Amárach Hotel Investment Survey December 2013


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A survey on the outlook for Irish hotel property investment in 2014.

Conducted in partnership with the Hotel Property Conference:

Published in: Economy & Finance, Business
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Amárach Hotel Investment Survey December 2013

  1. 1. Hotel Investment Outlook Amárach Research December 2013 Hotel Property Conference 1
  2. 2. a timely study Our survey of over 70 hotel operators, investors and professionals gives us a timely insight into: • The main drivers of hotel property performance as we enter 2014 on a more positive economic note • The outlook for the sector and the key factors that will driver growth in the medium term Hotel Property Conference 2
  3. 3. Timing is everything in investment, and right now the consensus on hotel property is very positive… Hotel Property Conference 3
  4. 4. the right time to buy 63% 19% 10% 6% already past right now next year in 2-3 years Q. When is/was right time to buy hotel property in Ireland? Source: Amárach Research, 2013 Hotel Property Conference 4
  5. 5. If ‘now’ is the right time to buy hotel property, then what does that say about hotel asset prices? Hotel Property Conference 5
  6. 6. fair value 70% 20% 10% above fair value fair value in current market below what they're really worth Source: Amárach Research, 2013 Hotel Property Conference 6
  7. 7. What then is driving the demand for hotel property, and what are the main constraints? Hotel Property Conference 7
  8. 8. the main constraints 59% 40% 36% 35% 21% lack of bank finance competition from lack of investor international finance investors lack of appropriate properties cost of fit out/ refurbishment Q. What are main constraints on buying hotel property? Source: Amárach Research, 2013 Hotel Property Conference 8
  9. 9. the main drivers 74% 66% 37% 34% 11% location price trading performance condition star rating Q. What are main drivers of hotel property purchases? Source: Amárach Research, 2013 Hotel Property Conference 9
  10. 10. What about the provision of finance for hotel purchases or refurbishments – now and in the future? Hotel Property Conference 10
  11. 11. the trend in finance 59% 43% 23% 23% 23% 17% 11% 1% worse same past 12 months better not sure next 12 months Source: Amárach Research, 2013 Hotel Property Conference 11
  12. 12. If funding is getting better, then where will the best growth prospects be next year? Hotel Property Conference 12
  13. 13. growth prospects Fastest rising hotel asset values in 2014: Dublin City Centre Greater Dublin Area Main Tourist Centres Galway 77% 31% 29% 14% Source: Amárach Research, 2013 Hotel Property Conference 13
  14. 14. Finally, what one thing has to change to drive hotel property values in next 2-3 years? Hotel Property Conference 14
  15. 15. driving value ahead “There has to be sustained growth in RevPar performance for another 12 months in order to give confidence that the recent trend upwards is durable. There also needs to be a more pronounced recovery outside Dublin to justify a higher valuation.” “Average room rates need to increase by at least 3 - 5% per year for the next few years and capitalise on recent increased demand.” “Nama have to stop beating down rates, if you cant get the room rate you can't get the return on your investment.” “Dealing with the still tax based hotels as they come out of the structures and their viability for continued operation.” Hotel Property Conference 15
  16. 16. a turning point We can be very positive about prospects for hotel property values going into 2014: • Finance is expected to be more available, while values are seen as fair for now • But there are challenges – both on the supply side and on the demand side – including legacy issues • Nevertheless, 2014 looks like being a turning point after seven difficult years Hotel Property Conference 16
  17. 17. T. 01 410 5200 E. W. B. Tw. Hotel Property Conference 17