hotel
HotelMarket
MarketEnd of Year Review 2014 / Outlook 2015
Performance of Irish Hotels
A resurging tourism market coupled with
improved trading conditions among hoteliers
is making the Irish hotel market a promising
one in which to invest.
The shortage of hotel rooms available, particularly in the
capital, means that room rates are spiking at present and will
continue to do so as long as there is a shortage of rooms.
Hotel occupancy in Ireland has returned to pre-crash
levels. ARRs (Average Room Rate) of Irish hotels have risen
successively since 2011, while occupancy levels and RevPARs
(Revenue per available room) have risen each year since
2010. According to Crowe Horwath’s 2014 Annual Irish Hotel
Industry Survey, occupancy levels increased on an annual
basis by 2.1% while ARR levels increased by 3.7% to €77.49.
RevPAR increased by 7.1% to stand at €51.07. That said,
ARR levels still remain low by historical comparisons and
are significantly below the average room rate at the peak of
2007 which stood at €97.69. Notably, total RevPAR has risen
by a significant 18% since 2011.
6 Irish Hotel Market
ARRs and occupancy levels in Dublin city hotels are
outperforming that of the rest of the country, reflecting the
limited supply of hotel rooms available in the capital to meet
current demand. According to PwC’s European Cities Hotel
Forecast 2015 and 2016, occupancy levels in Dublin have
surpassed pre-recession levels, rising from 76% in 2013 to 78.3%
in 2014 and are forecast to reach 80% in 2015. Furthermore,
Dublin is ranked in the top five for European cities’ hotel
occupancy levels. ARR in Dublin increased by 8.5% to stand at
€95, from €88 in 2013, and is forecast to reach over €100 by
2015. Furthermore, RevPAR in Dublin increased notably by 11.1%,
from €67 in 2013 to €75 in 2014, and is forecast to rise to €81 and
€88 in 2015 and 2016 respectively.
Investment by Location
An analysis of investment in hotels
by location reveals that Dublin was
the most sought-after region in 2014
accounting for 59% of the total spend
in the year.
Figure 2
Hotel Sales by Location, 2014
Outside of Dublin, activity was strongest in the
South West and the South East, accounting for
11% and 10% of the total spend respectively, while
8% of sales were in the Shannon, 7% in the East &
Midlands, 4% in the West and 1% in the North West.
That said, the 59% proportion in Dublin accounts
for just 12 out of the 60 hotel sales, emphasising the
higher valued hotels sold in the capital compared
with the rest of the country, while in the South
West, 11 sales were transacted in the year which
only represents 11% of the total spend, representing
the larger number of smaller lot size hotels sold.
Notably, 75% of the number of hotels sold in the
year were sub €10 million in value, while 15% were
€10 - €20 million, 7% were €20 - €50 million and just
3% were greater than €50 million.
The price differentiation between the best quality
hotels outside Dublin and mid-classification hotels
within Dublin became very evident in 2014; investors
are willing to pay a premium for well-located 3 and 4
star hotels in Dublin city centre, while 5 star hotels
outside of Dublin are being acquired for a price per
room that is significantly less.
Source: DTZ Sherry FitzGerald Research
Figure 3
Hotel Sales by Lot Size €m, 2014
Source: DTZ Sherry FitzGerald Research
7 Irish Hotel Market
Investment by Star Rating
Of the 60 hotels transacted in the twelve
months to December 2014, approximately
12% were 5 star, while 77% were either 3
or 4 star.
This suggests that the demand for well-located and
opportunistic 3 and 4 star hotels was driving activity
in the hotel market in the year. Notably, the majority of
hotels placed on the market during 2014 by NAMA and
other banks were broadly 3 and 4 star hotels. A better
quality 5 star hotel is more often transacted as a single
sale.
When analysing hotel sales by value however, 39% were
5 star, while 59% comprised 4 star and 3 star hotels
combined.
Figure 4
Figure 5
Hotel Sales Volume by Star Rating, 2014
Hotel Sales Value by Star Rating, 2014
Source: DTZ Sherry FitzGerald Research
Source: DTZ Sherry FitzGerald Research
8 Irish Hotel Market
Investor Type
Both international and domestic investors
are motivated by the recovering tourism
sector in Ireland while rising occupancy
levels, particularly in Dublin, are making the
Irish hotel market an attractive one in which
to invest.
Figure 6
Domestic vs. International Buyers, 2014
Hotel purchasers are increasingly more motivated by the
longer term trading potential and the EBIDA (Earnings
before Interest, Depreciation, and Amortization) of
an asset, as opposed to its appreciation in value.
Furthermore, Ireland’s
recognition for resilience
in adhering to austerity
has strengthened investor
Domestic buyers
sentiment within the overall
dominated in the
fourth quarter of the Irish economy.
year, accounting for
75% of sales in the
three month period
Demand for Irish hotels
from international investors
increased notably in 2014,
purchasing approximately
55% of the market share
in the twelve months to
December, while domestic purchasers accounted for
approximately 43%. That said, domestic buyers were more
dominant in the final quarter of the year, representing
75% of sales in the three month period.
Domestic sales in the year represented 39 hotel
transactions and only two of which were 5 star, indicating
that Irish buyers were most active purchasing small to
medium hotel assets. Repeat domestic buyers are also
becoming a prominent feature in the market.
Source: DTZ Sherry FitzGerald Research
Figure 7
Origin of International Buyers, 2014
An analysis of the proportion of foreign buyers in the
year saw the majority of transactions by US buyers,
accounting for an 87% share of the foreign spend and
approximately €275 million of the hotel assets purchased
in 2014, while European buyers comprised 5% and Asian,
3%. It is envisaged that, based on an increasing number of
enquires in recent months, investors from China will make
a larger appearance in the Irish hotel market in 2015. The
falling value of the euro, meanwhile, should increase the
activity coming from overseas.
Source: DTZ Sherry FitzGerald Research
9 Irish Hotel Market
Asset Type
An analysis of the type of asset
sales in the hotel market in the year
reveals that trading asset sales
were the most prominent in the year
accounting for 84% of the total
volume, while 11% were investment
sales and 4%, asset sales.
Figure 8
Asset Type, 2014
That said, one large deal can skew results as the
sale of The Westin for approximately €60 million
accounted for the entire value of investment
sales in 2014. On the contrary, trading asset sales
represented 49 out of the 60 hotels sold.
Source: DTZ Sherry FitzGerald Research
New Development
Development activity has re-emerged in the Irish
hotel market albeit at a moderate scale; the 4
star, 52-bedroom, Dean Hotel opened in Dublin
in 2014 and marked the first new hotel in Ireland
since The Marker Hotel in 2013.
However, the shortage in supply of hotel rooms available in
Ireland has spiked interest in hotel development and extensions
to well-located hotels, particularly in Dublin and other popular
tourist destinations. That said, hotel developers and investors are
competing with office developers for prime development sites in
Dublin city centre, as supply levels are tight and value for money
is to be found in the office market.
In Dublin, construction has commenced on the extension at
The Merrion Hotel, Dublin 2, of an additional five storeys.
Construction is almost complete on the change of use of offices
and other units to 23 additional bedrooms at The Gresham Hotel,
Dublin 1, while a change of use and refurbishment of a school to
21 additional rooms as an extension to The Fleet Street Hotel is
underway.
Planning permission has been granted for a number of hotels in
Dublin, including a new hotel development in Clonshaugh, Co.
Dublin, for a ten-storey, 325-bedroom hotel with spa and leisure
facilities, and for the development of eight existing buildings to
a 165-bedroom hotel on Camden Street, Dublin 2. Planning has
also been granted for an extension to the Russell Court Hotel,
Harcourt Street, Dublin 2, an extension at Finnstown Castle
10 Irish Hotel Market
Hotel in Lucan for 47 new suites, and an extension at Trinity
Capital Hotel complex, Pearse Street, Dublin 2, for 23 additional
bedrooms. Moreover, planning permission for the conversion of
Findlater House, O’Connell Street, Dublin 1, to a seven-storey,
198-bedroom hotel was given the green light.
Furthermore, following the Comer Group’s purchase of
the partially built Kilternan Hotel & Country Club in 2014,
approximately €20 million is the planned spend on the
128-bedroom hotel for redevelopment; planning has been
granted and an additional 78-bedroom aparthotel is due to be
constructed.
Further hotel development is underway outside of the capital;
construction has commenced for a 70-bedroom, four-storey
extension to the existing hotel at the K Club, Co. Kildare, and for
an extension at Ballynahinch Castle Hotel in Co. Galway, creating
10 additional bedrooms.
Planning permission has been issued to construct a new
2.5-storey hotel at Manorhamilton, Co. Leitrim, and for an
extension at Ashford Castle, Co. Mayo. Moreover, permission
has been granted for the change of use from an office building
to form an extension to the existing Park House Hotel, Forster
Street, Co. Galway.
Outlook
2014 was a notable year in the Irish hotel
market. Following a strong opening half to
the year, momentum in hotel transaction
activity gathered speed in the latter half
with sales for the year as a whole over
double the figure recorded in 2013.
Strong performance is expected to continue into 2015 with
a large number of hotels sale agreed at the end of the year.
Portfolio sales, in particular, which became prevalent in the
market in 2014, are anticipated to be a key driver of activity
for the year ahead. Furthermore, loan sales are also likely to
feature more prominently during 2015.
2014 saw demand for Irish hotels strongest from
international buyers, particularly the US, and it is envisaged
that this will continue not least as a result of the falling
value of the euro. Furthermore, access to and availability of
finance are improving for both new and existing domestic
and international investors.
The construction of new and expanding hotels, particularly
in Dublin, is welcome for the sector for 2015 as the supply of
available rooms remains limited.
11 Irish Hotel Market
Existing hotels are expected to continue growing in profitability,
due to a lack of supply of available rooms combined with the low
VAT level retained in Budget 2015. Furthermore, after two years
of strong growth in the tourism sector, expectations for 2015 are
very positive. The industry entered the year with a belief that the
improvements witnessed in the sector will be sustained. Hoteliers
are optimistic with regard to trading conditions and the generally
improving economic environment.
After a very busy 2014, 2015 is shaping up to be
another strong and exciting year. Reflecting the
strong demand in the market, a relatively recent feature
of the market is that non-distressed hotel owners are
now starting to consider sales of their properties,
particularly in Dublin. As a direct result of increased
demand, and strong hotel trading, it is likely that there
will be an increase in the number of planning permission
applications for new hotels in the capital in 2015.
Kirsty Rothwell, Head of Hotel Solutions
DTZ Sherry FitzGerald
AUTHORS
Marian Finnegan
Chief Economist, Director
Research
+353 (0) 1 237 6341
marian.finnegan@dtz.ie
Deirdre O’Reilly
Researcher
+353 (0) 1 237 6365
deirdre.oreilly@sherryfitz.ie
Kirsty Rothwell
Head of Hotel Solutions, Director
+353 (0) 1 639 9386
kirsty.rothwell@dtz.ie
About DTZ Sherry FitzGerald
DTZ Sherry FitzGerald is the sole Irish affiliate of DTZ, a global leader
in property services. With Irish offices in Dublin, Cork, Galway, Limerick
and an associated office in Belfast, we are the largest commercial
property advisory network in Ireland and are part of Sherry FitzGerald
Group, Ireland’s largest real estate adviser.
We provide occupiers and investors around the world with
best-in-class, end-to-end property solutions comprised of leasing
agency and brokerage, integrated property management, capital
markets, investment, asset management and valuation.
www.dtz.ie
© 2015
This report should not be relied upon as a basis for entering transactions without seeking specific,
qualified, professional advice. It is intended as a general guide only. This report has been prepared on
the basis of publicly available information, internally developed data and other sources believed to be
reliable. While reasonable care has been taken in the preparation of the report, neither Sherry FitzGerald
nor any of directors, employees or affiliates guarantees the accuracy or completeness of the information
contained in the report. Any opinion expressed (including estimates and forecasts) may be subject to
change without notice. No warranty or representation, express or implied, is or will be provided by Sherry
FitzGerald, its directors, employees or affiliates, all of whom expressly disclaim any and all liability for
the contents of, or omissions from, this document, the information or opinions on which it is based.
Information contained in this report should not, in whole or part, be published, reproduced or referred to
without prior approval. Any such reproduction should be credited to DTZ Sherry FitzGerald.