The Irish Hotel Market Introduction

THE IRISH HOTEL MARKET INTRODUCTION

This article presents an overview of the Dublin is host to a number of strategically important European “The first half of 2016 has been a very rewarding period for Dalata Hotel Group, with trading hotel performance for the Irish hotel market Headquarters, such as Google and Facebook. Ireland’s economic outlook ahead of our expectations. Prospects remain very strong for the Dublin hotel market and looking at the recovery following the depths remains strong but vulnerable to economic shocks. The UK’s vote to leave regional cities in Ireland. Despite the outcome of Brexit, to date we have not seen any impact of a severe economic crisis, to a period the EU poses a serious threat to the Irish economy in light of the strong on trading, but we remain highly attentive and alert to ensure we react quickly.” of buoyant hotel trading since 2014 and trade and financial linkages with the British economy. Nevertheless, upside also exists for Ireland, as it is possible that a number of businesses and which has continued strongly in the first PAT MCCANN European headquarters may choose to relocate to Dublin in order to retain half of 2016. However, with Great Britain Dalata Hotel Group PLC, Chief Executive Officer and Northern Ireland representing 40% of a presence in the EU. Following the uncertainty in the aftermath of the EU tourist arrivals to Ireland in 2015, we review Referendum, according to the Central Bank of Ireland, the outlook for the the potential impact on Ireland’s inbound Irish economy continues to remain favorable, with unemployment forecast tourism and hotel market, following the to continue to decline and GDP growth in 2016 expected to achieve UK’s decision to withdraw from the EU. This steady growth of 4.9% and 3.6% growth in 2017. In the medium term article undertakes an analysis of the hotel Ireland’s GDP outlook is set to stabilise at around 3%, albeit the economic sector, determining the key operators and performance is dependent on the severity of a slowdown to the UK reviews the growth of domestic brands as economy and to the rest of Europe. Underpinning stability and reducing well as the large indigenous hotel groups, uncertainty are key economic themes going forward, with the ongoing risks expanding through acquisitions and following the UK’s vote to exit the EU likely to have a material impact on the development, as brand association in Ireland Irish economy. begins to become more prevalent. Finally we take a look at how the strong hotel trading performance in recent years has resulted in a surge of hotel transactional activity by both domestic and overseas investors, targeting both Dublin and the regional cities. From these various perspectives, the resilience of the Irish hotel market and its future prospects will be assessed, at a time where the Irish economy is presented with a sudden and very real threat of instability that has ensued following the UK’s vote to end ties with the European Union.

ECONOMIC OVERVIEW Following a protracted period of harsh economic conditions between 2008 and 2012, the tourism sector in Ireland has witnessed positive growth and a strong recovery. The return to overall economic growth in Ireland, improved economic conditions to many of Ireland’s key overseas source markets, trends in exchange rate movements and inflation have all contributed to a buoyant tourism sector since 2014. In 2015 Ireland achieved GDP growth of 7.8%, the fastest growing EU economy recorded. Dublin is globally recognised as a leading location for a range of internationally traded financial, pharmaceutical and ICT companies. DEMAND s)

Between 2010 and 2015 tourism growth 18,000 overseas visitor numbers. Great Britain is the main source market, CAAG 2012-2015 CAAG 2013-2015 CAAG 2014-2015 in Ireland has been very strong, with record 16,000 representing 35% of total international visitation, followed by Continental overseas visitor arrivals achieved in 2015. The rrivals (000 Great Britain 7.1% 8.0% 11.3% Europe at 30%, Northern Ireland at 16% and North America 14%. In A 14,000 proportion of overseas visitors to Ireland has 12,000 Northern Ireland 4.7% -2.6% -12.6% 2015 the volume of visitors from both Continental Europe and North increased from 45% of total visitors in 2010 to America increased and in doing so increased their share of overall 10,000 North America 11.2% 11.6% 12.9% 56% in 2015. Overseas visitors to Ireland have visitor arrivals by 3%. In 2015, Northern Ireland witnessed a decline 8,000 grown by approximately 35% from 5.9m visitors Mainland Europe 8.6% 10.8% 15.7% in visitor arrivals following strong growth the previous two years. 6,000 in 2010 to over 8 million visitors in 2015 and to Country Source 4,000 Other 10.9% 9.4% 11.7% over 9.5 million visitors when including visitors Intercontinental However in the wake of the UK’s vote to leave the EU, tourism is likely 2,000 from Northern Ireland. Particularly strong growth Total Overseas to be largely effected by the impact of Brexit, as a result of the fall in the 0 7.9% 7.4% 8.1% in overseas visitor arrivals has been recorded 2010 2011 2012 2013 2014 2015 Visitors value of sterling, making holidays to Ireland significantly more expensive Source: Fáilte Ireland since 2013, representing an annual average Overseas Visitors Domestic Visitors Source: Fáilte Ireland for UK visitors. In addition, economic uncertainty as a result of Brexit is growth rate of 9.6% and double digit year-on- Figure 1: Overseas & Domestic Tourist Arrivals to Ireland Figure 2: Compound Annual Average Growth Rates to Ireland likely to result in a more cautious approach to discretionary spending year growth from mainland Europe and North (2010-2015) by Source Country and will impact upon visitor numbers, both domestic and from overseas. America of 10.8% and 11.6% respectively. Economic ties on the Irish border between Ireland and Northern Ireland Economic growth in many of Ireland’s key tourism Domestic Arrivals CAGR 2010-2015 0.6% s) will also become a critical issue. As such whilst the implications on tourism source markets have contributed to increased Domestic Arrivals CAGR 2013-2015 2.9% 4000 to Ireland in the long-term are dependent on the terms of engagement demand from overseas tourism, in the UK and Overseas Visitor Arrivals CAGR 2010-2015 9.9% 3,500 negotiated post-Brexit and the importance of common travel between rrivals (000 A the US, GDP growth in real terms averaged Overseas Visitor Arrivals CAGR 2013-2015 7.4% 3,000 Ireland and the UK of critical importance to the Irish economy, in the 2.4% and 2.2% per annum between 2013 Combined Arrivals CAGR 2010-2013 5.2% 2,500 short-term Ireland must be seen to retain its competitiveness and ensure and 2015 respectively. Other factors positively Combined Arrivals CAGR 2010-2015 5.3% 2,000 any negative consequences of Brexit are minimised. Positive initiatives impacting on overseas visitor arrivals include 1,500 by the Irish government, such as its commitment to the Tourism sector improved exchange rates in favour of overseas 1,000 with various financial initiatives including 0% Airport travel tax; retention of visitor arrivals from outside the Eurozone and 500 the 9% tourism VAT rate on hotel accommodation and food; a reduction the perception of Ireland as a safe destination. 0 in excise duty on alcohol as well as the positive promotion of Ireland 2012 2013 2014 2015 This growth in overseas visitors, together with a targeted at key source markets, will all be key drivers of demand in

Domestic trips have also recovered following the stable domestic market is feeding through to an Great Britain North America Mainland Europe the uncertain aftermath that has followed the Brexit vote. Furthermore, economic recession, growing on average 3% increased demand for hotel services, impacting Other Intercontinental North Ireland investment plans such as the €100m fund for the Wild Atlantic Way and each year since 2013, with the domestic market positively on overnight stays and revenue spend. Figure 3: Main Source Countries 2012-2015 plans to commence development of a second runway at Dublin Airport benefitting from increases in disposable income by 2020 are all important initiatives for Ireland in a post-Brexit era. brought about through a combination of reduced SOURCE MARKETS 5% personal taxes and increased employment The proportion of visitor arrivals to Ireland has % 0 3 opportunities as a result of the improved domestic remained relatively unchanged over the past

economy. According to Failte Ireland tourism few years. Visitor numbers for all major source 3

barometer (April 2016), repeat visitors, increased markets have grown strongly between 2014 %

marketing campaigns from local and national and 2015. Factors such as advantageous

tourist boards and private marketing campaigns currency trends, positive economic conditions

have all sought to encourage Irish nationals to take in the source markets and international holidays in Ireland, with the South-West, South- marketing campaigns such as “The Wild East and West of Ireland benefitting from 65% of Atlantic Way” and “The Gathering” have all overnight stays by domestic holidaymakers. all helped strengthen Ireland’s growth in Source: Fáilte Ireland

Great Britain North America Mainland Europe Other Intercontinental North Ireland Figure 4: Main Source Countries 2015 HOTEL SUPPLY

The Irish hotel industry accounts for over 65,000 30,000 500 Branded hotels in Ireland are located predominantly in Dublin or regional city Rooms

Rooms 5,000 250 rooms distributed across 1,156 hotels and hostels, 450 locations, with approximately 54% of hotel room supply in Dublin belonging to 25,000 4,500 with over 80% of bedroom stock operating within 400 a global, regional, national or international brand. Meanwhile in rural locations 4,000 200 No. of Hotels

No. of Rooms 350 the 3-star and 4-star market. The Irish hotel market 20,000 81% of the Irish Hotel Market is dominated by unbranded, independently 300 3,500 remains relatively fragmented with 79% of hotels 15,000 250 operated hotels or unbranded hotels operating as part of a consortia. 3,000 150 independently owned and operated, collectively, 200 2,500 10,000 this represents almost 60% of total room supply. 150 Over 80% of Irish bedroom supply operates within the 3-star and 4-star 2,000 100 100 5,000 market; and whilst the 2-star and Hostel market represent 30% of total hotel 1,500 50 1,000 50 Of the branded hotel bedroom stock (including 0 0 supply, they are significantly smaller in size, comprising less than 10% of 500 hotels operating under a consortium), 36% of BUDGET 2-STAR 3-STAR 4-STAR 5-STAR HOSTEL APTS bedroom stock. Hotels operating under a global or international flag are also 0 0 rooms are operated under a global or international INDEPENDENT BRANDED NUMBER OF HOTELS significantly larger in size, averaging over 150 bedrooms. National Irish hotel DALATA HOTEL GROUP CARLSON REZIDOR HOTEL GROUP TETRARCH CAPITAL HILTON WORLDWIDE (BLACKSTONE) CHOICE HOTELS INTERNATIONAL BONNINGTON GROUP AMARIS HOSPITALITY (LONE STAR) INTERCONTINENTAL HOTELS GROUP TIFCO HOTEL GROUP PREM GROUP WHITES HOTEL GROUP SMORGS TESTINATION KILLARNEY GROUP IRISH COURT HOTELS CARA HOTEL GROUP MCENIFF HOTELS PEMBASE HOLDINGS CORNER GROUP WILLIAM NEVILLE & SONS O’DONOGHUE RING HOTELS TALBOT HOTEL GROUP brand, 42% are operated under an Irish national Independent Branded Source: AM:PM Hotel Data Intelligence brands average around 115 rooms in size, whilst independent hotels average Nuber of Hotels brand and 22% of the bedroom supply operates less than 50 rooms in size. as part of a consortium. Figure 5: Number of Hotels and Bedrooms by Star Rating

We highlight the top hotel brands and top hotel operators in Ireland, ascertained by the number of 4% hotel bedrooms. The Dalata Hotel Group, operates 17 %

both the Maldron Hotel and Clayton Hotel brands Regional Dublin

3 Average Hotel Size Source: AM:PM Hotel Data Intelligence and manage a portfolio of partner hotels, making %

them the largest hotel operator in Ireland, with % Figure 8: Major Hotel Operators in Ireland by Number of Rooms,

5 1,800

some 30 hotels and approximately 4,900 rooms Dublin & Regional 7

300 Rooms

% 1,600 in Ireland. Following the Group’s IPO listing in 250 March 2014, the asset base of the Dalata Group 1,400 1,200 has transformed from a pure hotel operator, with 200 BUDGET 1,000 a managed and leased portfolio, to that of a hotel 2-STAR 150 800 3-STAR owner operator. Global Independent Iternational Regional National 4-STAR 600 100 Consortia Source: AM:PM Hotel Data Intelligence 5-STAR 400 50 HOSTEL 200 APTS Figure 6: Hotel Room Supply by Brand Type 0 40 60 80 100 120 0 0 20 CLAYTON HOTELS MALDRON HOTELS RADISSON BLUE GREAT NATIONAL HOTELS MANOR HOUSE HOTELS IRISH COUNTRY HOTELS JURYS INN TRAVELODGE CARA HOTEL GROUP DOUBLE TREE BY HILTON DOYLE COLLECTION PREFERRED HOTELS & RESORTS REGENCY HOTEL GROUP FBD HOTELS IRISH COURT HOTELS CLARION HOTEL WHISTLES HOTEL GROUP CROWNE PLAZA TALBOT HOTELS HILTON

CONSORTIA

NATIONAL

REGIONAL

INTERNATIONAL

INDEPENDENT

GLOBAL 0 40 60 80 10 12 14 16 20 0 0 0 0

Regional Dublin Source: AM:PM Hotel Data Intelligence Average Hotel Size Source: AM:PM Hotel Data Intelligence

Figure 7: Major Hotel Brands in Ireland by Number of Rooms, Figure 9: Average Hotel Size by Star Rating and Brand Type Dublin & Regional 100%

GENEVA 80% PARIS ZURICH Hotel Occupancy 60% HOTEL TRADING PERFORMANCE LONDON 95% MILAN 40% The vote by the UK to leave the EU has swept 90% Achieved ADR Performance (€) ROME a wave of uncertainty over the future health of 85% AMSTERDAM 20% overseas tourism to Ireland and the impact it 80% FRANKFURT will have on the Irish hotel industry. BARCELONA 0% 75% Dublin City Dublin Airport Dublin Ireland Regional EDINBURGH 70% Centre Surroundings DUBLIN €111 Since 2014, the improved economic conditions 65% 2013 2014 2015 BRUSSELS and resultant increase in demand for overnight 60% VIENNA accommodation, driven by a combination of 55% BERLIN 140 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC higher international and domestic visitor numbers MADRID 120 has resulted in strong trading performance for the 2013 2013 2014 2015 2015 2016 Source: Hotstats LISBON 2014 2016 Dublin hotel market, buoyed further by the dearth PRAGUE 100

€100 €150 €200 €300 €250 €50 of new hotel developments until recently. This Figure 10: Seasonality – Dublin 2013-2016 €0 80 enhanced trading environment has meant that 60 Source: STR Global Dublin has moved beyond a period of recovery 40

to a period of stabilised growth and prior to the centre hotels achieved an 18.5% growth in ADR and for the first half of 2016, Figure 12: Annual Achieved ADR Performance 2015 Room Rate Performance € Average 20 EU Referendum for the UK’s vote to leave the EU, prior to the EU Referendum, performance had been equally strong, achieving – Dublin v European Cities - confidence for continued growth remained high. 14% ADR growth for the period up to May 2016. (Source: STR Global). Dublin City Dublin Airport Dublin Ireland Regional In a European context, Dublin outperformed other European cities in 2015, Centre Surroundings

In 2015 Hotels in Dublin city centre achieved with the highest growth in RevPAR after Milan which benefitted from hosting Going forward, in the era of Brexit negotiation, we envisage that Dublin’s hotel 2013 2014 2015 occupancy levels of 84%, growing by four Expo 2015, driven largely from growth in the ADR. When compared to other trading performance will continue to perform strongly, albeit with somewhat percentage points since 2013. This high level European cities, Dublin is ranked well below other European cities, this implies weakened growth compared to the past few years. Dublin is likely to benefit 120 of occupancy performance is evidence of Dublin that Dublin currently represents a cheaper destination for international visitors from an increase in business travel from international companies relocating having a diversified market. Dublin attracts strong when considering a residential stay in Europe. or expanding their presence as a result of the UK’s planned exit from the EU. 100 corporate demand primarily during weekdays The limited supply growth in the short-term, together with the favourable 80 and has a thriving leisure market, with short 9% VAT rate for the tourism sector and Dublin’s growing trend as a tourist 60 city breaks at weekends. Corporate demand destination, despite the fall in Sterling, will continue to have a positive impact is weaker during the summer months, but on the city’s hotel performance. 40 RevPAR Growth year-on-year (%) year-on-year Growth RevPAR 30.0% compensated by significantly increased leisure 20 visitation. Dublin also benefits from a large 25.0% Outside of the capital city, regional hotels whilst not experiencing the superior 0 number of sporting and event-based trips as strong levels of growth in trading performance, have benefitted from an uplift Dublin City Dublin Airport Dublin Ireland Regional 20.0% well as conference events, many of which are in the domestic economy in recent years, resulting in greater demand for Centre Surroundings spread evenly throughout the year. 15.0% hotel accommodation. According to STR data, regional Irish hotels achieved 2013 2014 2015 occupancy of 66% in 2015, measuring a 6.8% compound annual average 10.0% The seasonality of demand, depicted in the growth (CAAG) between 2013 and 2015. With equally impressive average 25% following graph, is shown through an analysis 5.0% room rate growth, achieving €101 in 2015, RevPAR performance has of hotel room occupancy for the Dublin hotel increased 10% year-on-year between 2013 to 2015, to €67. Hotel trading 20% 0.0% market. The graph shows a very similar pattern leading up to the EU Referendum has remained strong in 2016, with year-to- 15% in seasonality trends between 2013 and 2015. -5.0% date RevPAR growth in double digits, up 11% on the previous year to €61. MILAN DUBLIN PORTO MADRID EDINBURGH ZURICH PRAGUE LISBON LONDON BARCELONA ROME BRUSSELS FRANKFURT BERLIN GENEVA PARIS AMSTERDAM VIENNA This regional performance marks a period of continued recovery, albeit with 10% Achieving high occupancy levels and with limited the regional trading data still below pre-recession 2007 levels. Hotels located 5% new supply entering the market, has allowed nearest the Irish border are likely to be the hardest hit, with travel and demand

Dublin city centre hotels to drive forward their Source: STR Global for overnight hotel accommodation likely to be impacted. 0% average daily room rate (ADR) and revenue per Figure 11: Annual RevPAR Growth 2015 FEB APR JUN available room (RevPAR). In 2015 Dublin city – Dublin v European Cities We highlight the performance of the regional Irish hotels compared to the Dublin City Centre Dublin Airport Dublin City Centre Dublin Airport Dublin Surroundings Dublin Surroundings Ireland Regional Dublin hotel market in the charts below. As can be seen Dublin city centre Ireland Regional Source: STR Data hotels and Dublin Airport hotels achieve a significant RevPAR premium over Figure 13 – Hotel Trading Performance, regional Ireland. Dublin v Regional Performance HOTEL DEVELOPMENT 200

Following a strong recovery from a period of harsh 150 Based on our research for prospective hotel developments and extensions, speculative projects are likely to proceed, especially in Dublin, any significant economic conditions and a period of oversupply we have reviewed future hotel supply in Ireland by star-rating and by region. slowdown in visitor arrivals as a result of Brexit, is likely to cause a number of

of hotel accommodation, there is now concern 100 There are approximately 12,000 bedrooms planned, of which over 70% of these speculative projects being put on hold until such a time where the Irish and increasing evidence of a shortfall of visitor projects are destined for Dublin. Of this total, 27% of projects are reportedly hotel sector once again shows signs of stability and sustainable growth. accommodation in Dublin. A shortage in quality 50 on-hold, whilst a further 58% remain speculative. Only approximately hotel accommodation can thereby limit the 1,800 rooms are anticipated to open by 2018. Projects are deemed to As shown in Figure 17, the vast majority of proposed hotels are planned potential for tourism growth in the future, due to 0 be speculative often due to a lack of information or due to the time taken in the mid- market segment, with over 70% of proposed hotel rooms the limited capacity to cater for a further lift in visitor 2013 2014 2015 2016 2017 in formulating development plans and funding. Whilst many of these planned as three-star and four-star hotels. There is also strong growth in

numbers to Ireland. Dublin Region Midlands & East Region West Region supply forecast for budget hotels making up over 12% of new hotel supply; Shannon North-West Region South-West Region meanwhile, the serviced apartment sector is likely to make an entry as a South-EastDub Regionlin Reg ion Midlands & East Region Source: West RKnightegion Frank Research Statistics published by Fáilte Ireland show that sub-sector of the Irish hotel market, with 10% of the proposed new hotel Shannon North-West Region South-West Region available bed spaces in Dublin in approved FigureSouth 14:- EastHotel Reg Bedroomsion Planned by Region 2013-2017 bedroom stock forecast to come from this segment. 4% 6% accommodation have declined by approximately % 1 3%

7% between 2010 and 2015 to around 81,800 Between the period of 2013 and 2016 approximately 2,000 new hotel rooms % We outline below the most significant hotel developments planned in 5

bed spaces. Meanwhile, research undertaken have entered the Irish hotel market as a result of new hotels opening, hotels Ireland, with the majority of the developments shown to be located in

by The Irish Tourism Industry Confederation, reopening following restoration or major refurbishment as well as extensions Dublin. In the short term the supply constraint will benefit hotel trading

estimates that Dublin requires 30 new hotels to existing hotels. The greater Dublin area received 25% of this new supply performance, particularly given the uncertainty following the vote for

or 5,000 bedrooms by 2020 to accommodate opening, with the North-West and South-West Regions also capturing over Brexit; however, in the medium term adding capacity will be important 73% the expected growth in visitor numbers. 300 new rooms entering the market. for the hotel industry, in particular Dublin as the capital city, to maintain its attractiveness as a business and tourist destination. Two major Irish hotel owners, Dalata Hotel Group and Amaris Hospitality remain upbeat

Dublin Region Midlands & East Region West Region and positive about the need for new hotel developments or significant Shannon North-West Region South-West Region extensions planned to existing properties. The Dalata Hotel Group have South-East Region Source: AM:PM over 500 hotel rooms in the pipeline for Dublin, including the 367-room

New Hotels Opening in Ireland, 2010-2015 Figure 15: Proposed Hotels in Ireland, by Region extension at the Clayton Hotel Dublin Airport and a proposed 180-room Clayton Hotel at Charlemont Street, both developments are expected to Hotel Name Location Region Opened Rooms Star Rating Facilities Location Type Brand be completed by mid-2018. Ascend Gibson Hotel Dublin Dublin Region 2010 252 4-star Full Service City Hotel Collection

Snoozles Galway West Region 2010 27 Hostel Hostel Rural Independent

Midlands & Relais & Ballyfin Ballyfin 2011 20 5-Star Country-House Rural East Region Chateaux SOUTH-EAST REGION Waterfront Hotel Baltimore South-West Region 2011 13 2-star Limited Service Rural Independent SOUTH-WEST REGION APTS Talbot Hotel Belmullet West Region 2011 21 4-star Full Service Rural Independent NORTH-WEST REGION HOSTEL

Park Place Apartments Killarney South-West Region 2011 73 Apts Limited Service Rural Independent SHANNON BUDGET

Anvil Bar Boolteens South-West Region 2012 6 3-star Inn Rural Independent WEST REGION 2-STAR

Leading Hotels MIDLANDS & EAST REGION 3-STAR Marker Hotel Dublin Dublin Region 2013 187 5-star Full Service City of the World 4-STAR DUBLIN REGION Dean (The) Dublin Dublin Region 2014 52 4-star Boutique City Independent 5-STAR

- 1,000 3,000 5,000 6,000 7,000 8,000 9,000 4,000 2,000 - 500 1,000 1,500 3,000 3,500 4,000 4,500 5,000 5,500 2,500 Cloughjordan House Cloughjordan Shannon 2015 17 3-star Full Service Rural Independent 2,000

North Pole Bar Drumfries North-West Region 2015 3 2-star Inn Rural Independent

Temple Bar Inn Dublin Dublin Region 2015 95 3-star Limited Service City Independent Speculative Due 2016 Due 2017 Due 2018 On Hold Speculative Due 2016 Due 2017 Due 2018 Source: Knight Frank Research; AM:PM Hotel Intelligence Data On Hold Source: Knight Frank Research; AM:PM Hotel Intelligence Data Croagh Patrick Hostel Murrisk West Region 2015 11 Hostel Hostel Rural Independent

Source: Fáilte Ireland Table 1: New Hotels Opening in Ireland, 2010-2015 Figure 16: Proposed Hotels in Ireland, by Region and Figure 17: Proposed Hotels in Ireland, by Star Rating Development Status

Speculative Due 2016 Due 2017 Due 2018

Oh Hold New Hotel Name Location Type Rooms Star Rating Owner Phase Opening Operator Under Maldron Proposed Maldron Hotel, Beasley St Cork New Build 121 4-Star Dalata Hotel Group Construction Due 2018 Hotel Group

Clayton Clayton Hotel, Charlemont Street Dublin Conversion 181 4-Star Dalata Hotel Group Full Planning Due 2018 Hotel Group

Consortium led by Awaiting Proposed Andrews Lane Hotel Dublin Conversion 115 Pod-Hotel Firebreak Hospitality Planning Speculative Unknown

Proposed Pinebrook House Hotel Dublin Conversion 152 4-Star Olema Consultants Full Planning Speculative Independent

Awaiting Clerys Department Store Dublin Conversion 176 4-Star OCS Properties Ltd Planning Speculative Unknown

CIE/Ronan Group Aquavetro Dublin Mixed-Use 167 4-Star Real Estate Pre-Planning Speculative Unknown

Ronan Group Bewleys Café, Grafton Street Dublin Mixed-Use 70 Boutique Real Estate Pre-Planning Speculative Unknown

Convention Centre Dublin Dublin New Build 250 5-Star SDDC Hotel Ltd Full Planning On Hold Unknown

Realmside Ltd Awaiting Hodson Bay Proposed Coombe Bay Hotel Dublin New Build 263 4-Star (O'Sullivan family) Planning Speculative Group

Under Holiday Inn Express Dublin - City Centre Dublin New Build 198 Budget Findlater House Ltd Construction Nov-16 IHG

Private Owner Proposed Hotel, Mill Street, Tenters Pub Dublin New Build 202 4-Star (Denis O'Brien) Full Planning Speculative Unknown

Staycity Proposed Apart-Hotel, Mark Street Dublin New Build 178 Apart-Hotel Tetrarch Capital Pre-Planning Speculative Apart Hotels

Tetrarch Proposed Hotel, Sackville Place Dublin New Build 158 4-Star Tetrarch Capital Pre-Planning Speculative Hospitality

Marlin Proposed Hotel, Bow Lane East Dublin New Build 190 Apart-Hotel Marlin Full Planning Speculative Apartments

Plaza on the Proposed Hotel Pembroke Street Lower Dublin New Build 108 4-Star Square Ltd Full Planning Speculative Independent

Proposed Travelodge, Summerhill Dublin New Build 364 Budget Smorgs Ltd Full Planning Speculative Travelodge

Maldron Proposed Maldron Hotel, Kevin Street Dublin New Build 137 3-Star Dalata Hotel Group Full Planning Due 2018 Hotel Group

Kendlebell Proposed Budget Hotel, Moore Street Dublin New Build 107 Budget Mid-West Ltd Full Planning Speculative Unknown

Hodson Proposed Hodson Bay Hotel, The Coombe Dublin New Build 263 4-Star Hodson Bay Hotel Full Planning Speculative Bay Group

Proposed Hotel North Wall, Spencer Dock Dublin Mixed-Use 169 4-Star Independent Pre-Planning Speculative Independent

Guestford Ltd Near Red Cow Hotel Extension Dublin Extension 152 4-Star (Tom Moran) Completion Due 2016 Independent

Clayton Clayton Hotel Dublin Airport Extension Dublin Airport Extension 367 4-Star Dalata Hotel Group Full Planning Speculative Hotel Group

CG Hotels Dublin Radisson Blu Hotel, Dublin Airport Dublin Airport Extension 146 4-Star Airport Ltd Full Planning Speculative Rezidor SAS

Dublin Airport Dublin Airport, T2 Dublin Airport New Build 400 4-Star Authority Full Planning Speculative Unknown

CG Hotels Dublin Radisson Blu Hotel, Dublin Airport Dublin Airport New Build 168 4-Star Airport Ltd Full Planning Speculative Rezidor SAS

Ronan Group Real TableProposed 2: EnniskerryHotel Developments Park Hotel Planned,Enniskerry Dublin & NewRegional Build 200 4-Star Estate Pre-Planning Speculative Unknown

Proposed Hotel Connacht Laundry Site Galway New Build 136 5-Star Welmary Properties Full Planning Speculative Unknown

Source: AM:PM Hotel Data Intelligence Table 2: Hotel Developments Planned, Dublin & Regional IRISH HOTEL INVESTMENT ENVIRONMENT

Historically the hotel investment market in Ireland Significant Irish Hotel Transactions - 2015 - Q2 2016 has largely focused on Dublin; however, in recent Meanwhile, strong investment activity has been recorded by Dublin-based Star Approximate Average Price times secondary cities, such as Cork, Limerick PREM Group, following their €30 million funding package with Swedish Sale Date Hotel Location Rooms Rating Price (€) per Room Buyer Buyer Origin and Galway are becoming increasingly popular investor Proventus Capital Partners. The group have added three Irish Q1-2015 Clayton Hotel Ballsbridge Dublin 304 3-star € 75,200,000 € 247,000 Dalata Hotel Group Irish with investors. Nevertheless, in 2015 over 60% properties to their 45-strong diverse hotel and serviced apartment portfolio Q1-2015 Clayton Hotel Dublin Airport Dublin Airport 466 4-star € 79,300,000 € 170,000 Dalata Hotel Group Irish of hotel investment volume was targeted at of owned, leased and managed assets across Ireland, the UK and Europe. Q1-2015 Clayton Hotel Leopardstown Leopardstown 354 4-star € 44,800,000 € 127,000 Dalata Hotel Group Irish

Dublin, which as the capital and gateway city to In late 2015 PREM Group acquired the 109-room Osprey Hotel & Spa Maldron Hotel Q1-2015 Dublin 297 3-star € 26,900,000 € 91,000 Dalata Hotel Group Irish Ireland attracts strong interest from overseas and Complex, in Naas, Co. Kildare, followed by two further 4-star hotel Newlands Cross domestic investors. transactions in 2016, the 74-room Tulfarris Hotel & Golf Resort in Co. Q1-2015 Clayton Hotel Galway Galway 195 4-star € 16,600,000 € 85,000 Dalata Hotel Group Irish Waterford Castle Hotel & Wicklow for in excess of €8 million and the 38-room Cahernane House Hotel Q1-2015 Waterford 20 4-star € 6,000,000 € 300,000 Private Individual Irish Golf Club As hotels have become a more established in Killarney for €3 million. Q1-2015 Adare Manor Limerick 64 5-star € 30,000,000 € 469,000 JP MacManus Irish asset class and as investors continue to seek out Q1-2015 Maldron Hotel Sandy Road Galway 104 4-star € 10,500,000 € 101,000 Dalata Hotel Group Irish suitable institutional grade product, Dublin has During the first half of 2016 hotel investment activity in Ireland has remained Q1-2015 Clayton Whites Hotel Wexford 157 4-star € 15,000,000 € 96,000 Dalata Hotel Group Irish witnessed a significant increase in investment from strong, with some 26 single asset hotel transactions recorded, with a total John Malone domestic and overseas investors on the hunt for transaction value of approximately €175 million, largely driven by activity Q1-2015 Intercontinental Dublin Dublin 197 5-star € 50,000,000 € 254,000 US/Irish Partnership/Lalco quality product in prime locations. Furthermore, outside of Dublin. These hotels include; the 110-suite Staycity Serviced Q1-2015 Temple Bar Hotel Dublin 132 3-star € 30,000,000 € 227,000 Pyramid Hotel Group USA the strong trading performance of hotels in Dublin Apartments Dublin for €25m; the 162-room Clarion Hotel Sligo for €13.1m Q2-2015 Glenroyal Hotel Maynooth 113 3-star € 10,500,000 € 93,000 Comer Group Irish since 2014, buoyed by a strong increase in and the 158-room Clarion Hotel Limerick for €16million. Meanwhile, the Q2-2015 Premier Inn Dublin Airport Dublin 155 Budget € 11,000,000 € 71,000 Kirkland Investments Irish demand from domestic and overseas visitors, second half of 2016 has already witnessed the €92 million sale of the iconic Balrath Investments together with the limited supply growth have further 323-bedroom, four-star, Gresham Hotel to the Spanish hotel firm RIU Hotels Q3-2015 Grafton Capital Hotel Dublin 76 3-star € 12,000,000 € 158,000 Irish Ltd helped underpin hotel transactional activity. & Resorts, outbidding Irish hotel group TifCo and generating a profit of almost Abu Dhabi €60 million for from the National Asset Management Agency which purchased Ballsbridge & Clyde Investment Q3-2015 Dublin 585 3-star € 180,000,000 € 308,000 Middle East In 2015, the Irish hotel investment arena was the asset from the former Anglo Irish Bank for €35 million. Court Hotels Authority/Chartered Land dominated by one key player, Dalata Hotel Group, Q4-2015 Kilkenny Hibernian Hotel Kilkenny 46 4-star € 7,000,000 € 152,000 iNua Hospitality Irish with the acquisition of 15 hotels in Ireland and A surge of investment activity for Dublin is expected for the second half Q4-2015 Dawson Hotel Dublin 36 4-star € 17,000,000 € 472,000 Tetrarch Capital Irish the UK for a total consideration of €558.8 million, of 2016, with a number of high profile hotels under negotiation and due Eagle Resort Q4-2015 Castlemartyr Resort Castlemartyr 103 5-star € 16,000,000 € 155,000 UK thereby allowing the Group to significantly scale to complete before the year end. Such high profile deals include the (Holdings) UK up its operations and in particular raise its market 501-room Doubletree by Hilton Hotel, Dublin (the former Burlington Hotel), Q4-2015 Clarion Hotel Cork Cork 198 4-star € 35,100,000 € 177,000 Dalata Hotel Group Irish profile in the Dublin market. The acquisitions with the German asset manager DekaBank emerging as the preferred Q1-2016 Tara Towers Hotel Dublin 111 3-star € 13,160,000 € 119,000 Dalata Hotel Group Irish consolidated the group’s position as the largest bidder for the hotel, with the Private Equity firm Blackstone seeking offers Emerald Investment Q1-2016 Hilton Dublin Airport Dublin 166 4-star € 10,000,000 € 60,000 UK hotel operator in Ireland, operating approximately over €180m (€359,000 per room), thereby more than doubling its investment Partners

20% of the hotel room supply in Dublin. The Group since its purchase in 2012. The Dalata Hotel Group is understood to be in Q1-2016 Clarion Hotel Sligo Sligo 162 4-star € 13,120,000 € 81,000 Dalata Hotel Group Irish targeted sizeable hotels in prime locations, notably exclusive talks with DekaBank to lease and operate the hotel upon completion Q2-2016 Tulfarris Hotel & Golf Resort Blessington 74 4-star € 8,000,000 € 108,000 PREM Group Irish

Dublin, Galway, Cork and Wexford, the majority of the sale. Q2-2016 DoubleTree by Hilton Dublin 501 4-star € 180,000,000 € 359,000 Blackstone Group USA of which have been rebranded under either the Podium Hospitality Q2-2016 Pillo Hotel Ashbourne Ashbourne (Irl) 148 4-star € 11,000,000 € 74,000 Irish Maldron or Clayton hotel brands. Following Meanwhile the surge of hotel transactions in Dublin is expected to be further Ltd further acquisitions in the first half of 2016, of bolstered with the sale of the Fitzpatrick Lifestyle Hotel Group portfolio, Q2-2016 Village at Lyons Celbridge 20 4-star € 6,000,000 € 300,000 Private Individual Irish the 7,717 rooms under Dalata management, comprising three hotels (The Spencer, The Morgan and The Beacon), Staycity Serviced Q2-2016 Dublin 110 Apts € 25,000,000 € 227,000 Independent Irish 54% of the portfolio is owned, 31% leased thought to be seeking offers over €130 million. Apartments and 15% managed. Q2-2016 Maldron Beasley Street Cork 121 4-star € 10,200,000 € 84,000 Dalata Hotel Group Irish Table 3: Significant Irish Hotel Transactions – 2015 – Q2 2016 Source: Knight Frank Research CONCLUSION AND OUTLOOK ABOUT THE AUTHOR ABOUT KNIGHT FRANK HOTELS OUR SERVICES

In 2015 the Irish hotel market moved into a period Established in 1952. Knight Frank’s dedicated • Investment sales and acquisitions of stabilised growth, with strong GDP growth hotel division is one of the largest in the country. • Agency and development consultancy - in Ireland’s main tourist markets. Favourable Our goal is to match investors to the very site acquisition and appraisal advice, lease exchange rate movement, targeted marketing best hotel investment opportunities in the and management contract negotiation campaigns, the reduced rate of VAT on tourism UK, Ireland and overseas. • Marketing campaigns and the perception of Ireland being a safe • Building consultancy and project management destination for travel, have all contributed to The hotels team is well established and we are • Branding and re-branding opportunities increased numbers of foreign visitors. Hotel supply dedicated to providing valuations, agency and • Valuation - asset review and bank funding in Dublin has been stable and hotels have enjoyed investment advice in the lucrative hotel sector. • Professional consultancy- planning, strong trading performance, underpinned by the We are market leaders with unique access to business rates and lease advisory continued economic recovery in Ireland and to the established national and international investors. • Leisure and cottage complex consultancy country’s main source markets. • Market research – UK and international We offer our clients comprehensive The impact of the UK’s vote to leave the EU, development advice and industry however, has the potential to significantly disrupt research, reporting on market activity and the Irish economy due to the considerable amount Philippa Goldstein holds a BSc Honours performance trends. of Anglo-Irish trade. Following the EU Referendum, Degree in Hotel & Catering Management from the euro has appreciated significantly versus Oxford Brookes University. Following ten years Our agency and valuation team, based in sterling and this is a major concern due to the operational experience in the hospitality industry London, cover the full range of hotel genres heavy reliance on visitor arrivals which currently in the UK and Europe and experienced in Hotel from branded corporate hotels to privately emanate from the UK. Valuations and Feasibility Studies, Philippa owned boutique city and regional country house recently joined Knight Frank’s Hotels team in hotels. We have longstanding relationships with Nevertheless, the fundamentals of the Irish hotel March 2016 as the dedicated Research & Hotel our clients and a strong reputation as trusted market remain positive despite the significant and Market Analyst. advisors in the sector. challenges and uncertainty ahead following the EU Referendum. Indeed, investor appetite from both PHILIPPA GOLDSTEIN Our transactional and advisory services, whilst

Irish and overseas investors continues to surge Hotel Analyst based in central London, has the support of our ahead in 2016 and favourable exchange rate T: +44 20 3826 0600 extensive regional network of commercial and conditions for economies pegged to the US Dollar E: [email protected] residential offices. Our international capabilities is likely to fuel further appetite from US, Middle extend throughout Europe’s key city centres. Eastern and Asian investors. Worldwide, we co-ordinate with colleagues in the majority of the capital cities throughout the EMEA, Africa, North America, India, South East CONTACTS Asia and Australia.

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