The AHC reflects on the recent Regional Roundtable held in Ireland
20th May 2019
The second of The AHC Regional Roundtables - Learn | Network | Be Inspired - took place this week continuing our series of conversations throughout the UK and Ireland to truly understand the opportunities, challenges, trends and concerns of those operating within the hotel industry. The event was kindly hosted by Tifco Hotel Group in the Crowne Plaza Dublin – Blanchardstown. With the conference theme for this year of "Unlock The Potential" ringing loud in our ears, we settled down to a highly engaging, active and insightful meeting.
The opening presentation from HotStats talked to a healthy operating and trading climate over recent years for Ireland, with current supply deficit in Dublin due to stabilise by 2020. But the weakness of sterling making Ireland an expensive destination for the British tourist they heavily rely on, Brexit uncertainty and the challenges in absorbing the 4.5% increase in VAT introduced this year may well all be contributing factors to Q1 2019 being the first period of negative growth Ireland has seen for many years.
The round table discussion opened positively with Dave Murray from CBRE saying “demand for investment is really strong. The transaction processes being run are complex in nature which was initially thought to put people off, but actually the fundamentals remain robust”. The group discussed the split, in terms of demand for hospitality product, between Dublin and the rest of Ireland with the rest of Ireland being more susceptible to seasonality than Dublin, which is largely driven by corporate travel. Niall Kelly from Marriott International felt the challenge in Dublin was the number of rooms available “our problem is we don’t have enough rooms” and with both occupancy and rate increasing over the last three years, more supply is required, particularly at the mid-scale level, to meet demand in Dublin.
A notable point raised which seems to be affecting the Irish region, especially, is the reliance on demand from tour operators. This business has historically been fruitful for the region, but a number of factors have led to a decline in tour business so far this year. As visitors from the tour packages traditionally emanate from the USA and Germany, suggested reasons for the decline include the US government shutdown earlier in the year, a possible recession looming in Germany and the lingering uncertainty over Brexit.
Emma Young from Allied Irish Bank (AIB) commented on the trend towards brands adopting a more communal ground floor environment to facilitate co-working and casual socialising throughout the day over the traditional model of multiple F&B spaces on the ground floor. It was also noted that the extended-stay model is currently only 2.5% of stock in Ireland so this segment of the market represents significant opportunities for investors, developers and operators.
The issue of labour within the industry was once again raised, as it was during our previous Regional Round Table in the North West. Affordable accommodation was cited as one of the most significant factors around labour in Dublin, in particular. Jim Murphy from PREM Group said they had just purchased two residential houses as a solution to the lack of affordable accommodation for staff across their portfolio. The continuous frustration around the status of the hospitality as a viable and rewarding career amongst young people occupied a substantial part of the meeting although heartening to hear from Phillip O'Neill, General Manager at the Clayton Hotel in Dublin that they have received over 1,000 applications for a graduate management programme with a capacity of 35.
On technology, the group widely agreed that personalisation was the area of most potential and the established loyalty programmes seem a sensible place to start. There are also multiple opportunities to embed technology in back-of-house processes, freeing up staff to engage with guests and deliver an exceptional hospitality experience. There remains a looming threat from dominant technology players, such as Google and Amazon, that should they move into/further into the hotel space, a very serious problem for operators could emerge.
On the subject of investment in the sector, the group generally agreed that demand for hotels as real estate assets is buoyant in Ireland. In common with the UK, the country has seen the emergence of non-traditional hotel investors such as pension and insurance funds deploying money into the asset class. This has been driven by the need to diversify portfolios combined with low rates of return on fixed-income assets such as office and retail.
While loan to value remain conservative, compared with the heady, pre-global financial crisis days alternative funding structures are being implemented, including the ground rents. As with many audiences, opinion was divided on the sustainability of the ground structure: bank lenders are reluctant to play second fiddle in terms of recourse, while investors and brokers generally see an opportunity to satisfy demand from funds to invest in the sector.
Several of the key talking points from this conversation will feature on the conference programme for The AHC 2019. More information on this and future Regional Roundtables can be found at www.theahc.co.uk
Our sincere thanks to those who attended the AHC Regional Roundtable in Ireland:
- Emma Young, Head of Hotel Corporate Banking – Allied Irish Bank
- Alan Long, Head of Hotel Corporate Banking – Allied Irish Bank
- Stephen Collins, Country Manager – Avvio
- Gerardo Larios Rizo, Head of Hospitality, Business Banking – Bank of Ireland
- Neville Graham, Managing Director International Membership – Best Western Hotels & Resorts
- Vivienne Nyhan, International Development Manager – Best Western Hotels & Resorts
- Joe Friel, Business Development Manager FF&E – Castlebrook
- Dave Murray, Director – CBRE
- Phillip O'Neill, General Manager – Clayton Hotel Dublin
- Marta Stybaniewicz, Senior Key Account Manager – Google
- John Duffy, Managing Director – JDDG International
- Brian McCarthy, Development Manager – Jurys Inn & Leonardo Hotels UK & Ireland
- Nial Kelly, Development Consultant – Marriott International
- Jim Muphy, CEO - PREM Group
- Sarah Duignan, Director of Client Relationships - STR
- Richard Carron, Business Development Director - The Delux Group
- David Monks, Development Director - Tifco Hotel Group
- Weldon Mather, Managing Director - WM Consultancy Ltd
- Elaina Fitzgerald Kane, Proprietor - Woodlands House Hotel & Spa