Ireland's Ashford Castle hotel sold to Red Carnation
Top hotel put up for sale by receivers in Oct for 25m euros
[LONDON] Ashford Castle, Ireland's most expensive hotel per night, was bought by Red Carnation Hotels UK Ltd for an undisclosed price as trophy properties are sold in the wake of the country's real estate crash.
The landmark 83-room property, where scenes of The Quiet Man starring John Wayne were filmed, was sold on behalf of receiver Ernst & Young Ltd through broker Savills Plc, E&Y said in a statement late Tuesday.
"Ashford Castle is the jewel in the crown of Irish hospitality," Tom Barrett, head of Savills's hotel and leisure unit in Ireland said in the statement. "It is a strong vote of confidence in the future of the industry from a leading international hotel and travel group."
The average room rate was about 315 euros (S$515) a night last July, Savills's Barrett said in October, when the hotel was put up for sale, citing data compiled by STR Global. The asking price at that time was 25 million euros. Irish developer Gerry Barrett paid 50 million euros for the hotel in 2007, according to the Irish Times. Income-producing properties in Ireland have lost about two-thirds of their value on average since 2007, according to Investment Property Databank Ltd.
Int'l hotel chains in China expanding faster than demand
Occupancy rate in first nine months of the year is 61%, 2nd lowest in Asia
(SHANGHAI) The expansion of hotel chains such as Hilton Worldwide and Hyatt Hotels Corp in China may be undermined by low demand as four in 10 rooms sit empty.
Room to grow: The number of branded hotel rooms is expected to jump 52 per cent by 2013
China's occupancy rate was 61 per cent in the first nine months of this year - the same as the nine months last year - and the second-lowest in Asia among 15 countries tracked by consulting and research group STR Global.
The world's biggest chains have been rushing into China, which was the third most-visited travel destination globally last year, based on United Nations World Tourism Organization data.
Chinese travellers took about 2.1 billion trips within the country last year, with domestic arrivals projected to rise at an annual average rate of 9 per cent for the next five years to reach 3.3 billion by 2015, according to Jones Lang LaSalle Hotels (JLLH).
The number of internationally branded hotel rooms is expected to surge 52 per cent by 2013 after rising 62 per cent in the past five years, said JLLH, which tracks data in 30 Chinese cities.
'Hotels in some markets of China are clearly oversupplied in the next three to five years, and they won't be generating good returns,' highlighted Nigel Summers, director at Horwath Asia Pacific. 'China has had very strong demand. The question is whether the increase in demand is going to be big enough to handle all the new hotels.'
Hilton said that it would have 100 hotels in China by 2014, four times the number of properties it manages in the country now. The US-based company currently has two flagship hotels in Shanghai.
For InterContinental Hotels Group, owner of the Holiday Inn and Crowne Plaza brands, one in four of the hotel rooms that it opens globally over the next five years will be in China, it said.
'There could be short-term bubbles in the real estate market, but long term, we feel very positive about it,' Richard Solomons, chief executive officer of England-based InterContinental, said. 'Even with the big increase in supply, we're seeing double- digit growth in revenue per available room (RevPAR).'
InterContinental will also be the first global operator to develop a brand just for China, targeting the rising number of Chinese travellers.
In the next decade, China will account for 25 per cent of hotels managed by Ritz-Carlton, the brand owned by US-based Marriott International, up from 10 per cent now. The Ritz-Carlton in the resort city of Sanya, opened three years ago, is its most profitable worldwide, said Victor Clavell, vice president for Ritz-Carlton (Asia-Pacific).
For Starwood Hotels & Resorts Worldwide Inc - owner of the St Regis, Sheraton, Westin and W brands - China may eventually overtake the US as the biggest hotel market, CEO Frits Van Paasschen said in July.
Meanwhile, lower-end hotel operators are filling more rooms as they are more affordable for domestic travellers. Home Inns & Hotels Management Inc, the nation's biggest budget hotel operator with 1,004 properties, had an occupancy rate of 94 per cent in Q3, while 7 Days Group Holdings, the second largest, filled 85.5 per cent of rooms at its 838 locations.
Rates at the Home Inns property in Shanghai's downtown Jingan district were 220 yuan (S$45) a night, compared with 1,590 yuan at the Hilton, a seven-minute car ride away.
International hotel operators usually expand to extend their presence by securing management contracts from property owners to reduce financial risks.
Some city governments in China require hotels as part of mixed-use property projects that also may include offices and apartments, contributing to the increase in supply. The city that's most 'in trouble' is the port city of Tianjin, according to consultancy firm Horwath.
The city of 9.8 million people already has a St Regis, a Crowne Plaza and a Hyatt Regency, with construction to more than double the number of hotel rooms in the next three years in a city with an average occupancy rate of 45 per cent, according to STR Global data.
'Every small government across China wants a five-star hotel in their city to support businesses and put them on the map,' Mr Summers said.
'Hotels also tend to be trophy assets more so than residential buildings,' said Jonas Ogren, who handles Asian business development for STR Global. 'So, developers may be inclined to want to develop a hotel even though it may not by itself be a great investment.'
Global chains may find it difficult to maintain their standards with the rapid expansion, said CEO of the hotel division at Sun Hung Kai Properties, Ricco DeBlank.
'They carry the risk of diluting their brands,' said Mr DeBlank. 'It's a worry just to see all these brands going to China and other places in Asia at such a rapid race because they can't go anywhere else, and Wall Street is expecting certain growth.' - Bloomberg