amárach hotel investment survey december 2013
DESCRIPTION
A survey on the outlook for Irish hotel property investment in 2014. Conducted in partnership with the Hotel Property Conference: http://www.propertyconference.ie/TRANSCRIPT
Hotel Property Conference 1
Hotel Investment Outlook Amárach Research
December 2013
Hotel Property Conference 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
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Timing is everything in investment, and right now the consensus on hotel property is very positive…
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the right time to buy
Source: Amárach Research, 2013
10%
63%
19%
6%
already past right now next year in 2-3 years
Q. When is/was right time to buy hotel property in Ireland?
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If ‘now’ is the right time to buy hotel property, then what does that say about hotel asset prices?
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fair value
Source: Amárach Research, 2013
10%
70%
20%
above fair value fair value in current market below what they're reallyworth
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What then is driving the demand for hotel property, and what are the main constraints?
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the main constraints
Source: Amárach Research, 2013
59%
40% 36% 35%
21%
lack of bankfinance
competition frominternational
investors
lack of investorfinance
lack ofappropriateproperties
cost of fit out/refurbishment
Q. What are main constraints on buying hotel property?
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the main drivers
Source: Amárach Research, 2013
74% 66%
37% 34%
11%
location price tradingperformance
condition star rating
Q. What are main drivers of hotel property purchases?
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What about the provision of finance for hotel purchases or refurbishments – now and in the future?
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the trend in finance
Source: Amárach Research, 2013
11%
23%
43%
23%
1%
23%
59%
17%
worse same better not sure
past 12 months next 12 months
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If funding is getting better, then where will the best growth prospects be next year?
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Fastest rising hotel asset values in 2014:
Dublin City
Centre
77%
growth prospects
Greater Dublin Area
31%
Main Tourist Centres
29%
Galway
14% Source: Amárach Research, 2013
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Finally, what one thing has to change to drive hotel property values in next 2-3 years?
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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.”
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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
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