Hotel Market Performance and Expansion Opportunities Aiden ... · © 2016 Crowe Horwath 4 Overview of Hotel Supply 2016 Midlands & East # Hotels 232 #Rooms 12,986 Avg Size 55 Western

1 © 2016 Crowe Horwath

Audit | Tax | Advisory

Audit | Tax | Advisory

Hotel Market Performance and Expansion Opportunities

Aiden Murphy, Crowe Horwath

8th November 2016


Introduction

Ireland Hotel Supply

Current hotel performance – 2016 Annual Hotel Industry Survey

Dublin hotel market

Regional hotel market

Hotel market by classification

Findings of the Crowe Horwath “Brexit” survey

Conclusions and Expansion Opportunities


Ireland Supply


Overview of Hotel Supply 2016

Midlands & East

# Hotels 232

#Rooms 12,986

Avg Size 55

Western Seaboard

# Hotels 253

# Rooms 13,544

Avg Size 54

South West

# Hotels 181

# Rooms 11,982

Avg Size 66 Source: Fáilte Ireland

D1/2/4/8

Naas Rd

Airport

Other

Dublin D1/2/4/8 Naas Rd Airport Other Total

# Hotels 87 6 14 44 151

# Rooms 10,061 1,159 2,115 5,499 18,834

Avg Size 116 193 151 125 125

Total

# Hotels 817

# Rooms 57,346

Avg Size 70


Overview of Hotel Supply 2016

1 and 2 Star

# Hotels 146

#Rooms 2,871

Avg Size 20

Luxury (5 Star)

# Hotels 36

#Rooms 4,111

Avg Size 114

3 Star (Mid Price)

# Hotels 346

#Rooms 22,293

Avg Size 64

4 Star (First Class)

# Hotels 289

#Rooms 28,071

Avg Size 97

88% of rooms in

Ireland are 3 & 4

Star


50%

52%

54%

56%

58%

60%

62%

64%

66%

68%

5k

10k

15k

20k

25k

30k

35k

40k

45k

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Trends in Hotel Supply - Regions excl Dublin

Bedrooms Occupancy

Ireland’s Hotel Supply

Rooms by Region

2001 to 2015 # Rooms % Diff

Midlands and East +5k +62%

South West +2k +20%

Western Seaboard +3k +28%

Total +10k +34%


Dublin’s Room Supply

50%

55%

60%

65%

70%

75%

80%

85%

5k

7k

9k

11k

13k

15k

17k

19k

21k

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Trends in Room Supply - Dublin

Bedrooms Occupancy

From 2001 to 2015 room supply

increased by 58% (+7k rooms)


Hotel Performance


Regional Hotel Performance Excluding Dublin

Per Room 2005 2010

Sales €54,266 €41,507

RevPAR €55 €39

Profit €8,111 €3,241

Per Room 2015 2016 (F)

Sales €58,777 +5%

RevPAR €55 €57

Profit €9,019 +9%

SALES

8% growth


Regional Hotel Performance excluding Dublin

€0

€10,000

€20,000

€30,000

€40,000

€50,000

€60,000

€70,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total Sales Regions excl Dublin PBT regions excl Dublin

15% 15%


Snapshot of Hotel Performance - Regional (excl Dublin)

Regional Hotel Market 2005 2010 2015 10 year

Variance

Occupancy 65% 56% 66% -1%

Average Room Rate

(ARR) €85 €70 €83 -€2

RevPAR €55 €39 €55 -

Revenue per room

Rooms €20k €14k €20k -

Food €18k €15k €23k +€5k

Beverage €11k €9k €12k +€1k

Other €5k €4k €4k -€1k

Total Revenue €54k €42k €59k +€5k

Total Payroll % 39% 43% 38% -1%

Net Profit per Room €8k €3k €9k +€1k

Net Profit % 15% 8% 15% - Source : Crowe Horwath Annual Hotel Industry Survey


Dublin Hotel Performance

Per Room 2005 2010

Sales €64,271 €40,191

RevPAR €87 €53

Profit €13,707 €6,226

Per Room 2015 2016 (F)

Sales €59,123 +7%

RevPAR €90 €98

Profit €16,913 +14%

23% Profit growth


Dublin Hotel Performance

€0

€10,000

€20,000

€30,000

€40,000

€50,000

€60,000

€70,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total Sales Dublin PBT Dublin

21%

29%


Snapshot of Hotel Performance - Dublin

Dublin Hotel Market 2005 2010 2015 10 year

Variance

Occupancy 77% 67% 81% +4%

Average Room Rate (ARR) €120 €79 €112 -€8

RevPAR €87 €53 €90 -€2

Revenue per room

Rooms €33k €19k €33k -

Food €15k €10k €14k -€1k

Beverage €11k €6k €9k -€2k

Other €5k €4k €4k -€1k

Total Revenue €64k €40k €59k -€4k

Total Payroll % 38% 40% 33% -5%

Net Profit per room €14k €6k €17k +€3k

Net Profit % 21% 15% 29% +8%

Source : Crowe Horwath Annual Hotel Industry Survey


Luxury (5 Star) Hotel Performance

Per Room 2005 2010

Sales €88,884 €60,446

RevPAR €100 €71

Profit €13,168 €3,208

Per Room 2015 2016 (F)

Sales €100,954 +6%

RevPAR €130 €143

Profit €20,860 +16%

PROFIT

58% growth


First Class (4 Star) Hotel Performance

Per Room 2005 2010

Sales €61,156 €44,541

RevPAR €62 €42

Profit €10,315 €4,711

Per Room 2015 2016 (F)

Sales €62,897 +5%

RevPAR €66 €71

Profit €12,805 +11%

PROFIT

24% growth


Mid Price (3 Star) Hotel Performance

Per Room 2005 2010

Sales €45,510 €32,460

RevPAR €56 €36

Profit €10,493 €5,149

Per Room 2015 2016 (F)

Sales €47,537 +5%

RevPAR €48 €52

Profit €9,157 +8%

13% Profit decline


Luxury Hotel Performance

€0

€20,000

€40,000

€60,000

€80,000

€100,000

€120,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total Sales Luxury PBT Luxury

Luxury Hotels at Peak

Sales and Profit levels

15% 21%


First Class Hotel Performance

€0

€10,000

€20,000

€30,000

€40,000

€50,000

€60,000

€70,000

€80,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sales First Class PBT First Class

17%

20%

First Class Hotels at

Peak Sales and Profit

levels


Mid Price Hotel Performance

€0

€10,000

€20,000

€30,000

€40,000

€50,000

€60,000

€70,000

€80,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total Sales Mid Price PBT Mid Price

23%

19%

Mid Price Hotels not

back to peak levels


International Tourism Demand and Brexit


International Tourism Demand

0.0m

2.0m

4.0m

6.0m

8.0m

10.0m

12.0m

GB Other Europe US/Canada ROW

2015

+13.6% Global

Economic

Crisis

Source: CSO

2016 (Jan-Sept)

+12%

US Terror

Attacks



Brexit – UK Visitors to Ireland as % of Total Visitors

1985 1995 2005 2015

UK Other Europe US/Canada ROW Source: CSO

UK 63% of

International

Tourists

UK 41% of

International

Tourists


Brexit – Source of Business by Region

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

All Dublin M&E South West Western Seaboard

GB NI

21% 20%

24%

17%

23%



Brexit – Source of Business by Classification of Hotel

21%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

All Luxury First Class Mid Price Economy

GB NI

16%

21% 20.5% 23%



Survey issued September 2016, 3 months

after Brexit result

Replies from 80 hotels

82% of respondents in the Border region felt

that Brexit had directly impacted their

business in the last 3 months.

Respondents who answered “Yes” felt that

any impact to date was minimal.

Brexit Survey - Findings

Dublin 31%

Regional 54%

Border 15%

Profile of Respondents

Yes 43%

No 57%

Has the Brexit vote had a direct impact on your business in the last 3 months?


Hotelier Sentiment for next 12-15 Months

Increase / Remain the Same

64%

Decrease 36%

Sentiment for Demand Levels

42%

21%

75%

58% 79% 25%

0%

20%

40%

60%

80%

100%

Dublin Regional Border

Demand By Region

Decrease Increase / Remain the Same

Decrease 13%

Increase / Remain the Stay

87%

Sentiment for Average Room Rate

96% 88% 67% 0%

20%

40%

60%

80%

100%

Dublin Regional Border

Average Room Rate By Region


Investment and Constraints


Investment and Constraints on the Sector

What happens if there’s no

additional supply introduced?


3 Star Hotels YTD Sept

2015

YTD Sept

2016

YOY

Growth

Occupancy 87% 86% -1%

Average Room Rate €91 €112 +€21

RevPAR €79 €96 +€17

New builds and

Extensions

Investment Feasibility – Dublin City Centre


2015

YTD Sept

2016

YOY

Growth

Occupancy 85% 86% +1%


RevPAR €106 €129 +€23

Source: STR Global


Investment Feasibility – Dublin Surrounding


2015

YTD Sept

2016

YOY

Growth



RevPAR €54 €64 +€10


2015

YTD Sept

2016

YOY

Growth



RevPAR €74 €90 +€16

Source: STR Global

Site Costs?

Feasibility?

New Builds & Extensions


Conclusion and Opportunities for the Irish Hotel Sector

Demand has returned to a level which allows:

Opportunity to yield room rate

Need for additional room supply

Potential for new hotels in the Dublin market

Existing hoteliers will have the opportunity to expand

Repositioning of hotels (e.g. upgrade in hotel classifications)

Re-investment in the hotel product through capex programmes, lifting revenue

Reduced potential for distressed sales and retrades.

Barriers to entry remain – planning, funding and stabilisation of new builds.


Bastow Charleton Member Crowe Horwath International

Marine House

Clanwilliam Court

Dublin 2

Ireland

www.crowehorwath.ie

Thank You.

Aiden Murphy

Partner | Restructuring, Advisory & Insolvency

[email protected]

Documents

Hotel Market Performance and Expansion Opportunities Aiden ... · © 2016 Crowe Horwath 4 Overview of Hotel Supply 2016 Midlands & East # Hotels 232 #Rooms 12,986 Avg Size 55 Western