LAST YEAR WAS a record one for hotel deals, as several big-ticket sales materialised towards the end of 2016.
According to research from Cushman & Wakefield, the commercial partner in Ireland for Sherry FitzGerald, 51 Irish hotels worth over €720 million changed hands during the year.
Hotel investment was concentrated on well-located three- and four-star hotels, the sales of which amounted to a combined €684 million.
The total value of hotel sales in 2016 was 91% higher than the previous year, while it also featured the highest volume of single-hotel transactions on record.
The report said that demand for Irish hotels from domestic buyers remains strong and accounted for over two-thirds of the volume of hotels sold in the 12-month period.
However, in terms of value, foreign buyers were the ones spending big, outweighing domestic investment.
The biggest deal of the year was sale of the four-star DoubleTree by Hilton hotel, formerly called the Burlington, in south Dublin.
It was purchased by German asset manager DekaBank for approximately €182 million from Blackstone, the world’s biggest private-equity property investor. Blackstone bought the hotel in 2012 for €67 million.
Irish hotel group Dalata is now managing the property, which has been rebranded to the Clayton Hotel Burlington Road.
Cushman & Wakefield said that the deal is the largest single hotel-asset transaction on record and accounted for a quarter of total activity in year.
Blackstone has been involved in several large Irish property deals in the last few years, including the acquisition of the Blanchardstown shopping centre in a massive sale worth almost €1 billion.
The second-largest deal was the sale of a portfolio of hotels called the Fitzpatrick Lifestyle Hotels. The group consisted of three, four-star Dublin hotels: the Morgan, the Spencer and the Beacon.
The portfolio was sold to the Irish-owned Lalco Hotel Group and US billionaire John Malone. Malone’s company, Liberty Global, owns Virgin Media Ireland, which in turn has taken over TV3 and recently completed a buyout of UTV Ireland.
After the DoubleTree, the sale of the Gresham in Dublin was the largest deal involving an individual hotel during the year. It was acquired for €92 million by Spain’s Riu Hotel Group.
Rounding out the top five was the Temple Bar Hotel in Dublin and the Radisson Blu Farnham Estate hotel in Cavan, which changed hands for €55 million and €28 million respectively.
The Lyrath Estate in Kilkenny, sold for €25 million, was the only five-star hotel on the top-10 list.
Cushman & Wakefield said that a feature of the market in 2016 “was the growing level of re-trades”.
“Following two years of active deleveraging, which is now winding down, the market has entered a new phase where hotels which previously transacted in the past five years are returning to the market,” the report said.
Cushamn & Wakefield said that the outlook for the hotel industry in 2017 is good, with the economy strengthening, record tourism numbers and strong demand for hotel rooms.
Average revenue rates on Dublin hotel rooms hit a new record late last year as high occupancy rates continued to drive up prices.
“The year ahead should see a continued robust level of hotel transaction activity, as continued re-trades from both loan buyers and asset buyers are expected,” it said.
“That said, with a slowdown in deleveraging activity and subsequently a decline in the number of properties being brought to the market, it is not anticipated to reach the record high level witnessed in 2016.”