THE IRISH HOTEL MARKET - Knight Frank
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THE IRISH HOTEL MARKET
INTRODUCTION
This article presents an overview of the Dublin is host to a number of strategically important European “The first half of 2016 has been a very rewarding period for Dalata Hotel Group, with trading
hotel performance for the Irish hotel market Headquarters, such as Google and Facebook. Ireland’s economic outlook ahead of our expectations. Prospects remain very strong for the Dublin hotel market and
looking at the recovery following the depths remains strong but vulnerable to economic shocks. The UK’s vote to leave regional cities in Ireland. Despite the outcome of Brexit, to date we have not seen any impact
of a severe economic crisis, to a period the EU poses a serious threat to the Irish economy in light of the strong on trading, but we remain highly attentive and alert to ensure we react quickly.”
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
PAT MCCANN
half of 2016. However, with Great Britain European headquarters may choose to relocate to Dublin in order to retain
Dalata Hotel Group PLC, Chief Executive Officer
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.
DEMAND
Arrivals (000s)
Between 2010 and 2015 tourism growth 18,000 overseas visitor numbers. Great Britain is the main source market,
CAAG 2012-2015 CAAG 2013-2015 CAAG 2014-2015
in Ireland has been very strong, with record 16,000
representing 35% of total international visitation, followed by Continental
overseas visitor arrivals achieved in 2015. The Great Britain 7.1% 8.0% 11.3% Europe at 30%, Northern Ireland at 16% and North America 14%. In
14,000
proportion of overseas visitors to Ireland has 12,000 Northern Ireland 4.7% -2.6% -12.6% 2015 the volume of visitors from both Continental Europe and North
increased from 45% of total visitors in 2010 to America increased and in doing so increased their share of overall
Source Country
10,000 North America 11.2% 11.6% 12.9%
56% in 2015. Overseas visitors to Ireland have visitor arrivals by 3%. In 2015, Northern Ireland witnessed a decline
8,000
grown by approximately 35% from 5.9m visitors Mainland Europe 8.6% 10.8% 15.7% in visitor arrivals following strong growth the previous two years.
6,000
in 2010 to over 8 million visitors in 2015 and to Other
4,000
10.9% 9.4% 11.7%
over 9.5 million visitors when including visitors Intercontinental However in the wake of the UK’s vote to leave the EU, tourism is likely
2,000
from Northern Ireland. Particularly strong growth Total Overseas to be largely effected by the impact of Brexit, as a result of the fall in the
0 7.9% 7.4% 8.1%
in overseas visitor arrivals has been recorded Visitors value of sterling, making holidays to Ireland significantly more expensive
2010 2011 2012 2013 2014 2015
Source: Fáilte Ireland
since 2013, representing an annual average Overseas Visitors Domestic Visitors Source: Fáilte Ireland for UK visitors. In addition, economic uncertainty as a result of Brexit is
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.
America of 10.8% and 11.6% respectively. Economic ties on the Irish border between Ireland and Northern Ireland
Arrivals (000s)
Economic growth in many of Ireland’s key tourism Domestic Arrivals CAGR 2010-2015 0.6% will also become a critical issue. As such whilst the implications on tourism
source markets have contributed to increased Domestic Arrivals CAGR 2013-2015 2.9% 4000 to Ireland in the long-term are dependent on the terms of engagement
demand from overseas tourism, in the UK and Overseas Visitor Arrivals CAGR 2010-2015 9.9% 3,500 negotiated post-Brexit and the importance of common travel between
the US, GDP growth in real terms averaged Overseas Visitor Arrivals CAGR 2013-2015 7.4% 3,000 Ireland and the UK of critical importance to the Irish economy, in the
2.4% and 2.2% per annum between 2013 Combined Arrivals CAGR 2010-2013 5.2% 2,500 short-term Ireland must be seen to retain its competitiveness and ensure
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
visitor arrivals from outside the Eurozone and 500 the 9% tourism VAT rate on hotel accommodation and food; a reduction
the perception of Ireland as a safe destination. 0 in excise duty on alcohol as well as the positive promotion of Ireland
2012 2013 2014 2015
This growth in overseas visitors, together with a targeted at key source markets, will all be key drivers of demand in
Domestic trips have also recovered following the stable domestic market is feeding through to an Great Britain North America Mainland Europe
the uncertain aftermath that has followed the Brexit vote. Furthermore,
economic recession, growing on average 3% increased demand for hotel services, impacting Other Intercontinental North Ireland investment plans such as the €100m fund for the Wild Atlantic Way and
each year since 2013, with the domestic market positively on overnight stays and revenue spend. Figure 3: Main Source Countries 2012-2015 plans to commence development of a second runway at Dublin Airport
benefitting from increases in disposable income by 2020 are all important initiatives for Ireland in a post-Brexit era.
brought about through a combination of reduced SOURCE MARKETS
personal taxes and increased employment The proportion of visitor arrivals to Ireland has 5%
%
opportunities as a result of the improved domestic remained relatively unchanged over the past 30
economy. According to Failte Ireland tourism few years. Visitor numbers for all major source
35%
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
4%
1
have all sought to encourage Irish nationals to take in the source markets and international 16%
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 Source: Fáilte Ireland
Great Britain North America Mainland Europe
Other Intercontinental North Ireland
Figure 4: Main Source Countries 2015
HOTEL SUPPLY
Rooms
Rooms
The Irish hotel industry accounts for over 65,000 30,000 500 Branded hotels in Ireland are located predominantly in Dublin or regional city
No. of Rooms
No. of Hotels
5,000 250
rooms distributed across 1,156 hotels and hostels, 450 locations, with approximately 54% of hotel room supply in Dublin belonging to
25,000 4,500
400
with over 80% of bedroom stock operating within a global, regional, national or international brand. Meanwhile in rural locations
4,000 200
350
the 3-star and 4-star market. The Irish hotel market 20,000 81% of the Irish Hotel Market is dominated by unbranded, independently
300 3,500
remains relatively fragmented with 79% of hotels 15,000 250 operated hotels or unbranded hotels operating as part of a consortia. 3,000 150
independently owned and operated, collectively, 200 2,500
10,000
this represents almost 60% of total room supply. 150 Over 80% of Irish bedroom supply operates within the 3-star and 4-star 2,000 100
100 1,500
5,000 market; and whilst the 2-star and Hostel market represent 30% of total hotel
50 1,000 50
Of the branded hotel bedroom stock (including 0 0
supply, they are significantly smaller in size, comprising less than 10% of
500
hotels operating under a consortium), 36% of BUDGET 2-STAR 3-STAR 4-STAR 5-STAR HOSTEL APTS bedroom stock. Hotels operating under a global or international flag are also
0 0
rooms are operated under a global or international INDEPENDENT BRANDED NUMBER OF HOTELS significantly larger in size, averaging over 150 bedrooms. National Irish hotel
DALATA HOTEL GROUP
CARLSON REZIDOR HOTEL GROUP
TETRARCH CAPITAL
HILTON WORLDWIDE (BLACKSTONE)
CHOICE HOTELS INTERNATIONAL
BONNINGTON GROUP
AMARIS HOSPITALITY (LONE STAR)
INTERCONTINENTAL HOTELS GROUP
TIFCO HOTEL GROUP
PREM GROUP
WHITES HOTEL GROUP
SMORGS
TESTINATION KILLARNEY GROUP
IRISH COURT HOTELS
CARA HOTEL GROUP
MCENIFF HOTELS
PEMBASE HOLDINGS
CORNER GROUP
WILLIAM NEVILLE & SONS
O’DONOGHUE RING HOTELS
TALBOT HOTEL GROUP
brand, 42% are operated under an Irish national Independent Branded Source: AM:PM Hotel Data Intelligence brands average around 115 rooms in size, whilst independent hotels average
Nuber of Hotels
brand and 22% of the bedroom supply operates less than 50 rooms in size.
as part of a consortium. Figure 5: Number of Hotels and Bedrooms by Star Rating
We highlight the top hotel brands and top hotel
operators in Ireland, ascertained by the number of
4%
hotel bedrooms. The Dalata Hotel Group, operates 17
%
both the Maldron Hotel and Clayton Hotel brands Regional Dublin
Average Hotel Size Source: AM:PM Hotel Data Intelligence
and manage a portfolio of partner hotels, making
3% 9%
them the largest hotel operator in Ireland, with Figure 8: Major Hotel Operators in Ireland by Number of Rooms,
5 9%
Rooms
some 30 hotels and approximately 4,900 rooms 1,800 Dublin & Regional
300
1,600
in Ireland. Following the Group’s IPO listing in 7
%
1,400 250
March 2014, the asset base of the Dalata Group
1,200
has transformed from a pure hotel operator, with 200 BUDGET
1,000 2-STAR
a managed and leased portfolio, to that of a hotel
150 3-STAR
800
owner operator.
Global Independent Iternational Regional National 4-STAR
600 100
Consortia Source: AM:PM Hotel Data Intelligence 5-STAR
400
HOSTEL
50
200 APTS
Figure 6: Hotel Room Supply by Brand Type
0 0
0
40
60
80
100
120
20
CLAYTON HOTELS
MALDRON HOTELS
RADISSON BLUE
GREAT NATIONAL HOTELS
MANOR HOUSE HOTELS
IRISH COUNTRY HOTELS
JURYS INN
CLARION HOTEL
WHISTLES HOTEL GROUP
TRAVELODGE
CARA HOTEL GROUP
DOUBLE TREE BY HILTON
DOYLE COLLECTION
PREFERRED HOTELS & RESORTS
REGENCY HOTEL GROUP
CROWNE PLAZA
TALBOT HOTELS
HILTON
FBD HOTELS
IRISH COURT HOTELS
CONSORTIA
NATIONAL
REGIONAL
INTERNATIONAL
INDEPENDENT
GLOBAL
0
40
60
80
10 0
12 0
14 0
16 0
20
Regional Dublin Source: AM:PM Hotel Data Intelligence
Average Hotel Size Source: AM:PM Hotel Data Intelligence
Figure 7: Major Hotel Brands in Ireland by Number of Rooms, Figure 9: Average Hotel Size by Star Rating and Brand Type
Dublin & Regional
Achieved ADR Performance (€)
100%
Hotel Occupancy
GENEVA
80%
PARIS
ZURICH
60%
HOTEL TRADING PERFORMANCE LONDON
95% MILAN 40%
The vote by the UK to leave the EU has swept
90% ROME
a wave of uncertainty over the future health of AMSTERDAM 20%
85%
overseas tourism to Ireland and the impact it FRANKFURT
80%
will have on the Irish hotel industry. BARCELONA 0%
75%
Dublin City Dublin Airport Dublin Ireland Regional
EDINBURGH
70% Centre Surroundings
DUBLIN €111
Since 2014, the improved economic conditions 65% 2013 2014 2015
BRUSSELS
and resultant increase in demand for overnight 60% VIENNA
accommodation, driven by a combination of
Average Room Rate Performance €
55% BERLIN 140
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
higher international and domestic visitor numbers MADRID
2013 2014 2015 120
has resulted in strong trading performance for the 2013 2015 2016 Source: Hotstats LISBON
2014 2016
PRAGUE 100
Dublin hotel market, buoyed further by the dearth
of new hotel developments until recently. This Figure 10: Seasonality – Dublin 2013-2016 80
€0
€50
€100
€150
€200
€250
€300
enhanced trading environment has meant that 60
Source: STR Global
Dublin has moved beyond a period of recovery 40
to a period of stabilised growth and prior to the centre hotels achieved an 18.5% growth in ADR and for the first half of 2016, Figure 12: Annual Achieved ADR Performance 2015
20
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).
Dublin City Dublin Airport Dublin Ireland Regional
In a European context, Dublin outperformed other European cities in 2015, Centre Surroundings
In 2015 Hotels in Dublin city centre achieved 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 2013 2014 2015
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
RevPAR Growth year-on-year (%)
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
120
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. 100
corporate demand primarily during weekdays The limited supply growth in the short-term, together with the favourable 80
and has a thriving leisure market, with short 9% VAT rate for the tourism sector and Dublin’s growing trend as a tourist
60
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. 40
compensated by significantly increased leisure 30.0%
20
visitation. Dublin also benefits from a large 25.0% Outside of the capital city, regional hotels whilst not experiencing the superior
0
number of sporting and event-based trips as strong levels of growth in trading performance, have benefitted from an uplift
Dublin City Dublin Airport Dublin Ireland Regional
20.0%
well as conference events, many of which are in the domestic economy in recent years, resulting in greater demand for Centre Surroundings
spread evenly throughout the year. 15.0% hotel accommodation. According to STR data, regional Irish hotels achieved 2013 2014 2015
occupancy of 66% in 2015, measuring a 6.8% compound annual average
10.0%
The seasonality of demand, depicted in the growth (CAAG) between 2013 and 2015. With equally impressive average
25%
following graph, is shown through an analysis 5.0% room rate growth, achieving €101 in 2015, RevPAR performance has
of hotel room occupancy for the Dublin hotel increased 10% year-on-year between 2013 to 2015, to €67. Hotel trading 20%
0.0%
market. The graph shows a very similar pattern leading up to the EU Referendum has remained strong in 2016, with year-to-
-5.0% 15%
in seasonality trends between 2013 and 2015. date RevPAR growth in double digits, up 11% on the previous year to €61.
MILAN
DUBLIN
PORTO
MADRID
PRAGUE
EDINBURGH
ZURICH
LISBON
LONDON
BARCELONA
FRANKFURT
BERLIN
GENEVA
ROME
BRUSSELS
AMSTERDAM
VIENNA
PARIS
This regional performance marks a period of continued recovery, albeit with 10%
Achieving high occupancy levels and with limited the regional trading data still below pre-recession 2007 levels. Hotels located
5%
new supply entering the market, has allowed nearest the Irish border are likely to be the hardest hit, with travel and demand
Dublin city centre hotels to drive forward their Source: STR Global for overnight hotel accommodation likely to be impacted. 0%
average daily room rate (ADR) and revenue per Figure 11: Annual RevPAR Growth 2015 FEB APR JUN
available room (RevPAR). In 2015 Dublin city – Dublin v European Cities We highlight the performance of the regional Irish hotels compared to the Dublin City Centre Dublin Airport
Dublin City Centre Dublin Airport Dublin Surroundings
Dublin Surroundings Ireland Regional
Dublin hotel market in the charts below. As can be seen Dublin city centre Ireland Regional Source: STR Data
hotels and Dublin Airport hotels achieve a significant RevPAR premium over Figure 13 – Hotel Trading Performance,
regional Ireland. Dublin v Regional Performance200
HOTEL DEVELOPMENT
Following a strong recovery from a period of harsh 150 Based on our research for prospective hotel developments and extensions, speculative projects are likely to proceed, especially in Dublin, any significant
economic conditions and a period of oversupply 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
of hotel accommodation, there is now concern 100 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
and increasing evidence of a shortfall of visitor projects are destined for Dublin. Of this total, 27% of projects are reportedly hotel sector once again shows signs of stability and sustainable growth.
accommodation in Dublin. A shortage in quality 50 on-hold, whilst a further 58% remain speculative. Only approximately
hotel accommodation can thereby limit the 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
potential for tourism growth in the future, due to 0 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
2013 2014 2015 2016 2017
the limited capacity to cater for a further lift in visitor in formulating development plans and funding. Whilst many of these planned as three-star and four-star hotels. There is also strong growth in
numbers to Ireland. Dublin Region Midlands & East Region West Region supply forecast for budget hotels making up over 12% of new hotel supply;
Shannon North-West Region South-West Region meanwhile, the serviced apartment sector is likely to make an entry as a
Dublin
South-East Region
Region Midlands & East Region West Region
Source: Knight Frank Research
Statistics published by Fáilte Ireland show that sub-sector of the Irish hotel market, with 10% of the proposed new hotel
Shannon North-West Region South-West Region
available bed spaces in Dublin in approved FigureSouth-East
14: Hotel Bedrooms Planned by Region 2013-2017
Region bedroom stock forecast to come from this segment.
accommodation have declined by approximately 6% 4%
3%
%
8% 5 1
7% between 2010 and 2015 to around 81,800 Between the period of 2013 and 2016 approximately 2,000 new hotel rooms We outline below the most significant hotel developments planned in
%
bed spaces. Meanwhile, research undertaken have entered the Irish hotel market as a result of new hotels opening, hotels Ireland, with the majority of the developments shown to be located in
by The Irish Tourism Industry Confederation, reopening following restoration or major refurbishment as well as extensions Dublin. In the short term the supply constraint will benefit hotel trading
estimates that Dublin requires 30 new hotels to existing hotels. The greater Dublin area received 25% of this new supply performance, particularly given the uncertainty following the vote for
or 5,000 bedrooms by 2020 to accommodate opening, with the North-West and South-West Regions also capturing over Brexit; however, in the medium term adding capacity will be important
%
the expected growth in visitor numbers. 300 new rooms entering the market.
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 Midlands & East Region West Region and positive about the need for new hotel developments or significant
Shannon North-West Region South-West Region extensions planned to existing properties. The Dalata Hotel Group have
South-East Region Source: AM:PM
over 500 hotel rooms in the pipeline for Dublin, including the 367-room
New Hotels Opening in Ireland, 2010-2015 Figure 15: Proposed Hotels in Ireland, by Region 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 Location Type Brand
be completed by mid-2018.
Ascend
Gibson Hotel Dublin Dublin Region 2010 252 4-star Full Service City
Hotel Collection
Snoozles Galway West Region 2010 27 Hostel Hostel Rural Independent
Midlands & Relais &
Ballyfin Ballyfin 2011 20 5-Star Country-House Rural
East Region Chateaux
SOUTH-EAST REGION
Waterfront Hotel Baltimore South-West Region 2011 13 2-star Limited Service Rural Independent
SOUTH-WEST REGION APTS
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
Leading Hotels MIDLANDS & EAST REGION 3-STAR
Marker Hotel Dublin Dublin Region 2013 187 5-star Full Service City
of the World 4-STAR
DUBLIN REGION
Dean (The) Dublin Dublin Region 2014 52 4-star Boutique City Independent 5-STAR
-
1,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2,000
Cloughjordan House Cloughjordan Shannon 2015 17 3-star Full Service Rural Independent
-
500
1,000
1,500
3,000
3,500
4,000
4,500
5,000
5,500
2,000
2,500
North Pole Bar Drumfries North-West Region 2015 3 2-star Inn Rural Independent
Temple Bar Inn Dublin Dublin Region 2015 95 3-star Limited Service City Independent Speculative Due 2016 Due 2017 Due 2018 On Hold Speculative Due 2016 Due 2017 Due 2018
Source: Knight Frank Research; AM:PM Hotel Intelligence Data On Hold Source: Knight Frank Research; AM:PM Hotel Intelligence Data
Croagh Patrick Hostel Murrisk West Region 2015 11 Hostel Hostel Rural Independent
Source: Fáilte Ireland
Table 1: New Hotels Opening in Ireland, 2010-2015 Figure 16: Proposed Hotels in Ireland, by Region and Figure 17: Proposed Hotels in Ireland, by Star Rating
Development Status
Speculative Due 2016 Due 2017 Due 2018
Oh HoldNew
Hotel Name Location Type Rooms Star Rating Owner Phase Opening Operator
Under Maldron
Proposed Maldron Hotel, Beasley St Cork New Build 121 4-Star Dalata Hotel Group Construction Due 2018 Hotel Group
Clayton
Clayton Hotel, Charlemont Street Dublin Conversion 181 4-Star Dalata Hotel Group Full Planning Due 2018 Hotel Group
Consortium led by Awaiting
Proposed Andrews Lane Hotel Dublin Conversion 115 Pod-Hotel Firebreak Hospitality Planning Speculative Unknown
Proposed Pinebrook House Hotel Dublin Conversion 152 4-Star Olema Consultants Full Planning Speculative Independent
Awaiting
Clerys Department Store Dublin Conversion 176 4-Star OCS Properties Ltd Planning Speculative Unknown
CIE/Ronan Group
Aquavetro Dublin Mixed-Use 167 4-Star Real Estate Pre-Planning Speculative Unknown
Ronan Group
Bewleys Café, Grafton Street Dublin Mixed-Use 70 Boutique Real Estate Pre-Planning Speculative Unknown
Convention Centre Dublin Dublin New Build 250 5-Star SDDC Hotel Ltd Full Planning On Hold Unknown
Realmside Ltd Awaiting Hodson Bay
Proposed Coombe Bay Hotel Dublin New Build 263 4-Star (O'Sullivan family) Planning Speculative Group
Under
Holiday Inn Express Dublin - City Centre Dublin New Build 198 Budget Findlater House Ltd Construction Nov-16 IHG
Private Owner
Proposed Hotel, Mill Street, Tenters Pub Dublin New Build 202 4-Star (Denis O'Brien) Full Planning Speculative Unknown
Staycity
Proposed Apart-Hotel, Mark Street Dublin New Build 178 Apart-Hotel Tetrarch Capital Pre-Planning Speculative Apart Hotels
Tetrarch
Proposed Hotel, Sackville Place Dublin New Build 158 4-Star Tetrarch Capital Pre-Planning Speculative Hospitality
Marlin
Proposed Hotel, Bow Lane East Dublin New Build 190 Apart-Hotel Marlin Full Planning Speculative Apartments
Plaza on the
Proposed Hotel Pembroke Street Lower Dublin New Build 108 4-Star Square Ltd Full Planning Speculative Independent
Proposed Travelodge, Summerhill Dublin New Build 364 Budget Smorgs Ltd Full Planning Speculative Travelodge
Maldron
Proposed Maldron Hotel, Kevin Street Dublin New Build 137 3-Star Dalata Hotel Group Full Planning Due 2018 Hotel Group
Kendlebell
Proposed Budget Hotel, Moore Street Dublin New Build 107 Budget Mid-West Ltd Full Planning Speculative Unknown
Hodson
Proposed Hodson Bay Hotel, The Coombe Dublin New Build 263 4-Star Hodson Bay Hotel Full Planning Speculative Bay Group
Proposed Hotel North Wall, Spencer Dock Dublin Mixed-Use 169 4-Star Independent Pre-Planning Speculative Independent
Guestford Ltd Near
Red Cow Hotel Extension Dublin Extension 152 4-Star (Tom Moran) Completion Due 2016 Independent
Clayton
Clayton Hotel Dublin Airport Extension Dublin Airport Extension 367 4-Star Dalata Hotel Group Full Planning Speculative Hotel Group
CG Hotels Dublin
Radisson Blu Hotel, Dublin Airport Dublin Airport Extension 146 4-Star Airport Ltd Full Planning Speculative Rezidor SAS
Dublin Airport
Dublin Airport, T2 Dublin Airport New Build 400 4-Star Authority Full Planning Speculative Unknown
CG Hotels Dublin
Radisson Blu Hotel, Dublin Airport Dublin Airport New Build 168 4-Star Airport Ltd Full Planning Speculative Rezidor SAS
Ronan Group Real
Table 2: Enniskerry
Proposed Hotel Developments
Park Hotel Planned, Dublin & New
Enniskerry Regional
Build 200 4-Star Estate Pre-Planning Speculative Unknown
Proposed Hotel Connacht Laundry Site Galway New Build 136 5-Star Welmary Properties Full Planning Speculative Unknown
Source: AM:PM Hotel Data Intelligence
Table 2: Hotel Developments Planned, Dublin & RegionalIRISH HOTEL INVESTMENT
ENVIRONMENT
Historically the hotel investment market in Ireland Significant Irish Hotel Transactions - 2015 - Q2 2016
has largely focused on Dublin; however, in recent Meanwhile, strong investment activity has been recorded by Dublin-based Star Approximate Average Price
times secondary cities, such as Cork, Limerick PREM Group, following their €30 million funding package with Swedish Sale Date Hotel Location Rooms Rating Price (€) per Room Buyer Buyer Origin
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 Maldron Hotel
Q1-2015 Dublin 297 3-star € 26,900,000 € 91,000 Dalata Hotel Group Irish
Newlands Cross
Ireland attracts strong interest from overseas and Complex, in Naas, Co. Kildare, followed by two further 4-star hotel
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
Wicklow for in excess of €8 million and the 38-room Cahernane House Hotel Waterford Castle Hotel &
Q1-2015 Waterford 20 4-star € 6,000,000 € 300,000 Private Individual Irish
Golf Club
As hotels have become a more established in Killarney for €3 million.
Q1-2015 Adare Manor Limerick 64 5-star € 30,000,000 € 469,000 JP MacManus Irish
asset class and as investors continue to seek out
Q1-2015 Maldron Hotel Sandy Road Galway 104 4-star € 10,500,000 € 101,000 Dalata Hotel Group Irish
suitable institutional grade product, Dublin has During the first half of 2016 hotel investment activity in Ireland has remained
Q1-2015 Clayton Whites Hotel Wexford 157 4-star € 15,000,000 € 96,000 Dalata Hotel Group Irish
witnessed a significant increase in investment from strong, with some 26 single asset hotel transactions recorded, with a total
John Malone
domestic and overseas investors on the hunt for transaction value of approximately €175 million, largely driven by activity Q1-2015 Intercontinental Dublin Dublin 197 5-star € 50,000,000 € 254,000 US/Irish
Partnership/Lalco
quality product in prime locations. Furthermore, outside of Dublin. These hotels include; the 110-suite Staycity Serviced
Q1-2015 Temple Bar Hotel Dublin 132 3-star € 30,000,000 € 227,000 Pyramid Hotel Group USA
the strong trading performance of hotels in Dublin Apartments Dublin for €25m; the 162-room Clarion Hotel Sligo for €13.1m
Q2-2015 Glenroyal Hotel Maynooth 113 3-star € 10,500,000 € 93,000 Comer Group Irish
since 2014, buoyed by a strong increase in and the 158-room Clarion Hotel Limerick for €16million. Meanwhile, the
Q2-2015 Premier Inn Dublin Airport Dublin 155 Budget € 11,000,000 € 71,000 Kirkland Investments Irish
demand from domestic and overseas visitors, second half of 2016 has already witnessed the €92 million sale of the iconic
Balrath Investments
together with the limited supply growth have further 323-bedroom, four-star, Gresham Hotel to the Spanish hotel firm RIU Hotels Q3-2015 Grafton Capital Hotel Dublin 76 3-star € 12,000,000 € 158,000 Irish
Ltd
helped underpin hotel transactional activity. & Resorts, outbidding Irish hotel group TifCo and generating a profit of almost
Abu Dhabi
€60 million for from the National Asset Management Agency which purchased Ballsbridge & Clyde Investment
Q3-2015 Dublin 585 3-star € 180,000,000 € 308,000 Middle East
Court Hotels Authority/Chartered
In 2015, the Irish hotel investment arena was the asset from the former Anglo Irish Bank for €35 million.
Land
dominated by one key player, Dalata Hotel Group,
Q4-2015 Kilkenny Hibernian Hotel Kilkenny 46 4-star € 7,000,000 € 152,000 iNua Hospitality Irish
with the acquisition of 15 hotels in Ireland and A surge of investment activity for Dublin is expected for the second half
Q4-2015 Dawson Hotel Dublin 36 4-star € 17,000,000 € 472,000 Tetrarch Capital Irish
the UK for a total consideration of €558.8 million, of 2016, with a number of high profile hotels under negotiation and due
Eagle Resort
thereby allowing the Group to significantly scale to complete before the year end. Such high profile deals include the Q4-2015 Castlemartyr Resort Castlemartyr 103 5-star € 16,000,000 € 155,000 UK
(Holdings) UK
up its operations and in particular raise its market 501-room Doubletree by Hilton Hotel, Dublin (the former Burlington Hotel), Q4-2015 Clarion Hotel Cork Cork 198 4-star € 35,100,000 € 177,000 Dalata Hotel Group Irish
profile in the Dublin market. The acquisitions with the German asset manager DekaBank emerging as the preferred
Q1-2016 Tara Towers Hotel Dublin 111 3-star € 13,160,000 € 119,000 Dalata Hotel Group Irish
consolidated the group’s position as the largest bidder for the hotel, with the Private Equity firm Blackstone seeking offers
Emerald Investment
Q1-2016 Hilton Dublin Airport Dublin 166 4-star € 10,000,000 € 60,000 UK
hotel operator in Ireland, operating approximately over €180m (€359,000 per room), thereby more than doubling its investment Partners
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 4-star € 13,120,000 € 81,000 Dalata Hotel Group Irish
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 74 4-star € 8,000,000 € 108,000 PREM Group Irish
Dublin, Galway, Cork and Wexford, the majority of the sale. Q2-2016 DoubleTree by Hilton Dublin 501 4-star € 180,000,000 € 359,000 Blackstone Group USA
of which have been rebranded under either the
Podium Hospitality
Q2-2016 Pillo Hotel Ashbourne Ashbourne (Irl) 148 4-star € 11,000,000 € 74,000 Irish
Maldron or Clayton hotel brands. Following Meanwhile the surge of hotel transactions in Dublin is expected to be further Ltd
further acquisitions in the first half of 2016, of bolstered with the sale of the Fitzpatrick Lifestyle Hotel Group portfolio, Q2-2016 Village at Lyons Celbridge 20 4-star € 6,000,000 € 300,000 Private Individual Irish
the 7,717 rooms under Dalata management, comprising three hotels (The Spencer, The Morgan and The Beacon), Staycity Serviced
Q2-2016 Dublin 110 Apts € 25,000,000 € 227,000 Independent Irish
54% of the portfolio is owned, 31% leased thought to be seeking offers over €130 million. Apartments
and 15% managed. Q2-2016 Maldron Beasley Street Cork 121 4-star € 10,200,000 € 84,000 Dalata Hotel Group Irish
Source: Knight Frank Research
Table 3: Significant Irish Hotel Transactions – 2015 – Q2 2016CONCLUSION AND OUTLOOK 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 site acquisition and appraisal advice, lease
exchange rate movement, targeted marketing best hotel investment opportunities in the and management contract negotiation
campaigns, the reduced rate of VAT on tourism UK, Ireland and overseas. • Marketing campaigns
and the perception of Ireland being a safe • 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 business rates and lease advisory
continued economic recovery in Ireland and to the established national and international investors. • Leisure and cottage complex consultancy
country’s main source markets. • Market research – UK and international
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 performance trends.
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.
challenges and uncertainty ahead following the EU
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: philippa.goldstein@knightfrank.com residential offices. Our international capabilities
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 KAREN CALLAHAN PETER ROWAN
Head of Hotels & Healthcare Partner – Head of Hotel Valuations Partner – Head of Hotel Agency 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 T: +353 1 237 4512
E: julian.evans@knightfrank.com E: ian.elliott@knightfrank.com E: alex.sturgess@knightfrank.com E: karen.callahan@knightfrank.com E: peter.rowan@ie.knightfrank.comYou can also read
