Property consultants CBRE Ireland have today released figures for the volume and value of hotel sales completed in the Irish market during the first three months of 2021.
According to the property consultants, in total, 5 hotels sold in Ireland in the first three months of the year for more than €13.5 million between them, compared to only 10 hotel sales in the entire year in 2020 when more than €165 million of hotels traded in the Irish market.
Hotels traded since the beginning of the year were all located in the regions including The Blarney Hotel & Golf Resort and Liss Ard Estate in Cork; the Killaloe Hotel in Clare; the Lansdowne Arms Hotel in Kerry and the Iona Hotel in Rosslare, Co. Wexford.
According to CBRE, alternative deal structures are expected to become increasingly evident in the hotel sector of the market. In addition to an increase in sale and leaseback transactions, which will prove popular considering that they enable hotel owners to release capital and focus on their core business, the property consultants expect to see increased incidence of vendor financing, deferred payments, lease purchase arrangements and ground lease transactions in this sector over the coming months.
While Government wage supports and other stimuli have supported the hotel sector to some degree, CBRE say that the reality is that until such time as the nationwide vaccination programme has been advanced, lockdown eased and international travel permitted, conditions in the hotel sector will remain compromised. CBRE say it is not a question of ‘if’ the hotel sector will recover, but rather ‘when’ it will recover and this is encouraging hotel purchasers.
The property experts say the market will clearly rebound in time, but the speed of this recovery is totally dependent on the timing of vaccine rollout and lifting of travel restrictions. As was the case last year, provincial hotels (particularly those in coastal locations) are likely to benefit most from an increase in domestic ‘staycation’ business in 2021 whereas cities such as Dublin, which are more dependent on international travel, will take longer to recover.
Looking ahead, Director in CBRE’s Hotels team, Dave Murray said, "Encouragingly, since the fourth quarter of 2020, and supported by pricing discounts of 15% to 20% from some vendors, there has been a discernible increase in activity in the hotel sector from a transactional perspective. Where sellers are realistic on pricing, there are opportunities to negotiate deals. In addition to the five sales completed in the first three months of 2021, there is considerable underlying activity in this sector with negotiations now well underway on several hotel assets, which should see a number of further hotel transactions completing over the coming months. Once there is transparency on pricing, we expect to see more momentum in the market - mirroring a trend last witnessed in 2012/2013."