hotel-market-in-minutes-q2-2015

Savills World Research
Ireland Hotels
Hotels & Leisure Market in Minutes
May 2015
Economic Overview
Ireland was Europe’s fastest growing
economy in 2014 with GDP expanding
by 4.8%. This was the sharpest rate
of increase since 2007 and reflects the
combination of continued strong net
exports growth (10.4%) in addition to
a return of domestic demand growth
(2.9%) for the first time in seven
years. Moreover, according to the
Dublin Economic Monitor, consumer
sentiment in the city is at its highest
point since the series began in
2003. In turn this has led to a strong
improvement in the labour market with
nearly 30,000 new jobs (net) created
in Ireland in 2014. This brings the total
number of new jobs added since the
Q1 2012 trough to 114,000.
Ballsbridge Hotel – Part of Project Trinity launched Q2 2015
GRAPH 1
Trips Taken in Ireland by Origin of Visitor
18,000
16,000
No. of Trips (000s)
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2008
2009
2010
Overseas
Source: CSO
2011
Domestic
2012
2013
2014
The tourism sector has been a big
winner in the recovery accounting
for nearly a fifth of total employment
growth since Q1 2012. Strong GDP
growth in Ireland’s main tourist markets
(2.4% in the US and 2.8% in the UK in
2014), a significant decline in the value
of the Euro (-22.2% vs the Dollar and
-13.1% vs Sterling in the year to April
22nd 2015) and the reduced VAT rate
on tourism (13.5% to 9% in July 2011)
have all contributed to increased
numbers of foreign visitors. Over
7.6m non-residents visited Ireland in
2014, the highest number since 2008.
In addition, a further 14% growth in
visitor numbers was recorded in Q1
2015. In terms of trips taken by Irish
residents, there has also been positive
momentum. Improvements in the
consumer economy including real
wage (2.6%) and consumption growth
(1.1%) contributed to 7.4m domestic
trips in 2014, an increase of 3.4% on
2013 and the highest in five years.
Moreover, the number of domestic
trips was up a further 13.2% in Q1
2015. ■
Market in Minutes | Ireland Hotels
TABLE1
Notable Hotel Transactions January – April 2015
No. of Rooms
Price (€m)
(Approx.)
Buyer Nationality
Price Per Room
(€000’s Approx.)
Jurys Inn Group*
7,309
909
US
124
Bewley Moran Hotels**
2,506
453
Irish
181
InterContinental, Dublin 4
197
50
US/ Irish
254
Adare Manor, Limerick
62
30
Irish
484
Temple Bar Hotel, Dublin 2
129
28
US
217
Holiday Inn, Belfast
170
26
Irish
153
Clayton Hotel, Galway
195
17
Irish
87
Whites of Wexford, Wexford
157
15
Irish
96
Pillo Hotel, Galway
104
11
Irish
106
Etap Hotel, Belfast (Investment)
146
9
International
62
Muckross Park, Killarney
67
7
Irish
104
Waterford Castle, Waterford
19
6
Irish
N/A
Ardmore Hotel, Dublin 11
96
5
Irish
52
Charleville, Co. Cork
91
4
Irish
44
Maldron, Wexford (Investment)
108
3.5
Irish
32
Ramada, Portrush
69
3
UK
43
Clybaun Hotel, Co. Galway
92
3
Irish
33
Hotel
Source: Savills
Note: *Includes 6 Irish hotels out of 31 in total **Includes 5 Irish hotels out of 9 in total
Hotel Transactions
With more trips being taken, the
demand for hotel accommodation
is strengthening and this is feeding
through to an increase in hotel
transactions. In 2014, almost sixty
hotels changed ownership in deals
worth €440m, double the value
of 2013 transactions. In the first
months of 2015, two notable deals
have already been completed with
Lone Star purchasing the Jurys Inn
Group for over €900m and Dalata
completing its purchase of nine
Moran Bewley hotels. This is in
addition to over €200m of individual
hotel sales. Moreover, there
were two substantial off-market
transactions - the InterContinental
Hotel in Ballsbridge (acquired by
John Malone) and the Holiday
Inn
Belfast
(another
Dalata
acquisition). This activity excludes
loan/debt transactions which have
also been a feature of the market.
Clyde Court Hotel - Part of Project Trinity launched Q2 2015
02
Ireland Hotels
Market in Minutes | Ireland Hotels
RevPAR Growth in 2014
12
10
8
6
4
2
0
As a result of the increase in hotel
transactions over the last couple
of years, there has been significant
change in the ownership structure
of many assets. Flowing from
these changes many hotels are
being rebranded with others being
subsumed into existing larger hotel
chains. Some notable examples
are detailed below.
Dalata is to rebrand eight Irish and
five UK hotels under the Clayton
brand, originating from the Clayton
Galway. The brand will be attached
to larger urban properties with
a focus on midweek corporate
customers. The existing Maldron
brand will have fourteen properties
with a greater range of locations
and more of a focus on leisure
business.
In January, the Four Seasons hotel
in Dublin was renamed as the
InterContinental Dublin.
This is in addition to the rebranding
of other hotels over the last year
including the Burlington Hotel
which was renamed as DoubleTree
by Hilton following extensive
renovation in 2014. ■
Carlton Kinsale Hotel launched by Savills Q1 2015
03
Ireland Hotels
Paris
Hotel Branding
Rome
Source: STR Global
London
Berlin
A'dam
Madrid
Dublin
A combination of strong demand
and limited new supply has resulted
in an increase in occupancy at
Dublin’s hotels, from 67% in 2010
to approximately 78% in 2014.
According to PwC, this is the 4th
highest occupancy in Europe
and highlights the popularity of
Dublin with both business and
leisure visitors. With occupancy
approaching and in many cases
exceeding 80% in Dublin the
average daily rate (ADR) has
increased from €77 in 2010 to
approximately €96 in 2014. Along
with the traditional calendar of
major events in Dublin, recent
additions such as Web Summit
have attracted additional visitors to
the city and as a result Dublin was
the best performing city in Europe
in terms of revenue per available
room (RevPAR) growth in 2014, up
11.3%.
GRAPH 2
% Change Y/Y
Dublin Hotel Performance
Market in Minutes | Ireland Hotels
2015 OUTLOOK
■ Forecasts for strong economic growth in Ireland (4.4%), the UK (2.5%) and the US (3.5%) in 2015 will support
a further increase in trips taken in Ireland (both domestic and foreign).
■ Quantitative Easing (QE), in effect since March 9th 2015, will continue to put pressure on an already declining
Euro. This will be particularly beneficial for visitors from non-Euro Area countries who will get better value for
money when visiting Ireland.
■ As visitor numbers continue to increase, hotel occupancy, ADR and RevPAR are likely to continue to grow and
this, in turn, will support hotel transactions going forward.
Savills Hotels & Leisure & Research Teams
Please contact us for further information
Tom Barrett
John McCartney
Director of Research
+353 (0)1 618 1427
[email protected]
Brooke Sheehan
Associate
+353 (0)1 618 1440
[email protected]
Denis O’Donoghue
Aishling Waldron
Aaron Spring
Proinsias Mac Fhlannchadha
Padraic Reidy
Director Hotels & Leisure
+353 (0)1 618 1415
[email protected]
Associate
+353 (0)1 618 1483
[email protected]
Senior Surveyor
+353 (0)1 618 1446
[email protected]
Hotel Analyst
+353 (0)1 618 1304
[email protected]
Associate
+353 (0) 21 490 6118
[email protected]
Anna
Gilmartin
Economist,
Research
Surveyor
+353 (0)1 618
1448
Savills Ireland
[email protected]
+353 (0) 618 1460
[email protected]
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Ireland Hotels