Last year, 2,100 rooms or 46% of all hotel beds in Cork City and county alone have changed control.
Recovery is beckoning and new groups are competing for market share and dominance.
Over €710m worth of Irish hotels transacted in 2015, or up to €1bn if investment sales are included, with other deals and developments pending, according to different reports this month by international agents, Savills, and CBRE.
The latter say that 63 Irish hotels changed operators in the past year.
Eleven Irish hotel properties are currently transacting with signed contracts worth €55m, 10 other hotels totalling €30m are ‘sale agreed’, and a further 10, with a combined value of €126m, “are officially being marketed for sale, which suggests another very active year in this sector of the Irish property market,” says CBRE in a preview of the Irish market for 2016.
Meanwhile, CBRE this week have closed the sale of the 56-bed Watermarque hotel (not trading) and 24 apartments Cahirsiveen, Kerry, for sub-€1m, to a private investor.
Separately, a number of hotels sold in 2015 as investments, and 40 changed hands as part of loan portfolios.
Savills say hotel-assets demand is strong, due to a 14% growth in overseas visitors, Irish GDP growth of 7%, RevPAR (revenue per available room) growth in Dublin of over 20%, and significantly stronger US dollar and UK pound in visitor-source markets, with a weaker euro.
Both CBRE and Savills say that while some Dublin hotels will sell in 2016, the focus there is development of new hotels, and the addition of bedrooms at existing hotels, to meet record demand.
In Cork, “hotels have performed exceptionally well this year, recording occupancy of 80% and an average daily room (ADR) rate of €78, with hotel occupancy now 14% higher than it was at the peak of the market, in 2007,” says Denis O’Donoghue, of Savills. ADR currently is 15% lower than 2007 prices.
Drivers for 2016 will be expected growth at Cork Airport, the new CityJet service to London City Airport, new European routes, plus a first transatlantic service to the US/Boston, from May, while the anticipated convention/events centre could add 200,000 bed nights to Cork.
A dozen Cork hotels either sold or went ‘sale agreed’ towards the end of 2015, at a total €80m, says Mr O’Donoghue, with Savills Hotels & Leisure acting in eight of those.
The largest was the 191-bed Clarion Hotel, in the city centre, bought as an investment by Dalata Hotel Group plc for €35m, a record transaction equating to €184,00 per room, or a net yield of 6.5% based on the passing rent.
Dalata are understood to have purchased the Corbett-family-owned 120-bed hotel site on Cork’s Parnell Place/South Mall, built to a shell state, and understood to be making c €10m.
Other key sales include Castlemartyr Resort, the second-largest Cork hotel transaction of the year, at €14m, along with Carlton Hotel & Resort Kinsale, and The Maritime Hotel, Bantry which is ‘sale agreed.’
Of Fáilte Ireland’s 78 registered Cork hotels, 22 have changed ownership since 2013. Mr O’Donoghue says “we expect 2016 to be another busy year , but after the high volume of transactions completed in the past three years, we’d expect some reduction in sales volumes.”