Ireland's hotel market starts to recover in wake of financial crisis
In Ireland, the zombie hotels dotted across the landscape are beginning to revive or die.
Four years ago, the country's debt-laden hotels were contending with falling visitor numbers and new competitors financed by surging mortgage lending during Ireland's "Celtic Tiger" boom. That's when zombie hotels emerged, slashing room rates to stay alive and keep tax breaks granted during the boom.
Now increasing demand for rooms, led by Dublin, is prompting investors from American billionaire John Malone to Russia's richest woman to buy Irish hotels. The Irish capital generated more revenue growth per available hotel room than any other major European city in the 12 months up to June, according to a survey by lodging-data provider STR Global.
"There's a fair bit of capital in the marketplace looking for what people now believe is a good investment again," said Kevin McGillycuddy, managing director of Brehon Capital Partners. The Dublin-based private-equity firm and partner Midwest Holding bought the Ritz-Carlton Powerscourt near Dublin in February and opened the five-star Marker Hotel in April.
Brehon might also have purchased the city's Trinity Capital Hotel if its bid hadn't been trumped by Malone, chairman of Liberty Global. Malone, who controls the international cable company, paid about €35 million (HK$358 million) for the 195-room property this month, said a person with knowledge of the transaction who asked not to be identified because the information is private.
"It's a personal investment with friends," Malone said in an e-mail.
Tourism, Ireland's largest indigenous industry, was devastated by the global financial crisis, with visitor numbers plunging 23 per cent between 2008 and 2010. Since then, visitor numbers have begun to pick up, as has the hotel occupancy rate.
That's reflected in the property market. Hotel values have climbed about 20 per cent in central Dublin since September 2011, more than any other part of the Irish property market, brokers CBRE Group and Savills estimate.