Hotel room shortage spurs a new construction round
Published 05/11/2015 | 02:30
As many as 3,500 new hotel bedrooms are in the development pipeline for Dublin and about 2,500 of these may be provided in 13 new hotels according to Daniel O'Connor of agents JLL. The others would come from extensions including those already underway and in the planning pipeline.
These developments if they were to materialise could help to attract back the web summit before the end of the decade and boost Dublin's capacity as a conference and city breaks destination. The extra bedrooms would also be vital if Dublin wishes to succeed in its joint bid with Scotland to host the 2023 Rugby World Cup. However it has been estimated that even without the world cup, Dublin needs up to 5,000 extra beds to accommodate demand.
Mr O'Connor is also concerned that not all of the 3,500 will be delivered because of problems with planning permissions and the cost of development finance. Two of the 13 projects have been refused planning permission. Furthermore the cost of funds for hotel developments is much more expensive than for acquisitions of existing hotels.
"While margins of 4 to 5pc may be charged for funds for purchasing an existing hotel, rates double to 8 to 10pc for finance for construction work on an extension," he says.
On the other hand developers who opt to build hotels in the docklands Strategic Development Zone may find it easier to get planning permission and as a result funding may prove more readily available for those projects.
In a survey of existing docklands accommodation, JLL counted 1,157 hotel guestrooms in Docklands spread among only five hotels of four star quality. However with over 4 million sq ft of offices in Docklands this equates to only one guestroom per 3,457 sq ft of built office stock "which is well below the Dublin business park / corporate location average of one guestroom per 2,000 sq ft of office stock," O'Connor says.
This survey does not allow for the extra demand for the thousands of people who attend events in the three major docklands venues: The Convention Centre, Three Arena at the Point and Bord Gais Energy Theatre.
The docklands shortage is set to become even worse when some of the numerous office projects currently at planning stages within the North Docklands are developed. These include Ballymore Oxley's 650,000 sq ft of offices and over 200 apartments in Project Wave; Exo 224,500 sq ft office building at the Point Village and an office led development at Spencer Dock extending to 510,000 sq. ft and including a 169 guestroom hotel;
In addition a number of office developments are also in the pipeline for south docklands.
Earlier this year O'Connor predicted that the north docklands would attract a number of new hotel projects partly because its SDZ planning zone facilitates fast track development but also because development sites are not as expensive as in south docklands where site values are driven by office plans.
Since he made those predictions a company linked to Paddy McKillen has signalled its intention to lodge plans next month for a new 150 bedroom hotel on the site of a former warehouse at North Wall Quay close to the Central Bank's new headquarters and at the front of the Project Wave site.
These are in addition to plans for the 169 bedroom Spencer Dock hotel on the former British Railway Hotel site on North Wall which is being sought by David Hughes and Luke Charleton of Ernst & Young, receivers to Spencer Dock Development Company.
Meanwhile The Irish Infrastructure Fund, which is managed by Irish Life Investment Managers and AMP Capital, has acquired the license to build and operate a 330 bedroom hotel on a site to the rear of the Dublin Convention Centre. The fund is backed by a €250 million cornerstone commitment from the Ireland Strategic Investment Fund, formerly the state owned National Pension Reserve Fund.
Another semi-state company, The Dublin Airport Authority may provide another of the new hotels, this one accommodating 400 bedrooms at a site near Terminal 2 in Dublin Airport.
Also on Dublin's northside work is due for completion in the Spring of next year on a 198 bed new generation Holiday Inn Express Hotel in Findlater House, O'Connell St.
Nearby, to the rear of Clerys department store, property investor Tetrarch has lodged an application to convert another office block, the three storey Sackville House, into a 158 bedroom boutique hotel at Sackville Place and Marlborough St. and open it by 2017.
O'Connor points out that sites such as Sackville Place are likely to be targeted by hotel developers because they are convenient to all the amenities and the central business district while also being less expensive than the prime south side office sites.
Two other hotels are also possible in O'Connell St, one at the Clerys site and the other on the Carlton site.
To the west of the Carlton site, Kendlebell Midwest Ltd is awaiting a decision from Bord Pleanala on its plans for a 107 bedroom seven story hotel at 17, 18, 19 Moore Lane, and 30 Moore Street.
Meanwhile on the southside, the area bordering Dublin 2, 6 and 8 has seen a number of hotel plans. U and I Group, formerly known as DevSec is to develop a 181 bedroom four star hotel on the site of the former St. Ultan's Hospital, at Charlemont Street. Construction Information Services estimates the build cost at €20.6m.
This is within 10 minutes walk from a site on Camden St where the UK pub group Wetherspoons has received Bord Pleanala permission for a 165 bedroom hotel.
Closer to town on the same arterial route, there are plans for a 206 bedroom hotel on the site of Fanagans undertakers at Aungier St.
Meanwhile in Dublin 8 the Dutch building firm BAM has planning permission for a 188 bedroom hotel at the Tenters site in Blackpitts, to the west of Clanbrassil St.