Irish hotels now seen as major investments with £673m in deals
Last year was one where 'big got bigger' and 'small was beautiful' when it came to activity in the Irish hotel sector. Hotel transaction volumes for the last 12 months are expected by JLL to reach an impressive €750m (£673m) by year end.
While this represents a substantial increase of 36% on the €550m (£493m) recorded in 2017, it is, more importantly, a real sign that Irish hotels are no longer considered 'alternative investments'. They are now very much 'mainstream'.
One outstanding feature of the hotel market in 2018 was that the big deal became bigger, to the point where two major portfolio sales ended up accounting for more than 55% of total transaction volumes.
The largest portfolio sale involved the Tifco Hotel Group, Ireland's second-largest hotel operator, which sold in Ireland's most-valuable hotel transaction ever.
Totalling 19 hotels and development sites, it was acquired by Apollo Global Management for approximately €350m (£314m).
The other large portfolio transaction of 2018 saw a group of Irish and UK Hilton hotels, including the Hilton Garden Inn in Dublin's IFSC, acquired for more than €110m (£99m) by LRC Group.
There were also a healthy number of single asset transactions in the Dublin hotel market. These included the sales of the Hilton Dublin Airport, which sold for €23m (£20.26m), and the Ibis Dublin Red Cow, which sold for €14m (£13m).
Notably, all of the above transactions involved new international buyers, with their capital originating from the US, Israel, Canada and the UK respectively.
Another interesting development for the Dublin hotel market came last September, with leading institutional investor Aviva's €17.5m (£15.7m) acquisition of the Premier Suites Plus aparthotel in Ballsbridge, Dublin 4.
The sale and leaseback deal with the 49-unit property's previous owners, the Prem Group, represented the first foray of Aviva's Irish Property Fund into Ireland's hospitality and aparthotel market. Outside the capital, a number of provincial hotels were sold in 2018.
The bulk of these transactions involved domestic investors and operators with an established presence in the market.
Examples included the McWilliam Park Hotel in Mayo which was acquired for €9.2m (£8.3m) by Davy Real Estate, and the Radisson Blu in Sligo which was acquired for €16.5m (£14.8m) by iNua Hospitality. Other hotels sold outside of Dublin included the Heritage Hotel & Spa in Killenard, Co Laois. The five-star property was acquired by FBD Hotels and Resorts for a figure in the region of €9m (£8m).
The €17m (£15m) sale of the five-star Sheen Falls Lodge in Kerry proved to be the most valuable provincial hotel sale of 2018, achieving a price per room of €250,000 (£224,000).
As the new year gets under way, major hotel resorts including the K Club and Druids Glen are understood to still be in search of new owners.