Ireland's hotel deals created robust 2018

iNua owns Radisson Blu hotels in Cork, Limerick, Athlone and Sligo. Photo credit: Radisson Hotel Group (Hotel owner and manager iNua Hospitality has raised €40 million to fund its 5-year growth strategy.)

A new report from property consultants CBRE Ireland found a total of 34 hotel deals worth more than €730 million were competed during 2018, excluding hotel investment sales.

This total was considerably higher than the volume of sales completed in 2017. Earlier this year, CBRE said that yields for leased assets compressed by as much as 50 basis points in Ireland during 2017.

Many of last year's deals involved single assets selling for smaller amounts. A full 63 percent of transactions ranged between €1 million–€10 million, while 23 percent were below €1 million. A third of the deals were conducted off-market.

Positive Trading Year

Marie Hunt, executive director and head of research at CBRE Ireland, said 2018 was a very positive trading year for Ireland's hoteliers, with the country's hotel industry boosted "in no small part" by strong economic activity, increased air connectivity and record tourism numbers, with more than 11 million tourists visiting Ireland in 2018.

"Interestingly, while the number of UK visitor numbers was down [year-over-year] this was more than compensated for by visitors from other jurisdictions on the back of increased marketing efforts from bodies such as Tourism Ireland and Fáilte Ireland," she said. 

Hotels that changed hands during 2018 included The Heritage Hotel & Spa in Killenard in County Laois and the Connemara Coast Hotel in Furbo in County Galway.

In the first half of the year, eight hotels sold for a total of more than €214 million, and in an echo of the previous year, the company said an increasing proportion of transactions in the hotel, development and investment sectors were being conducted off-market.

“Following a year in which transactional activity in the hotel sector was constrained by a shortage of product, particularly in the Dublin market, we expect to see significant improvement in this situation [for] 2018, with several high-profile hotel properties expected to be offered for sale (both on and off market) over the next few months,” said Lisa Keogh, associate director, CBRE Hotels. “Some of these sales will have been fast-tracked by Capital Gains Tax Waiver scheme changes announced in last autumn’s budget, whereby assets purchased after 2011 that originally had to be held for a seven-year period in order to trigger a capital gains tax waiver, can now be sold after a four-year hold period.”

Domestic companies have been stepping up their interest in Ireland. In July, iNua announced it had secured an investment of €40 million to support the growth of the business in its domestic market. 

International brands also started gaining ground in the country. Around the time iNua made its announcement, Hard Rock International announced plans to partner with Ireland-based hotel company Tifco to enter the hotel market with the Hard Rock Hotel Dublin in 2020. Tifco owns 25 hotels with another two in development, and is attracting a number of buyers.