Another hot year for Irish hotel sales as 55 change hands

Dublin’s hotel occupancy rate has been the highest ever in 2016, at 82%

Dublin’s iconic Gresham Hotel: New owner Riu Hotels and Resorts, which bought the O’Connell Street institution for €93m, has planning permission for 140 additional bedrooms. Photograph: Nick Bradshaw

Dublin’s iconic Gresham Hotel: New owner Riu Hotels and Resorts, which bought the O’Connell Street institution for €93m, has planning permission for 140 additional bedrooms. Photograph: Nick Bradshaw

 

The best year for selling hotels in Ireland was 2015, when 63 properties changed hands for €710 million, a figure that seemed unlikely to be beaten in 2016. But it has turned out to be another bumper year, said John Hughes of CBRE Hotels.

This year 55 hotels have changed hands for €700 million-plus, said Mr Hughes. He added that International buyers are attracted to Dublin because the RevPAR (revenue per available room) has continued the momentum from 2014 and is now up to 23 per cent.

The year produced some major sales, with lots of interest in acquiring Irish properties by international hotel groups and investment managers. For example, the Blackstone Group doubled its money on the sale of the DoubleTree by Hilton Hotel to German Deka Investment Fund for about €180 million.

Having purchased the DoubleTree in 2012 for €67 million and invested a further €20 million, Blackstone walked away with about €90 million. Dalata is now managing the facility, renamed Clayton Hotel Burlington Road.

In a strong bidding contest, Dublin’s stately Gresham Hotel on O’Connell Street drew €93 million from Spanish group Riu Hotels and Resorts. The Gresham, which has planning permission for 140 additional bedrooms and conference facilities, has been renamed Riu Plaza Gresham Dublin.

Hotelier Paul Fitzpatrick sold his three Fitzpatrick Lifestyle hotels in Dublin for about €150 million. The Beacon, Morgan and Spencer were acquired by the John Malone Partnership, which includes John Lally and Paul Higgins. Other hotels in the partnership include the Westin and the Intercontinental Ballsbridge.

Occupancy highs

Hotel occupancy in Dublin has been the highest ever this year, at 82 per cent, and will probably continue into 2017 due to the shortage of hotel beds. According to hotel benchmarkers STR Global, average Saturday night occupancy in Dublin during the past 12 months was 89.6 per cent.

According to a report for Fáilte Ireland by Fitzpatrick Associates, the shortfall in accommodation has been tempered by Airbnb, which is providing some 782 rooms into the market every day. This would be equivalent to four 200-bedroom hotels.

Only four new hotels have opened in the past eight years: the Gibson, the Temple Bar Inn, the Dean and the Marker. This year one hotel closed (the 182-room Clyde Court) and one opened (the 198-bed Holiday Inn Express on O’Connell Street). The net gain is only 16 extra rooms in a city crying out for 5,000.

Tifco closed a deal to acquire the 12 Travelodges in Ireland, making it the second largest hotel group in the country after Dalata. Tifco had to wait for permission from the Competition and Consumer Protection Commission because it already owns seven hotels and manage seven others

Outside Dublin, a few big sales reinforced the growth expectation for tourism. This year will be the best year ever for visitor numbers, with more than 10.5 million. Expectations for 2017 foresee further growth of 4.5 per cent.

In and around Dublin, plans are afoot for up to 80 individual hotel projects. Some are new builds and others are extensions to existing properties. The largest hotel will be at Dublin Airport T2, with more than 400 rooms.

Other big projects are a hotel at the Convention Centre Dublin (300 bedrooms), the Coombe (260 bedrooms) and a selection of 200-room new builds in Spencer Dock, Bow Lane, Charlemont Street, O’Connell Street, and Mill Street. Most of these will not come on stream before 2018 or 2019.

North’s largest hotel

In Belfast, Hastings, the largest hotel group, acquired Windsor House and has revised plans to provide 304 rooms in the 23-storey building, up from the original 200 rooms. It will be the largest hotel in Northern Ireland.

Lyrath Estate outside Kilkenny city sold for well in excess of its €20 million guide price. Another country hotel and resort, the 1,250-acre Farnham Estate in Cavan, was sold for more than €22 million.

“You could not dream of putting together such a property for that price,” said Tom Barrett of Savills. He cited “a recovery happening in rural Ireland, but we will never be complacent again in this industry”.

Other country properties that have changed hands this year are the Clarion in Sligo for €13 million to Dalata; the Pillo in Ashbourne to Podium Hotels for €11 million; and Tulfarris Estate at Blessington to PremGroup for €8 million, a good deal higher than the asking price of €5 million.