Hard Rock and EasyHotel have both announced hotels in London as they bolster their positions in Europe.
The announcements came as performance and investor appetite remained strong in the city, increasing competition for sites.
Tifco signed a franchise agreement with Hard Rock to open a 120-room hotel in early 2020, operating the site itself. Todd Hricko, head of global hotel development for Hard Rock International, said: “Ireland has always been a place close to our hearts, and it only seems right to open a Hard Rock Hotel in Dublin, given the city’s musical roots. This is an exciting opportunity to extend our presence in Europe and elevate the one-of-a-kind offering at Hard Rock Hotels to the next level.”
Enda O’Meara, CEO, Tifco, added: “Dublin’s vibrant cultural scene makes it one of the hottest European cities to visit, attracting over 5.5 million overseas visitors annually. Hard Rock Hotel is an iconic, global brand that will be bringing something very different in its own distinctive style to this vibrant part of the capital city.”
At EasyHotel, the company has acquired a freehold site in central Dublin, for EUR9m, to develop a 96-room hotel. The group has planning for the hotel, but said that it would be applying to amend the existing permission to allow for a 130-room site.
Guy Parsons, CEO, EasyHotel, said: “We are delighted to have secured this excellent site in the vibrant City of Dublin, our third investment since our successful fundraising in March 2018 and our second owned hotel site in Europe. The Dublin site takes our pipeline of owned/leased projects to 1,280 rooms in addition to the 1,782 franchise rooms currently under development.”
Performance in Dublin has remained strong. According to STR, in the first quarter occupancy was up 0.8% on the year, with revpar up by 7.8%. STR analysts noted that performance was strong across the country, “not just in the always popular Dublin. Continuing to help Ireland’s performance is a lack of meaningful supply growth”.
Lack of growth, combined with strong performance, has meant increased interest from investors and competition for sites. The Goldman Sachs-backed Tifco, which owns 25 hotels with another two in development, is currently being marketed and, Hotel Analyst understands, was attracting a number of buyers, many from Asia.
Lisa Keogh, associate director, CBRE Hotels, said: “Following a year in which transactional activity in the hotel sector was constrained by a shortage of product, particularly in the Dublin market, we expect to see significant improvement in this situation in 2018 with several high-profile hotel properties expected to be offered for sale (both on and off market) over the next few months.
At EasyHotel, announcement was made alongside the news that the company was due to appoint a Group Development Director to lead the development in Europe, together with a dedicated team focussed initially on Spain, France and Germany.
EasyHotel, the company said it thought there was potential for approximately 12,000 EasyHotel rooms, primarily in the UK, Spain, France and Germany with an additional opportunity for approximately 15,000 franchised EasyHotel rooms across the UK, Europe and the Middle East.
Parsons told Hotel Analyst: “We’re not saying the UK market is dead – our revpar was up 11.2% – but at the same time if you look at the STR figures you can see that Europe is performing ahead of the UK. London has been under pressure for a while and the regions are mixed – underlying all of that is that consumer confidence is weaker than it has been, probably because of Brexit.
“We’ve got a reasonable pipeline in the UK, we’re not pulling out of the UK, but if you look at Spain the fact is that revpar is rising and we’re not seeing land costs rising at the same pace. Now is the perfect time to go to Spain, there isn’t a dominant super budget or budget player. We had looked to developing into the four gateway sites, but we may now develop past that. The market economies are absolutely right. We’re confident that we’ve got the product right. The time is right for us to exploit that.”
HA Perspective [by Katherine Doggrell]: Dublin has been a bubbly market for some time now, to the extent that a local player such as Dalata has turned its attention to the UK, proclaiming that the city was too rich for its blood.
There is no end to the number of brands and investors still willing to take a chance on the market and one of the reasons why the city has become such a priority is Brexit. When even Jacob Rees-Mogg is moving his business to Dublin – nanny approves, we assume – then there must be something in it. The EU has made it clear that the Irish border is a non-negotiable and, as such, it seems, politically, a better bet than its neighbouring island, where stockpiling tins of Spam is the smart consumer move.
While the city has benefitted from limited stock, more rooms are on their way, According to Deloitte, construction projects in progress or planning will add 3,000 rooms in the capital by 2020, increasing total stock by 15%. Despite this growth, investors and brands are betting that Dublin will remain strong and stable way past March 2019.