Intercontinental hotel’s arrival shows brands are back in town

There has been a steady cranking up of activity in the property side of the hotel market, especially in Dublin, for close to two years. Many top hotels have changed hands, such as John Malone’s €65 million purchase of the Westin Dublin or Blackstone’s €67 million purchase of what was the Burlington.

The numerous property deals – €600 million is the countrywide estimate for 2014 – are as much symptomatic of the recovery in general commercial property values as they are of the impressive recovery in tourist numbers and conference bookings.

A better barometer, however, than property prices of the operating performance of the hotel industry, is the interest of big international hotel companies in expanding their portfolios here.

Currently, the brands are the bees and Dublin is the honeypot.

The news that Intercontinental Hotels Group has signed a deal to hang its premier brand over the door of the Four Seasons in Ballsbridge is proof that, viewed from outside of this State’s borders, Ireland is well and truly back in vogue. The big hotel brand owners and operating companies – the Hiltons, Intercontinentals and Hyatts of the world – don’t earn a bean from booming property prices. They need real economic activity to turn a buck: tourist bookings, incentive travel, corporate bookings etc.

IHG also wants to bring in the Hotel Indigo brand, while it is scouting locations for further Holiday Inn and Holiday Inn Express sites. When asked on Monday why it was attracted back to Ireland, IHG cited ballooning revpar (revenue per available room) as the reason.

The US consumer economy is back on its not inconsiderable feet, so the big US hotel brands have a ready-made well of business to mine via their extensive booking systems.

Fáilte Ireland says 2015 will be a bumper year for tourists. The UK market and the recovery in the domestic economy should ensure continued growth in the corporate bookings sector.

But in industry that is being stimulated with a taxpayer-backed Vat reduction scheme, what will this flurry of activity mean for hotel prices? The only way is up.