A number of international brands are keen to expand in the Irish market, says CBRE
Between foot and mouth disease, Sars, ash clouds, recessions and Covid , Ireland’s hoteliers have proven flexible and resilient. Whilst many had assumed that the pandemic would provoke insolvency in the industry, in fact, the hotel business is bouncing back remarkable strongly.
For an expert view, I chatted with Paul Collins, head of hotels Ireland with CBRE, and he confirmed a strong recovery in both the operating side of hotels, and the demand for hotels as investments.
Mr Collins told me that regional hotels had weathered Covid far better than the cities, bolstered by a “captive audience” domestic market and a higher spend per guest.
The going in the cities was “really tough,” but the long-term ownership structure – predominantly families and corporate proprietors – together with six strong years trading pre-pandemic, means that CBRE does not anticipate insolvencies. Indeed, Dublin hotels, he tells me, have come “quickly out of the blocks,” although trade is not yet back to 2019 levels.
One barometer of returning business, he says, is the fast return to travel, with the DAA reporting 4.2 million people through Dublin airport in the first quarter and many US routes reopening.
When appraising hotels, CBRE uses a 10-year model and they are predicting a return to “stabilisation” for hotels within 12-24 months in the cities, while most regional hotels have already recovered to pre-Covid levels.
Indeed, the market is in a strong expansionary mode. For example, Dublin city and county has 25,000 operating hotel bedrooms, six thousand of which were added since 2016.
There are a further 2,750 bedrooms “on-site” and opening from now to 2024, providing Dublin with a modern stock of hotels in competing with the traditional rival cities of London, Paris, Edinburgh and Amsterdam.
Dublin had an occupancy rate in excess of 80pc pre-pandemic, which Mr Collins says was the third-highest in Europe. He does not see a risk of oversupply in Dublin, and says that the new stock is a “catching-up” process.
Reflecting this recovery is a remarkable level of investment in hotels, from what is known as the “capital markets” side of the business. In 2018 and 2019, Mr Collins tells me, transaction volumes, that is of operating hotels, and investment sales of hotels, were €600-€700m a year.
In the first four months of this year, approximately €100m of deals were done and Mr Collins is predicting a year-end figure of €500m, and possibly more. The biggest transaction this year is likely to be the Irish Travelodge portfolio, which is on the market for approximately €250m.
There is an extraordinary range of hotel operators and corporate and private financiers active in the market.
Examples include Thomas Roggla’s (The TMR collection) purchase of 15 hotels, from Aghadoe Heights to The Metro, Ballymun, and the Irish investment group MHL which has bought several properties including the Powerscourt Hotel in Co Wicklow, the Intercontinental, Westin, Morgan and Spencer hotels in Dublin, and the Galmont, Galway.
FBD Holdings has bought four hotels and a Singaporean investor, Stanley Quek has acquired The Sheen Falls in Kerry, Castlemartyr in Cork and several hotels in Dublin. Established Irish hotel owners such as the Neville Group and Barry English, are also active.
Mr Collins tells me that a swathe of international brands are keen to expand in the Irish market, including Hampton by Hilton, Ruby, CitizenM, Motel One, Premier Inn, Sonder and several others.