THE IRISH HOTEL MARKET

INTRODUCTION This article presents an overview of the

Dublin is host to a number of strategically important European

hotel performance for the Irish hotel market

Headquarters, such as Google and Facebook. Ireland’s economic outlook

looking at the recovery following the depths

remains strong but vulnerable to economic shocks. The UK’s vote to leave

of a severe economic crisis, to a period

the EU poses a serious threat to the Irish economy in light of the strong

of buoyant hotel trading since 2014 and

trade and financial linkages with the British economy. Nevertheless, upside

which has continued strongly in the first

also exists for Ireland, as it is possible that a number of businesses and

half of 2016. However, with Great Britain

European headquarters may choose to relocate to Dublin in order to retain

and Northern Ireland representing 40% of

a presence in the EU. Following the uncertainty in the aftermath of the EU

tourist arrivals to Ireland in 2015, we review

Referendum, according to the Central Bank of Ireland, the outlook for the

the potential impact on Ireland’s inbound

Irish economy continues to remain favorable, with unemployment forecast

tourism and hotel market, following the

to continue to decline and GDP growth in 2016 expected to achieve

UK’s decision to withdraw from the EU. This

steady growth of 4.9% and 3.6% growth in 2017. In the medium term

article undertakes an analysis of the hotel

Ireland’s GDP outlook is set to stabilise at around 3%, albeit the economic

sector, determining the key operators and

performance is dependent on the severity of a slowdown to the UK

reviews the growth of domestic brands as

economy and to the rest of Europe. Underpinning stability and reducing

well as the large indigenous hotel groups,

uncertainty are key economic themes going forward, with the ongoing risks

expanding through acquisitions and

following the UK’s vote to exit the EU likely to have a material impact on the

development, as brand association in Ireland

Irish economy.

begins to become more prevalent. Finally we take a look at how the strong hotel trading performance in recent years has resulted in a surge of hotel transactional activity by both domestic and overseas investors, targeting both Dublin and the regional cities. From these various perspectives, the resilience of the Irish hotel market and its future prospects will be assessed, at a time where the Irish economy is presented with a sudden and very real threat of instability that has ensued following the UK’s vote to end ties with the European Union. ECONOMIC OVERVIEW Following a protracted period of harsh economic conditions between 2008 and 2012, the tourism sector in Ireland has witnessed positive growth and a strong recovery. The return to overall economic growth in Ireland, improved economic conditions to many of Ireland’s key overseas source markets, trends in exchange rate movements and inflation have all contributed to a buoyant tourism sector since 2014. In 2015 Ireland achieved GDP growth of 7.8%, the fastest growing EU economy recorded. Dublin is globally recognised as a leading location for a range of internationally traded financial, pharmaceutical and ICT companies.

“The first half of 2016 has been a very rewarding period for Dalata Hotel Group, with trading ahead of our expectations. Prospects remain very strong for the Dublin hotel market and regional cities in Ireland. Despite the outcome of Brexit, to date we have not seen any impact on trading, but we remain highly attentive and alert to ensure we react quickly.” PAT MCCANN

Dalata Hotel Group PLC, Chief Executive Officer

in Ireland has been very strong, with record overseas visitor arrivals achieved in 2015. The proportion of overseas visitors to Ireland has increased from 45% of total visitors in 2010 to 56% in 2015. Overseas visitors to Ireland have grown by approximately 35% from 5.9m visitors in 2010 to over 8 million visitors in 2015 and to over 9.5 million visitors when including visitors from Northern Ireland. Particularly strong growth in overseas visitor arrivals has been recorded

18,000 16,000 14,000 12,000 Source Country

Between 2010 and 2015 tourism growth

Arrivals (000s)

DEMAND

10,000 8,000 6,000 4,000 2,000 0

2010

2011

2012

2013

2014

2015

overseas visitor numbers. Great Britain is the main source market,

CAAG 2012-2015

CAAG 2013-2015

CAAG 2014-2015

Great Britain

7.1%

8.0%

11.3%

Europe at 30%, Northern Ireland at 16% and North America 14%. In

Northern Ireland

4.7%

-2.6%

-12.6%

2015 the volume of visitors from both Continental Europe and North

North America

11.2%

11.6%

12.9%

Mainland Europe

8.6%

10.8%

15.7%

Other Intercontinental

10.9%

9.4%

11.7%

Total Overseas Visitors

7.9%

7.4%

8.1% Source: Fáilte Ireland

representing 35% of total international visitation, followed by Continental

America increased and in doing so increased their share of overall visitor arrivals by 3%. In 2015, Northern Ireland witnessed a decline in visitor arrivals following strong growth the previous two years. However in the wake of the UK’s vote to leave the EU, tourism is likely to be largely effected by the impact of Brexit, as a result of the fall in the value of sterling, making holidays to Ireland significantly more expensive

since 2013, representing an annual average

Overseas Visitors

growth rate of 9.6% and double digit year-on-

Figure 1: Overseas & Domestic Tourist Arrivals to Ireland

Figure 2: Compound Annual Average Growth Rates to Ireland

likely to result in a more cautious approach to discretionary spending

year growth from mainland Europe and North

(2010-2015)

by Source Country

and will impact upon visitor numbers, both domestic and from overseas.

Domestic Visitors

Source: Fáilte Ireland

America of 10.8% and 11.6% respectively.

for UK visitors. In addition, economic uncertainty as a result of Brexit is

Domestic Arrivals CAGR 2010-2015 0.6%

source markets have contributed to increased

Domestic Arrivals CAGR 2013-2015 2.9%

demand from overseas tourism, in the UK and

Overseas Visitor Arrivals CAGR 2010-2015 9.9%

the US, GDP growth in real terms averaged

Overseas Visitor Arrivals CAGR 2013-2015 7.4%

Arrivals (000s)

Economic ties on the Irish border between Ireland and Northern Ireland

Economic growth in many of Ireland’s key tourism

will also become a critical issue. As such whilst the implications on tourism 4000

to Ireland in the long-term are dependent on the terms of engagement

3,500

negotiated post-Brexit and the importance of common travel between

3,000

Ireland and the UK of critical importance to the Irish economy, in the short-term Ireland must be seen to retain its competitiveness and ensure

2.4% and 2.2% per annum between 2013

Combined Arrivals CAGR 2010-2013 5.2%

2,500

and 2015 respectively. Other factors positively

Combined Arrivals CAGR 2010-2015 5.3%

2,000

any negative consequences of Brexit are minimised. Positive initiatives

impacting on overseas visitor arrivals include

1,500

by the Irish government, such as its commitment to the Tourism sector

improved exchange rates in favour of overseas

1,000

with various financial initiatives including 0% Airport travel tax; retention of

500

visitor arrivals from outside the Eurozone and

0

the perception of Ireland as a safe destination. This growth in overseas visitors, together with a Domestic trips have also recovered following the

stable domestic market is feeding through to an

economic recession, growing on average 3%

increased demand for hotel services, impacting

each year since 2013, with the domestic market

positively on overnight stays and revenue spend.

Great Britain

the 9% tourism VAT rate on hotel accommodation and food; a reduction 2012

2013

2014

North America

Other Intercontinental

2015

in excise duty on alcohol as well as the positive promotion of Ireland targeted at key source markets, will all be key drivers of demand in the uncertain aftermath that has followed the Brexit vote. Furthermore,

Mainland Europe

investment plans such as the €100m fund for the Wild Atlantic Way and

North Ireland

Figure 3: Main Source Countries 2012-2015

benefitting from increases in disposable income

plans to commence development of a second runway at Dublin Airport by 2020 are all important initiatives for Ireland in a post-Brexit era.

opportunities as a result of the improved domestic

remained relatively unchanged over the past

economy. According to Failte Ireland tourism

few years. Visitor numbers for all major source

barometer (April 2016), repeat visitors, increased

markets have grown strongly between 2014

marketing campaigns from local and national

and 2015. Factors such as advantageous

tourist boards and private marketing campaigns

currency trends, positive economic conditions

have all sought to encourage Irish nationals to take

in the source markets and international

holidays in Ireland, with the South-West, South-

marketing campaigns such as “The Wild

East and West of Ireland benefitting from 65% of

Atlantic Way” and “The Gathering” have

all overnight stays by domestic holidaymakers.

all helped strengthen Ireland’s growth in

% 30

5%



4%

The proportion of visitor arrivals to Ireland has

1

personal taxes and increased employment

16%

SOURCE MARKETS

35%

brought about through a combination of reduced

Source: Fáilte Ireland Great Britain

North America

Other Intercontinental

Mainland Europe

North Ireland

Figure 4: Main Source Countries 2015

with over 80% of bedroom stock operating within the 3-star and 4-star market. The Irish hotel market remains relatively fragmented with 79% of hotels independently owned and operated, collectively, this represents almost 60% of total room supply.

500 450

25,000

400 350

20,000

300

15,000

250 150 100

5,000

0 BUDGET

a global, regional, national or international brand. Meanwhile in rural locations 81% of the Irish Hotel Market is dominated by unbranded, independently

2-STAR

operated hotels or unbranded hotels operating as part of a consortia.

3,000

Over 80% of Irish bedroom supply operates within the 3-star and 4-star

2,000

market; and whilst the 2-star and Hostel market represent 30% of total hotel

1,500

supply, they are significantly smaller in size, comprising less than 10% of bedroom stock. Hotels operating under a global or international flag are also

Rooms

5 9%

%



owner operator.

300

1,600

1,200

200 150

800 Consortia

Independent

Iternational

Regional

National

Source: AM:PM Hotel Data Intelligence

Figure 6: Hotel Room Supply by Brand Type

Dublin & Regional

250

1,000 Global

Source: AM:PM Hotel Data Intelligence

Figure 8: Major Hotel Operators in Ireland by Number of Rooms, 1,800

1,400

a managed and leased portfolio, to that of a hotel

TALBOT HOTEL GROUP

has transformed from a pure hotel operator, with

O’DONOGHUE RING HOTELS

March 2014, the asset base of the Dalata Group

7

in Ireland. Following the Group’s IPO listing in

WILLIAM NEVILLE & SONS

some 30 hotels and approximately 4,900 rooms

CORNER GROUP

them the largest hotel operator in Ireland, with

3% 9%

and manage a portfolio of partner hotels, making

Regional Dublin Average Hotel Size

PEMBASE HOLDINGS MCENIFF HOTELS

%

both the Maldron Hotel and Clayton Hotel brands

CARA HOTEL GROUP

17

IRISH COURT HOTELS

4%



hotel bedrooms. The Dalata Hotel Group, operates

TESTINATION KILLARNEY GROUP

operators in Ireland, ascertained by the number of

SMORGS

We highlight the top hotel brands and top hotel

WHITES HOTEL GROUP

Figure 5: Number of Hotels and Bedrooms by Star Rating

0 PREM GROUP

as part of a consortium.

less than 50 rooms in size.

0 TIFCO HOTEL GROUP

brands average around 115 rooms in size, whilst independent hotels average

brand and 22% of the bedroom supply operates

50

500 INTERCONTINENTAL HOTELS GROUP

Source: AM:PM Hotel Data Intelligence

1,000

AMARIS HOSPITALITY (LONE STAR)

significantly larger in size, averaging over 150 bedrooms. National Irish hotel

100

BONNINGTON GROUP

NUMBER OF HOTELS

Nuber of Hotels

150

2,500

CHOICE HOTELS INTERNATIONAL

Branded

APTS

200

3,500

HILTON WORLDWIDE (BLACKSTONE)

BRANDED

HOSTEL

4,000

TETRARCH CAPITAL

Independent

4-STAR 5-STAR

250

CARLSON REZIDOR HOTEL GROUP

INDEPENDENT

3-STAR

5,000

4,500

DALATA HOTEL GROUP

rooms are operated under a global or international brand, 42% are operated under an Irish national

50

0

hotels operating under a consortium), 36% of

locations, with approximately 54% of hotel room supply in Dublin belonging to

200

10,000

Of the branded hotel bedroom stock (including

Branded hotels in Ireland are located predominantly in Dublin or regional city

Rooms Rooms

rooms distributed across 1,156 hotels and hostels,

30,000

No. of Hotels

The Irish hotel industry accounts for over 65,000

No. of Rooms

HOTEL SUPPLY

600

100

400

50

200

2-STAR 3-STAR 4-STAR 5-STAR HOSTEL APTS

80

100

120

60

80

10 0

12 0

INTERNATIONAL INDEPENDENT GLOBAL

16 0

14 0

Dublin & Regional

60

NATIONAL REGIONAL

20

Figure 7: Major Hotel Brands in Ireland by Number of Rooms,

40

CONSORTIA

0

Source: AM:PM Hotel Data Intelligence

40

IRISH COURT HOTELS

HILTON

FBD HOTELS

TALBOT HOTELS

CROWNE PLAZA

REGENCY HOTEL GROUP

PREFERRED HOTELS & RESORTS

DOYLE COLLECTION

DOUBLE TREE BY HILTON

CARA HOTEL GROUP

WHISTLES HOTEL GROUP

TRAVELODGE

CLARION HOTEL

JURYS INN

IRISH COUNTRY HOTELS

MANOR HOUSE HOTELS

GREAT NATIONAL HOTELS

RADISSON BLUE

MALDRON HOTELS

CLAYTON HOTELS

Regional Dublin Average Hotel Size

20

0

0

0

BUDGET

Source: AM:PM Hotel Data Intelligence

Figure 9: Average Hotel Size by Star Rating and Brand Type

a wave of uncertainty over the future health of overseas tourism to Ireland and the impact it will have on the Irish hotel industry. Since 2014, the improved economic conditions and resultant increase in demand for overnight accommodation, driven by a combination of

95% 90%

Dublin hotel market, buoyed further by the dearth

ZURICH LONDON MILAN AMSTERDAM

80%

FRANKFURT

60% 40% 20% 0%

BARCELONA

75%

Dublin City Centre

EDINBURGH

70%

DUBLIN

65%

€111

2013

BRUSSELS

60%

2014

BERLIN

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2013 2014

2015 2015 2016

2014

Source: Hotstats

2016

€300

€250

€200

€150

€100

€50

Figure 10: Seasonality – Dublin 2013-2016

Source: STR Global

centre hotels achieved an 18.5% growth in ADR and for the first half of 2016,

Figure 12: Annual Achieved ADR Performance 2015

EU Referendum for the UK’s vote to leave the EU,

prior to the EU Referendum, performance had been equally strong, achieving

– Dublin v European Cities

confidence for continued growth remained high.

14% ADR growth for the period up to May 2016. (Source: STR Global).

80

60 40 20 Dublin City Centre

In a European context, Dublin outperformed other European cities in 2015, with the highest growth in RevPAR after Milan which benefitted from hosting

Going forward, in the era of Brexit negotiation, we envisage that Dublin’s hotel

occupancy levels of 84%, growing by four

Expo 2015, driven largely from growth in the ADR. When compared to other

trading performance will continue to perform strongly, albeit with somewhat

percentage points since 2013. This high level

European cities, Dublin is ranked well below other European cities, this implies

weakened growth compared to the past few years. Dublin is likely to benefit

of occupancy performance is evidence of Dublin

that Dublin currently represents a cheaper destination for international visitors

from an increase in business travel from international companies relocating

having a diversified market. Dublin attracts strong

when considering a residential stay in Europe.

or expanding their presence as a result of the UK’s planned exit from the EU.

corporate demand primarily during weekdays

The limited supply growth in the short-term, together with the favourable

and has a thriving leisure market, with short

9% VAT rate for the tourism sector and Dublin’s growing trend as a tourist

city breaks at weekends. Corporate demand

destination, despite the fall in Sterling, will continue to have a positive impact

is weaker during the summer months, but

on the city’s hotel performance.

spread evenly throughout the year. The seasonality of demand, depicted in the following graph, is shown through an analysis of hotel room occupancy for the Dublin hotel market. The graph shows a very similar pattern in seasonality trends between 2013 and 2015.

2015

100 80

60 40 20

25.0%

0

strong levels of growth in trading performance, have benefitted from an uplift

20.0%

Dublin City Centre

in the domestic economy in recent years, resulting in greater demand for hotel accommodation. According to STR data, regional Irish hotels achieved

15.0%

2013

2014

Dublin Airport

Dublin Ireland Regional Surroundings

2015

occupancy of 66% in 2015, measuring a 6.8% compound annual average

10.0%

growth (CAAG) between 2013 and 2015. With equally impressive average

5.0%

room rate growth, achieving €101 in 2015, RevPAR performance has increased 10% year-on-year between 2013 to 2015, to €67. Hotel trading

0.0%

leading up to the EU Referendum has remained strong in 2016, with year-to-

-5.0%

date RevPAR growth in double digits, up 11% on the previous year to €61. PARIS

BRUSSELS

VIENNA

ROME

GENEVA

Dublin city centre hotels to drive forward their

BERLIN

AMSTERDAM

FRANKFURT

BARCELONA

LONDON

LISBON

ZURICH

PRAGUE

EDINBURGH

MADRID

PORTO

DUBLIN

new supply entering the market, has allowed

2014

Ireland Regional

120

Outside of the capital city, regional hotels whilst not experiencing the superior

MILAN

Achieving high occupancy levels and with limited

30.0%

2013

RevPAR Growth year-on-year (%)

In 2015 Hotels in Dublin city centre achieved

well as conference events, many of which are

Dublin Surroundings

100

PRAGUE

to a period of stabilised growth and prior to the

number of sporting and event-based trips as

Dublin Airport

2015

120

LISBON

Dublin has moved beyond a period of recovery

visitation. Dublin also benefits from a large

Dublin Ireland Regional Surroundings

140

MADRID

enhanced trading environment has meant that

compensated by significantly increased leisure

Dublin Airport

VIENNA

55% 2013

80%

ROME

€0

of new hotel developments until recently. This

PARIS

85%

higher international and domestic visitor numbers has resulted in strong trading performance for the

GENEVA

Average Room Rate Performance €

The vote by the UK to leave the EU has swept

Hotel Occupancy

Achieved ADR Performance (€)

HOTEL TRADING PERFORMANCE

100%

Source: STR Global

average daily room rate (ADR) and revenue per

Figure 11: Annual RevPAR Growth 2015

available room (RevPAR). In 2015 Dublin city

– Dublin v European Cities

This regional performance marks a period of continued recovery, albeit with the regional trading data still below pre-recession 2007 levels. Hotels located nearest the Irish border are likely to be the hardest hit, with travel and demand for overnight hotel accommodation likely to be impacted. We highlight the performance of the regional Irish hotels compared to the Dublin hotel market in the charts below. As can be seen Dublin city centre

25% 20% 15% 10% 5% 0%

FEB

APR

JUN

Dublin City Centre Dublin Airport Dublin Airport Dublin Surroundings Dublin Surroundings Ireland Regional Source: STR Data Ireland Regional Dublin City Centre

hotels and Dublin Airport hotels achieve a significant RevPAR premium over

Figure 13 – Hotel Trading Performance,

regional Ireland.

Dublin v Regional Performance

200

HOTEL DEVELOPMENT Following a strong recovery from a period of harsh

150

economic conditions and a period of oversupply of hotel accommodation, there is now concern

100

and increasing evidence of a shortfall of visitor accommodation in Dublin. A shortage in quality hotel accommodation can thereby limit the 0 2013

the limited capacity to cater for a further lift in visitor numbers to Ireland.

2014

Dublin Region Shannon

Midlands & East Region

Shannon

2016

2015

North-West Region

Dublin Region South-East Region

Statistics published by Fáilte Ireland show that

speculative projects are likely to proceed, especially in Dublin, any significant

we have reviewed future hotel supply in Ireland by star-rating and by region.

slowdown in visitor arrivals as a result of Brexit, is likely to cause a number of

There are approximately 12,000 bedrooms planned, of which over 70% of

these speculative projects being put on hold until such a time where the Irish

projects are destined for Dublin. Of this total, 27% of projects are reportedly

hotel sector once again shows signs of stability and sustainable growth.

on-hold, whilst a further 58% remain speculative. Only approximately

50

potential for tourism growth in the future, due to

Based on our research for prospective hotel developments and extensions,

2017

1,800 rooms are anticipated to open by 2018. Projects are deemed to

As shown in Figure 17, the vast majority of proposed hotels are planned

be speculative often due to a lack of information or due to the time taken

in the mid- market segment, with over 70% of proposed hotel rooms

in formulating development plans and funding. Whilst many of these

planned as three-star and four-star hotels. There is also strong growth in supply forecast for budget hotels making up over 12% of new hotel supply;

West Region

meanwhile, the serviced apartment sector is likely to make an entry as a

South-West Region

Midlands & East Region North-West Region

West Region Source: Knight Frank Research South-West Region

sub-sector of the Irish hotel market, with 10% of the proposed new hotel

FigureSouth-East 14: Hotel Bedrooms Planned by Region 2013-2017 Region

available bed spaces in Dublin in approved accommodation have declined by approximately 7% between 2010 and 2015 to around 81,800

Between the period of 2013 and 2016 approximately 2,000 new hotel rooms

bed spaces. Meanwhile, research undertaken

have entered the Irish hotel market as a result of new hotels opening, hotels

by The Irish Tourism Industry Confederation,

reopening following restoration or major refurbishment as well as extensions

estimates that Dublin requires 30 new hotels

to existing hotels. The greater Dublin area received 25% of this new supply

or 5,000 bedrooms by 2020 to accommodate

opening, with the North-West and South-West Regions also capturing over

the expected growth in visitor numbers.

300 new rooms entering the market.

8% 5 1 %

%

3%

bedroom stock forecast to come from this segment.

6% 4%

We outline below the most significant hotel developments planned in Ireland, with the majority of the developments shown to be located in Dublin. In the short term the supply constraint will benefit hotel trading performance, particularly given the uncertainty following the vote for Brexit; however, in the medium term adding capacity will be important

%

73

for the hotel industry, in particular Dublin as the capital city, to maintain its attractiveness as a business and tourist destination. Two major Irish hotel owners, Dalata Hotel Group and Amaris Hospitality remain upbeat

Dublin Region Shannon

Midlands & East Region North-West Region

and positive about the need for new hotel developments or significant

West Region

South-West Region

South-East Region

extensions planned to existing properties. The Dalata Hotel Group have

Source: AM:PM

over 500 hotel rooms in the pipeline for Dublin, including the 367-room

Figure 15: Proposed Hotels in Ireland, by Region

New Hotels Opening in Ireland, 2010-2015 Location Type

extension at the Clayton Hotel Dublin Airport and a proposed 180-room Clayton Hotel at Charlemont Street, both developments are expected to

Hotel Name

Location

Region

Opened

Rooms

Star Rating

Facilities

Brand

Gibson Hotel

Dublin

Dublin Region

2010

252

4-star

Full Service

City

Ascend Hotel Collection

Snoozles

Galway

West Region

2010

27

Hostel

Hostel

Rural

Independent

Ballyfin

Ballyfin

Midlands & East Region

2011

20

5-Star

Country-House

Rural

Relais & Chateaux

Waterfront Hotel

Baltimore

South-West Region

2011

13

2-star

Limited Service

Rural

Independent

Talbot Hotel

Belmullet

West Region

2011

21

4-star

Full Service

Rural

Independent

NORTH-WEST REGION

HOSTEL

Park Place Apartments

Killarney

South-West Region

2011

73

Apts

Limited Service

Rural

Independent

SHANNON

BUDGET

Anvil Bar

Boolteens

South-West Region

2012

6

3-star

Inn

Rural

Independent

WEST REGION

2-STAR

Marker Hotel

Dublin

Dublin Region

2013

187

5-star

Full Service

City

Leading Hotels of the World

MIDLANDS & EAST REGION

3-STAR

Dean (The)

Dublin

Dublin Region

2014

52

4-star

Boutique

City

Independent

11

Hostel

Hostel

Rural

Independent

Speculative On Hold

Due 2016

Due 2017

5,500

2015

On Hold

Due 2018

5,000

West Region

Due 2017

Source: Knight Frank Research; AM:PM Hotel Intelligence Data

4,500

Murrisk

Due 2016

4,000

Croagh Patrick Hostel

Speculative

3,500

Independent

3,000

City

2,000

Limited Service

2,500

3-star

1,500

95

1,000

2015

500

Dublin Region

-

Dublin

9,000

Temple Bar Inn

8,000

Independent Independent

7,000

Rural Rural

6,000

Full Service Inn

4,000

3-star 2-star

5,000

17 3

5-STAR

3,000

2015 2015

4-STAR

DUBLIN REGION

2,000

Shannon North-West Region

APTS

1,000

Cloughjordan Drumfries

SOUTH-EAST REGION SOUTH-WEST REGION

-

Cloughjordan House North Pole Bar

be completed by mid-2018.

Due 2018

Source: Knight Frank Research; AM:PM Hotel Intelligence Data

Source: Fáilte Ireland

Table 1: New Hotels Opening in Ireland, 2010-2015

Figure 16: Proposed Hotels in Ireland, by Region and Development Status Speculative Oh Hold

Due 2016

Due 2017

Due 2018

Figure 17: Proposed Hotels in Ireland, by Star Rating

Hotel Name

Location

Type

New Rooms

Star Rating

Owner

Phase

Opening

Operator

Due 2018

Maldron Hotel Group

Proposed Maldron Hotel, Beasley St

Cork

New Build

121

4-Star

Dalata Hotel Group

Under Construction

Clayton Hotel, Charlemont Street

Dublin

Conversion

181

4-Star

Dalata Hotel Group

Full Planning

Due 2018

Clayton Hotel Group

Proposed Andrews Lane Hotel

Dublin

Conversion

115

Pod-Hotel

Consortium led by Firebreak Hospitality

Awaiting Planning

Speculative

Unknown

Proposed Pinebrook House Hotel

Dublin

Conversion

152

4-Star

Olema Consultants

Full Planning

Speculative

Independent

Clerys Department Store

Dublin

Conversion

176

4-Star

OCS Properties Ltd

Awaiting Planning

Speculative

Unknown

Aquavetro

Dublin

Mixed-Use

167

4-Star

CIE/Ronan Group Real Estate

Pre-Planning

Speculative

Unknown

Bewleys Café, Grafton Street

Dublin

Mixed-Use

70

Boutique

Ronan Group Real Estate

Pre-Planning

Speculative

Unknown

Convention Centre Dublin

Dublin

New Build

250

5-Star

SDDC Hotel Ltd

Full Planning

On Hold

Unknown

Proposed Coombe Bay Hotel

Dublin

New Build

263

4-Star

Realmside Ltd (O'Sullivan family)

Awaiting Planning

Speculative

Hodson Bay Group

Holiday Inn Express Dublin - City Centre

Dublin

New Build

198

Budget

Findlater House Ltd

Under Construction

Nov-16

IHG

Proposed Hotel, Mill Street, Tenters Pub

Dublin

New Build

202

4-Star

Private Owner (Denis O'Brien)

Full Planning

Speculative

Unknown

Proposed Apart-Hotel, Mark Street

Dublin

New Build

178

Apart-Hotel

Tetrarch Capital

Pre-Planning

Speculative

Staycity Apart Hotels

Proposed Hotel, Sackville Place

Dublin

New Build

158

4-Star

Tetrarch Capital

Pre-Planning

Speculative

Tetrarch Hospitality

Proposed Hotel, Bow Lane East

Dublin

New Build

190

Apart-Hotel

Marlin

Full Planning

Speculative

Marlin Apartments

Proposed Hotel Pembroke Street Lower

Dublin

New Build

108

4-Star

Plaza on the Square Ltd

Full Planning

Speculative

Independent

Proposed Travelodge, Summerhill

Dublin

New Build

364

Budget

Smorgs Ltd

Full Planning

Speculative

Travelodge

Proposed Maldron Hotel, Kevin Street

Dublin

New Build

137

3-Star

Dalata Hotel Group

Full Planning

Due 2018

Maldron Hotel Group

Proposed Budget Hotel, Moore Street

Dublin

New Build

107

Budget

Kendlebell Mid-West Ltd

Full Planning

Speculative

Unknown

Proposed Hodson Bay Hotel, The Coombe

Dublin

New Build

263

4-Star

Hodson Bay Hotel

Full Planning

Speculative

Hodson Bay Group

Proposed Hotel North Wall, Spencer Dock

Dublin

Mixed-Use

169

4-Star

Independent

Pre-Planning

Speculative

Independent

Red Cow Hotel Extension

Dublin

Extension

152

4-Star

Guestford Ltd (Tom Moran)

Near Completion

Due 2016

Independent

Clayton Hotel Dublin Airport Extension

Dublin Airport

Extension

367

4-Star

Dalata Hotel Group

Full Planning

Speculative

Clayton Hotel Group

Radisson Blu Hotel, Dublin Airport

Dublin Airport

Extension

146

4-Star

CG Hotels Dublin Airport Ltd

Full Planning

Speculative

Rezidor SAS

Dublin Airport, T2

Dublin Airport

New Build

400

4-Star

Dublin Airport Authority

Full Planning

Speculative

Unknown

Radisson Blu Hotel, Dublin Airport

Dublin Airport

New Build

168

4-Star

CG Hotels Dublin Airport Ltd

Full Planning

Speculative

Rezidor SAS

200

4-Star

Ronan Group Real Estate

Pre-Planning

Speculative

Unknown

136

5-Star

Welmary Properties

Full Planning

Speculative

Unknown

Proposed Park Hotel Enniskerry Build Table 2: Enniskerry Hotel Developments Planned, Dublin & New Regional Proposed Hotel Connacht Laundry Site

Galway

New Build

Table 2: Hotel Developments Planned, Dublin & Regional

Source: AM:PM Hotel Data Intelligence

IRISH HOTEL INVESTMENT ENVIRONMENT Historically the hotel investment market in Ireland has largely focused on Dublin; however, in recent

Significant Irish Hotel Transactions - 2015 - Q2 2016

Meanwhile, strong investment activity has been recorded by Dublin-based Sale Date

Hotel

Location

Rooms

Star Rating

Approximate Price (€)

Average Price per Room

Buyer

Buyer Origin

times secondary cities, such as Cork, Limerick

PREM Group, following their €30 million funding package with Swedish

and Galway are becoming increasingly popular

investor Proventus Capital Partners. The group have added three Irish

Q1-2015

Clayton Hotel Ballsbridge

Dublin

304

3-star

€ 75,200,000

€ 247,000

Dalata Hotel Group

Irish

with investors. Nevertheless, in 2015 over 60%

properties to their 45-strong diverse hotel and serviced apartment portfolio

Q1-2015

Clayton Hotel Dublin Airport

Dublin Airport

466

4-star

€ 79,300,000

€ 170,000

Dalata Hotel Group

Irish

of hotel investment volume was targeted at

of owned, leased and managed assets across Ireland, the UK and Europe.

Q1-2015

Clayton Hotel Leopardstown

Leopardstown

354

4-star

€ 44,800,000

€ 127,000

Dalata Hotel Group

Irish

Dublin, which as the capital and gateway city to

In late 2015 PREM Group acquired the 109-room Osprey Hotel & Spa

Ireland attracts strong interest from overseas and

Complex, in Naas, Co. Kildare, followed by two further 4-star hotel

Q1-2015

Maldron Hotel Newlands Cross

Dublin

297

3-star

€ 26,900,000

€ 91,000

Dalata Hotel Group

Irish

domestic investors.

transactions in 2016, the 74-room Tulfarris Hotel & Golf Resort in Co.

Q1-2015

Clayton Hotel Galway

Galway

195

4-star

€ 16,600,000

€ 85,000

Dalata Hotel Group

Irish

Q1-2015

Waterford Castle Hotel & Golf Club

Waterford

20

4-star

€ 6,000,000

€ 300,000

Private Individual

Irish

Q1-2015

Adare Manor

Limerick

64

5-star

€ 30,000,000

€ 469,000

JP MacManus

Irish

Q1-2015

Maldron Hotel Sandy Road

Galway

104

4-star

€ 10,500,000

€ 101,000

Dalata Hotel Group

Irish

Q1-2015

Clayton Whites Hotel

Wexford

157

4-star

€ 15,000,000

€ 96,000

Dalata Hotel Group

Irish

Q1-2015

Intercontinental Dublin

Dublin

197

5-star

€ 50,000,000

€ 254,000

John Malone Partnership/Lalco

US/Irish

Wicklow for in excess of €8 million and the 38-room Cahernane House Hotel As hotels have become a more established

in Killarney for €3 million.

asset class and as investors continue to seek out suitable institutional grade product, Dublin has

During the first half of 2016 hotel investment activity in Ireland has remained

witnessed a significant increase in investment from

strong, with some 26 single asset hotel transactions recorded, with a total

domestic and overseas investors on the hunt for

transaction value of approximately €175 million, largely driven by activity

quality product in prime locations. Furthermore,

outside of Dublin. These hotels include; the 110-suite Staycity Serviced

the strong trading performance of hotels in Dublin

Apartments Dublin for €25m; the 162-room Clarion Hotel Sligo for €13.1m

since 2014, buoyed by a strong increase in

and the 158-room Clarion Hotel Limerick for €16million. Meanwhile, the

demand from domestic and overseas visitors,

second half of 2016 has already witnessed the €92 million sale of the iconic

together with the limited supply growth have further

323-bedroom, four-star, Gresham Hotel to the Spanish hotel firm RIU Hotels

helped underpin hotel transactional activity.

& Resorts, outbidding Irish hotel group TifCo and generating a profit of almost €60 million for from the National Asset Management Agency which purchased

In 2015, the Irish hotel investment arena was

the asset from the former Anglo Irish Bank for €35 million.

dominated by one key player, Dalata Hotel Group,

Q1-2015

Temple Bar Hotel

Dublin

132

3-star

€ 30,000,000

€ 227,000

Pyramid Hotel Group

USA

Q2-2015

Glenroyal Hotel

Maynooth

113

3-star

€ 10,500,000

€ 93,000

Comer Group

Irish

Q2-2015

Premier Inn Dublin Airport

Dublin

155

Budget

€ 11,000,000

€ 71,000

Kirkland Investments

Irish

Q3-2015

Grafton Capital Hotel

Dublin

76

3-star

€ 12,000,000

€ 158,000

Balrath Investments Ltd

Irish

Q3-2015

Ballsbridge & Clyde Court Hotels

Dublin

585

3-star

€ 180,000,000

€ 308,000

Abu Dhabi Investment Authority/Chartered Land

Middle East

Q4-2015

Kilkenny Hibernian Hotel

Kilkenny

46

4-star

€ 7,000,000

€ 152,000

iNua Hospitality

Irish

Q4-2015

Dawson Hotel

Dublin

36

4-star

€ 17,000,000

€ 472,000

Tetrarch Capital

Irish

Q4-2015

Castlemartyr Resort

Castlemartyr

103

5-star

€ 16,000,000

€ 155,000

Eagle Resort (Holdings) UK

UK

Q4-2015

Clarion Hotel Cork

Cork

198

4-star

€ 35,100,000

€ 177,000

Dalata Hotel Group

Irish

Q1-2016

Tara Towers Hotel

Dublin

111

3-star

€ 13,160,000

€ 119,000

Dalata Hotel Group

Irish

€ 10,000,000

€ 60,000

Emerald Investment Partners

UK

4-star

€ 13,120,000

€ 81,000

Dalata Hotel Group

Irish

74

4-star

€ 8,000,000

€ 108,000

PREM Group

Irish

Dublin

501

4-star

€ 180,000,000

€ 359,000

Blackstone Group

USA

Pillo Hotel Ashbourne

Ashbourne (Irl)

148

4-star

€ 11,000,000

€ 74,000

Podium Hospitality Ltd

Irish

Q2-2016

Village at Lyons

Celbridge

20

4-star

€ 6,000,000

€ 300,000

Private Individual

Irish

Q2-2016

Staycity Serviced Apartments

Dublin

110

Apts

€ 25,000,000

€ 227,000

Independent

Irish

Q2-2016

Maldron Beasley Street

Cork

121

4-star

€ 10,200,000

€ 84,000

Dalata Hotel Group

with the acquisition of 15 hotels in Ireland and

A surge of investment activity for Dublin is expected for the second half

the UK for a total consideration of €558.8 million,

of 2016, with a number of high profile hotels under negotiation and due

thereby allowing the Group to significantly scale

to complete before the year end. Such high profile deals include the

up its operations and in particular raise its market

501-room Doubletree by Hilton Hotel, Dublin (the former Burlington Hotel),

profile in the Dublin market. The acquisitions

with the German asset manager DekaBank emerging as the preferred

consolidated the group’s position as the largest

bidder for the hotel, with the Private Equity firm Blackstone seeking offers

hotel operator in Ireland, operating approximately

over €180m (€359,000 per room), thereby more than doubling its investment

Q1-2016

Hilton Dublin Airport

Dublin

166

4-star

20% of the hotel room supply in Dublin. The Group

since its purchase in 2012. The Dalata Hotel Group is understood to be in

Q1-2016

Clarion Hotel Sligo

Sligo

162

targeted sizeable hotels in prime locations, notably

exclusive talks with DekaBank to lease and operate the hotel upon completion

Q2-2016

Tulfarris Hotel & Golf Resort

Blessington

Dublin, Galway, Cork and Wexford, the majority

of the sale.

Q2-2016

DoubleTree by Hilton

Q2-2016

of which have been rebranded under either the Maldron or Clayton hotel brands. Following

Meanwhile the surge of hotel transactions in Dublin is expected to be further

further acquisitions in the first half of 2016, of

bolstered with the sale of the Fitzpatrick Lifestyle Hotel Group portfolio,

the 7,717 rooms under Dalata management,

comprising three hotels (The Spencer, The Morgan and The Beacon),

54% of the portfolio is owned, 31% leased

thought to be seeking offers over €130 million.

and 15% managed.

Table 3: Significant Irish Hotel Transactions – 2015 – Q2 2016

Irish

Source: Knight Frank Research

ABOUT THE AUTHOR

ABOUT KNIGHT FRANK HOTELS

OUR SERVICES

In 2015 the Irish hotel market moved into a period

Established in 1952. Knight Frank’s dedicated

•

Investment sales and acquisitions

of stabilised growth, with strong GDP growth

hotel division is one of the largest in the country.

•

Agency and development consultancy -

in Ireland’s main tourist markets. Favourable

Our goal is to match investors to the very

exchange rate movement, targeted marketing

best hotel investment opportunities in the

campaigns, the reduced rate of VAT on tourism

UK, Ireland and overseas.

CONCLUSION AND OUTLOOK

and the perception of Ireland being a safe

site acquisition and appraisal advice, lease and management contract negotiation •

Marketing campaigns

•

Building consultancy and project management

destination for travel, have all contributed to

The hotels team is well established and we are

•

Branding and re-branding opportunities

increased numbers of foreign visitors. Hotel supply

dedicated to providing valuations, agency and

•

Valuation - asset review and bank funding

in Dublin has been stable and hotels have enjoyed

investment advice in the lucrative hotel sector.

•

Professional consultancy- planning,

strong trading performance, underpinned by the

We are market leaders with unique access to

continued economic recovery in Ireland and to the

established national and international investors.

country’s main source markets. We offer our clients comprehensive The impact of the UK’s vote to leave the EU,

development advice and industry

however, has the potential to significantly disrupt

research, reporting on market activity and

the Irish economy due to the considerable amount

Philippa Goldstein holds a BSc Honours

of Anglo-Irish trade. Following the EU Referendum,

Degree in Hotel & Catering Management from

the euro has appreciated significantly versus

Oxford Brookes University. Following ten years

Our agency and valuation team, based in

sterling and this is a major concern due to the

operational experience in the hospitality industry

London, cover the full range of hotel genres

heavy reliance on visitor arrivals which currently

in the UK and Europe and experienced in Hotel

from branded corporate hotels to privately

emanate from the UK.

Valuations and Feasibility Studies, Philippa

owned boutique city and regional country house

recently joined Knight Frank’s Hotels team in

hotels. We have longstanding relationships with

Nevertheless, the fundamentals of the Irish hotel

March 2016 as the dedicated Research & Hotel

our clients and a strong reputation as trusted

market remain positive despite the significant

and Market Analyst.

advisors in the sector.

Referendum. Indeed, investor appetite from both

PHILIPPA GOLDSTEIN

Our transactional and advisory services, whilst

Irish and overseas investors continues to surge

Hotel Analyst

based in central London, has the support of our

ahead in 2016 and favourable exchange rate

T: +44 20 3826 0600

extensive regional network of commercial and

conditions for economies pegged to the US Dollar

E: [email protected]

residential offices. Our international capabilities

performance trends.

challenges and uncertainty ahead following the EU

is likely to fuel further appetite from US, Middle

extend throughout Europe’s key city centres.

Eastern and Asian investors.

Worldwide, we co-ordinate with colleagues in the majority of the capital cities throughout the EMEA, Africa, North America, India, South East

CONTACTS

Asia and Australia.

JULIAN EVANS

IAN ELLIOTT

ALEX STURGESS

Head of Hotels & Healthcare

Partner – Head of Hotel Valuations Partner – Head of Hotel Agency

KAREN CALLAHAN

PETER ROWAN

Partner – Hotels

Director – Commercial Valuations & Professional Services, Ireland

T: +44 20 7861 1147

T: +44 20 7861 1082

T: +44 20 7861 1164

T: +44 20 7861 1086

E: [email protected]

E: [email protected]

E: [email protected]

E: [email protected] E: [email protected]

T: +353 1 237 4512

business rates and lease advisory •

Leisure and cottage complex consultancy

•

Market research – UK and international