THE IRISH HOTEL MARKET - Knight Frank

 
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THE IRISH HOTEL MARKET - Knight Frank
THE IRISH HOTEL
   MARKET
THE IRISH HOTEL MARKET - Knight Frank
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.
THE IRISH HOTEL MARKET - Knight Frank
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
THE IRISH HOTEL MARKET - Knight Frank
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
THE IRISH HOTEL MARKET - Knight Frank
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 Performance
200
             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 Hold
New
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 & Regional
IRISH 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 2016
CONCLUSION 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.com
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