2018 – STRONG HOTEL DEVELOPMENT BUT LIMITED TRANSACTIONAL ACTIVITY
01 February 2019The New Year celebrations have now ceased and its back to work for another year. The hospitality sector locally in 2018 was a year which saw limited transactional activity in terms of licensed premises changing ownership and probably the quietest since the early years of the recession. That said one of the main reasons for this inactivity is that the previous five years had seen a considerable shift in ownership of public houses and hotels.
On the hotel front 2018 has seen a wave of new hotels opening throughout the city offering tourists and visitors new well known alternatives when seeking to book accommodation. The city’s hotel room stock has increased by around one third during this 12 month period with Belfast providing over 4,500 bedrooms. Clearly this increased supply has impacted the market and in the short term it will take time to settle down in terms of demand thus impacting room and occupancy rates.
The escalation in rooms are provided by a number of first rate hotels operated by either local or brand operators. The Hastings Hotels have added the 4 Star Grand Central to their impressive portfolio which is located close to the Europa and providing over 300 bedrooms with a unique cocktail lounge on its 23rd floor known as the Observatory. Locally again Andras House Hotels have increased their portfolio with the opening of the first Hampton by Hilton in Ireland providing 178 rooms in the heart of the city complementing their other operations which include the Crowne Plaza, Ibis and Holiday Inn hotels. In terms of other new offerings in 2018 we have seen the opening of the global brand AC Marriott Hotel on the River Lagan which forms part of the City Quays development. The 4 Star hotel’s food and beverage offer is being operated by the multi-award winning Michelin starred chef Jean Christophe Novelli. Other new schemes include the new Maldron hotel on Brunswick Street by the Dalata Group who are the largest hotel group in Ireland and again they have increased their portfolio in Northern Ireland which already included the Clayton and Maldron hotels brands in Belfast and Derry. Other newer smaller operations include the easyHotel and The Flint which is a non-traditional styled “bedroom only” hotel operated by a local family. On the north coast there are a number of new hotels in the pipeline which are well needed in this ever popular destination for golfers and regular tourists to this stunning location.
Pic: Beech Hill Hotel
In terms of trading hotels changing hands in 2018 the number of deals have been very limited indeed. Two hotels on the periphery of Derry City were sold which included the Waterfoot and more recently the sale of the Beech Hill Hotel. The latter iconic hotel had been held by the same families for many years until it was acquired by The House Collection who are based in the Republic. In Belfast we acted in the sale, on behalf of the vendor, of the former Lansdowne Hotel on the Antrim Road which is currently undergoing refurbishment and I understand following a comprehensive refurbishment is due to open in the coming months.
During the past year many pub operators have been realigning their businesses to include refurbishing their premises, rebranding and evolving their product offering. The public house market has seen limited transactional activity during the past year with deals relating to provincial sales which included Romas in Newtownards. Again as per the hotel sector a lot of transactional activity has occurred over the years from 2013. Although the Belfast pub market has yielded little transactional activity this was largely down to supply as demand remains constant but pricing is a key constituent as always. A number of city centre pubs have undergone refurbishment including the former Apartment now trading as Hell Cat Maggies, the former Washington now trading as The Rusty Saddle and The Carmichaels have leased out the former Morrisons pub to Mark Beirne which now trades as Pug Uglys. The provincial market remains challenging as towns and villages still have too many outlets which are surviving on weekend trade to sustain their businesses.
The face of provincial villages and towns will continue to evolve providing less and less traditional trading businesses on their main street. One result of this shift is the onward sale/surrender of liquor licences from these premises which are being absorbed by the convenience operators who are enhancing their on-site product mix for patrons. All liquor licences that I have transacted during 2018 have been sold for £90,000 and I expect the demand to continue in the New Year and values to improve.
Unfortunately 2019 will revolve around Brexit conversation and whether we will have a hard or soft border and ultimately this uncertainty is bad for business. Clearly the lack of local governance will also continue to hamper any progress and decision making. I envisage that the hospitality sector will continue to work through a challenging market principally due to growing costs, competition, consumer spend and staffing as the main issues to contend with as well as the other issued mentioned. That said people locally are very resilient and are accustomed to uncertainty and working through difficult times so I expect we will work through the obstacles put in front of us. In terms of transactional activity I would hope and I expect that there will be more deals to be transacted in the coming year compared to 2018.