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Hotel Economic Overview Drivers that are reshaping Ireland’s Hotel sector Naoise Cosgrove Partner


Contents • Background to Hotel Supply • Performance Trends • International Demand • Market Segments © 2013 Crowe Horwath


Hotel Supply Background

Š 2013 Crowe Horwath


Dublin # Hotels # Rooms Avg Size

Western Seaboard 254 # Hotels 13,543 # Rooms 53 Avg Size

D1/2/4

Naas Rd

Airport

Other

Total

84 9,570 114

8 2,079 260

11 1,988 181

48 4,914 102

151 18,551 123

D1/2/4

Naas Rd

24%

Airport

Other 32%

23%

21%

South West 181 # Hotels 11,865 # Rooms 66 Avg Size © 2013 Crowe Horwath

Midlands & East 249 # Hotels 13,334 # Rooms 54 Avg Size

Source: Fáilte Ireland Registrations


Bedroom By Classification Luxury 7%

Economy 5%

First Class 44%

© 2013 Crowe Horwath

Mid Price 44%

Source: Fáilte Ireland Registrations


2010: Loans transfers to NAMA

Debt per Room €140k

Dec 2010: BOSI Transfer to Lloyds

€131k

€120k €104k €100k €80k

€63k €60k €40k €20k €0k

2003

2004

2005

2006

2007

2008

2009

Debt per Room

Dec/03 €63k

Dec/04 €81k

Dec/05 €106k

Dec/06 €131k

Dec/07 €127k

Dec/08 €115k

Dec/09 €104k

Debt

€2.7bn

€3.6bn

€4.8bn

€6.3bn

€6.9bn

€6.7bn

€6.2bn

Source: Analysis of Central Bank (Credit Advanced to Irish Resident Private Hotels Sector Enterprises and Fáilte Ireland data) © 2013 Crowe Horwath


Performance Trends

Š 2013 Crowe Horwath


Hotel Trends - Republic of Ireland €120

80% 75%

€100

70% 65%

€80

60% €60

55% 50%

€40

45% 40%

€20

35% €0 ADR Occ RevPAR Change

2002 €88 65% €57

2003 €91 66% €60 +5%

2004 €93 66% €61 +2%

2005 €95 69% €66 +7%

Source: Crowe Horwath Annual Hotel Survey © 2013 Crowe Horwath

2006 €97 70% €67 +3%

2007 €98 70% €68 +1%

2008 €88 64% €56 -18%

2009 €78 59% €46 -18%

2010 €74 60% €44 -5%

2011 €73 61% €45 +2%

2012 €75 64% €48 +7%

2013 (F) 2014 (F) €76 €77 66% 67% €50 €52 +5% +3%

30%


Dublin RevPAR Growth

RevPAR Growth

16%

YTD Oct 013

14% 14%

Cork

9%

Galway

7%

Limerick

5%

12% 12% 10% 10%

8%

Source: Trending.ie 6% 4% 2% 0% 2011

Source: STR Global Š 2013 Crowe Horwath

2012

YTD Oct 2013


Hotel Performance 2012 by Region €60k

30%

€50k

25%

€40k

20%

€30k

15%

€20k

10%

€10k

5%

€k Total Sales per Room Profit per Room Profit %

Dublin €41,995 €10,038 24%

Midlands & East €53,820 €5,144 10%

Total Sales per Room

Source: Crowe Horwath Annual Hotel Survey © 2013 Crowe Horwath

Profit per Room

South West €44,704 €5,260 12% Profit %

Western Seaboard €42,483 €5,471 13%

0%


Other 7%

Conference & Banquet

Leisure

Food & Beverage

Rooms

Food & Beverage 37%

Rooms 56%

Golf

Hotel Sales Mix

Source: Crowe Horwath Annual Hotel Survey Š 2013 Crowe Horwath

Dublin Hotels

Midlands & East Residential

Other 10% Rooms 30%

Food & Beverage 61%


Sales Mix

VAT Rate

All Hotels

Dublin

Midlands & East

Revenue (est)

9%

82%

88%

79%

Revenue (est)

23%

18%

12%

21%

Total Revenue

100%

100%

100%

2012 EBITDA %

13.8%

23.9%

9.6%

Impact if VAT at 13.5%

-3.7%

-3.9%

-3.5%

Adjusted EBITDA

10.1%

20.0%

6.1%

EBITDA Per Room

€6,497

€10,038

€5,144

Adjusted EBITDA

€4,760

€8,381

€3,249

(€1,737)

(€1,657)

(€1,895)

-27%

-17%

-37%

Difference

© 2013 Crowe Horwath

Special 9% VAT rate extended to 1 Jan 2015 (hotel rooms, food and leisure membership)

Capacity to pass on increase cost to consumers?

Illustration of Impact to Hotel if VAT is increased to 13.5% and where it is not possible to pass on the cost to consumers


International Demand

Š 2013 Crowe Horwath


Overseas Visitor Numbers 9,000k

+7% YOY Increase

Currently 1m below peak

Tourism Ireland 2014-2016 Marketing Plan

8,000k 7,000k 6,000k 5,000k

4,000k 3,000k

2,000k 1,000k

-

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

6,065k

6,369k

6,575k

6,977k

7,709k

8,012k

7,839k

6,927k

6,037k

6,505k

6,517k

Source: CSO Š 2013 Crowe Horwath

2013 (F) 2014 (B) 2015 (B) 2016 (B) 6,996k

7,276k

7,695k

8,115k


Other Areas 6% North America 17%

Other Europe 36%

Source: CSO Š 2013 Crowe Horwath

Visitors

Other Areas 10% Great Britain 41%

Spend

Great Britain 34%

North America 23%

Other Europe 33% Source: Tourism Ireland


Visitor Numbers by Region 4,500k

2013 Growth Trends 4,000k

Great Britain

5.1%

3,500k

Other Europe

5.6%

3,000k

North America

14.6%

2,500k

Other Areas

14.4%

Total

2,000k 1,500k 1,000k 500k

2003

2004

2005

Great Britain

Source: CSO Š 2013 Crowe Horwath

2006

2007

Other Europe

2008

2009 North America

2010

2011 Other Areas

2012

2013 (F)

7.3%


Airport Passenger Numbers

Dublin

Cork

Shannon

Knock

Kerry

Total

2008

23,500k

3,300k

3,200k

629k

852k

31,481k

2012

19,100k

2,300k

1,400k

686k

573k

24,059k

2008 to 2012

-4,400k

-1,000k

-1,800k

+57k

-279k

-7,423k

%

-18.7%

-30.3%

-56.3%

+9.0%

-32.8%

-23.6%

Š 2013 Crowe Horwath


Dublin Cork

2013/14

2014/15

Growth

%

7,550k

8,250k

700k

8%

865k

865k

0k

0%

Kerry

270k

270k

0k

0%

Knock

500k

580k

80k

14%

Shannon

450k

750k

300k

40%

TOTAL

9,635k

10,715k

1,080k

10%

+1 million passenger promise on Government’s decision to scrap €3 travel tax © 2013 Crowe Horwath

13% additional capacity in transatlantic schedule 2013 (Boston and Chicago frequency)

YTD Sept long-haul passenger numbers up 14%

Transatlantic capacity will increase by 24% in 2014

April 2014 - 5 services per week between Dublin and San Francisco

Daily direct service between Dublin and Toronto

More frequent flights on Boston and New York routes


Market Segments

Š 2013 Crowe Horwath


Market Segments - Outlook Leisure Breaks Meetings, Incentive, Conference and Events (MICE)

Business Travellers / Corporate Accounts Tour Groups Š 2013 Crowe Horwath


• Launched in May 2012 • Ireland’s biggest ever tourism initiative • Designed to appeal to 70m people with ancestral links • Promotion budget of €5m for 2012 and €7m for 2013 • Aim to attract more than 320,000 people to Ireland • Projected €170m boost for the economy © 2013 Crowe Horwath


Š 2013 Crowe Horwath


35,000 US visitors

€30 million spend

Worth €60.5m to economy 1.3m US viewers 800k European viewers

© 2013 Crowe Horwath


The CCD opened in September 2010

Š 2013 Crowe Horwath

To date the CCD has hosted over 800,000 delegate days – c. 46% of which are international

Has won numerous international awards Top 4 Convention Centres in the World (AIPC 2012)

The International Bar Association in 2012 largest conference to date - 5,200 delegates over 6 days


Targets corporate and association events

Long lead time (2-5 years)

Report solid pipeline of bookings and enquires

Caters for up to 8,000 delegates - 750 to 2,500 typical

Hosts major international delegates including Queen Elizabeth II during 2012 state visit

In March 2014 will host the European Elections Congress for the European People’s Party (2,000 delegates, including 13 Head of State)

Service levels and customer satisfaction are important deciding factors

Price competitiveness is also a critical selection criteria

Competing with Barcelona, Vienna, Amsterdam, Paris, Copenhagen, UK

Creates direct demand for 3, 4, and 5 star hotels within the city centre; displacement effect

© 2013 Crowe Horwath


2,500+ Googler employees. New“ The Foundry” to attract extra 15,000 overseas visitors

Will double their workforce in 2014 © 2013 Crowe Horwath

Relocating to Grand Canal Square; Employs over 500 staff.

Relocating to Docklands office. Plans to grow workforce by more than 35%

Moving into Burlington Plaza

Moving to Point Village offices; Recruiting further 200 employees


GDS Trends 12 months to Oct 2013 Rest of Country, €12.8m

Dublin GDS Trends

2012

2013

Growth

€43,730k

€49,965k

+14.3%

273,229

294,204

+7.7%

Rate

€160

€170

+6.1%

Rest of Country GDS Trends

2012

2013

Growth

€11,197k

€12,763k

+14.0%

82,268

89,404

+8.7%

€136

€143

+4.9%

Revenue

Dublin, €50.0m

Roomnights

Revenue

Roomnights Rate

Source: TravelClick © 2013 Crowe Horwath


Drivers for Future Growth

Key Threats

• Increased visitor numbers

• Financial distress

• Improving domestic consumer and corporate demand

• Global economic growth

• Retaining competitiveness

• Attractiveness of Irish Hospitality brand

Competition from cheaper cost destinations

VAT rate increase

• Continued recovery anticipated – led by Dublin and other key economic centres © 2013 Crowe Horwath



Naoise Cosgrove - Crowe Horwath