€3.25m for Rathmines budget hotel
With the hotel industry among the sectors hardest hit by the property crash and the economic slowdown, the sell off of a range of “distressed” hotels is due to be stepped up early in the new year. In the meantime commercial agents CBRE are seeking a buyer for a hotel investment on Lower Rathmines Road, Dublin 6, with the promise of a net return of 10.3 per cent.
Natalie Brennan of CBRE is quoting in excess of €3.25 million for the Travelodge hotel, which is being sold on the instructions of Paul McCann, of Grant Thornton, who was appointed receiver by the British Lloyds banking group.
The 54-bedroom budget hotel is producing an annual rent of €400,000 under a 35-year lease, which has 28 years left to run. The lease is subject to five yearly rent reviews, with a guaranteed uplift of 15 per cent or at a higher figure in line with the Consumer Price Index. The next review is due in 2015.
The Travelodge Group operates more than 500 budget hotels in Ireland, the UK and Spain. It has 11 hotels in this country: four in Dublin, two in Limerick and one each in Galway, Waterford, Cork, Belfast and Derry.
The Rathmines hotel is located on three levels over a row of shops, with the entrance foyer and reception area on the ground floor. A lift serves the upper floors.
Travelodge offers single, double, twin and triple rooms, which come with ensuite bathrooms, internet access and televisions. Single room rates range from €49 to €75 per night. The breakfastroom and kitchen are located on the first floor, with a meeting room/ boardroom on the third floor.
Brennan says CBRE is expecting strong interest in the hotel because of its central trading location, attractive rent roll and the fact that the lease has a long period to run.
Earlier this year, Lloyds also appointed receivers to four other hotels owned by developer Bernard McNamara. The Burlington Hotel in Dublin has attracted considerable overseas interest; Kerry’s Parknasilla and the Cork International Airport hotels are under offer; while Dublin’s rundown Ormond Hotel on the city quays will be more difficult to shift.
Paul Collins, who runs CBRE’s hotels division, says there has been a noticeable increase in the level of sales activity this year, with 15 hotels changing hands and 10 more currently under offer.
Most of the provincial hotels were sold to Irish cash buyers, he says, although there is increasing interest from overseas now that prices have become more competitive.
In Dublin much of the interest has come from international parties encouraged by resurgent trading in the city, says Collins. There have been 25 months of growth, he says, taking into account a combination of bedroom occupancy and average room rates. Four of the last five hotel sales in Dublin were to overseas buyers