2013 was a bumper year for hotel sales according to property consultants, Savills Ireland. In its latest report on the hotels sector, Savills notes that this was driven by an underlying improvement in tourism performance.
2013 was a bumper year for hotel sales according to property consultants, Savills Ireland. In its latest report on the hotels sector, Savills notes that this was driven by an underlying improvement in tourism performance;
Economist and Director of Research at Savills Ireland Dr. John McCartney said;
“2013 was a strong year for tourism with the number of visitors from our key markets in Britain and North America rising strongly. This fundamentally stems from a robust recovery in both economies, and from the success of events such as the Gathering.”
However, McCartney notes that domestic tourism has also contributed to this improvement;
“Discretionary spending suffered a severe blow during the recession. However, led by a strong recovery in the labour market, household disposable incomes are now beginning to edge up again. As a result, consumer sentiment is at its highest level for almost seven years, the savings ratio has come right down, and people are once again beginning to contemplate holiday breaks”.
According to Tom Barrett, Director of Hotels & Leisure at Savills, this has led to improved trading in Ireland’s hotels;
“The Dublin market has maintained its status as the strongest performer in the Irish hotel sector and one of the best performing capital cities in Europe. RevPAR (revenue per available room) witnessed growth of 11% to €71 per room in 2013 (STR Global). Regional cities also experienced positive RevPAR growth with Cork up 10% to €52, Galway up 9% to €53, Kilkenny up 12% to €50 and Limerick up 7% to €30 (Trending.ie). Outside of the cities a recovery has begun, albeit at a slower pace”.
In turn, this has driven investor demand for hotel assets, with 39 hotels being traded during the year in transactions worth over €200m. Savills, which was involved in almost 80% of hotel deals in the €5m+ bracket, reports that both international and domestic buyers are continuing to show strong interest in Irish hotel assets. Tom Barrett continued;
“International buyers continue to show interest in prime city centre hotels and trophy assets in regional locations, while domestic buyers are more focused on regional stock. This is a trend we expect to continue this year as more stock comes to market. A number of properties have already been put up for sale, and NAMA has recently announced its intention to bring further hotel assets to the market this year”.
Barrett also noted improved bank lending conditions and capital investment as a positive indicator for the sector;
“After some time, AIB and Bank of Ireland are now actively involved in the hotel sector again. Both banks are demonstrating a willingness to lend to domestic and international buyers of hotel assets.”
He continued;
“Another positive indicator is the number of sold hotels that are undergoing extensive refurbishments. For example, following its sale to a Russian buyer last spring, the Morrison Hotel underwent a €7m Capital Expenditure programme. The Double Tree Hotel on Dublin’s Burlington Road is currently being transformed at a cost of €16m, while a €20m refurbishment programme is also underway at Ashford Castle in Mayo.“
Properties launched in 2014 by Savills include Oriel House Hotel and Blarney Hotel & Golf Resort, both in Cork, with asking prices of €6m and €2.5m respectively. The Charleville Park Hotel in Cork was also launched recently with an asking price of €3.75m.