Hotels & Leisure Market in Minutes May 2015 Savills World Research Ireland Hotels 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. 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. ■ GRAPH 1 Trips Taken in Ireland by Origin of Visitor Source: CSO 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2008 2009 2010 2011 2012 2013 2014 No. of Trips (000s) Overseas Domestic Ballsbridge Hotel – Part of Project Trinity launched Q2 2015
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Hotels & Leisure Market in Minutes May 2015
Savills World Research Ireland Hotels
Economic OverviewIreland 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.
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. ■
GRAPH 1
Trips Taken in Ireland by Origin of Visitor
Source: CSO
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2008 2009 2010 2011 2012 2013 2014
No.
of T
rips (
000s
)
Overseas Domestic
Ballsbridge Hotel – Part of Project Trinity launched Q2 2015
02 Ireland Hotels
Hotel No. of Rooms Price (€m) (Approx.) Buyer Nationality Price Per Room
(€000’s Approx.)Jurys Inn Group* 7,309 909 US 124Bewley 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
Market in Minutes | Ireland Hotels
Source: Savills Note: *Includes 6 Irish hotels out of 31 in total **Includes 5 Irish hotels out of 9 in total
TABLE1
Notable Hotel Transactions January – April 2015
Hotel TransactionsWith 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
03 Ireland Hotels
Market in Minutes | Ireland Hotels
Dublin Hotel Performance 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%.
Hotel BrandingAs 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. ■
■ 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.
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