International Hotel Branding

Introduction:

Irish Hotel Market

The number of hotel rooms in Ireland has increased by more than 70 per cent to 50,000 over the last decade. Last year, hotel room capacity grew by 6 per cent, according to figures published by Failte Ireland.

The Hotel industry in Ireland has become extremely competitive. Faced with competition from new hotels, some established players have decided to leave the market. The government sold off the Great Southern Hotel chain, while another well-known hotel chain, the Gresham group, was sold in January 2004 for €115 million.

The hotel model is changing. It is all about the number of rooms you have now. Fortunately, a lot of smaller, family-owned hotels have been able to sell off their hotels as property assets.

The Ramada Hotel Group and Crawford Investments announced a €300 million investment in 37 hotels in Ireland over a three-year period. The hotels will be a mixture of new developments and existing establishments.

Golden Tulip UK, a British hotel group that has already entered the Irish market, expects to have 15 hotels in Ireland.

The industry is set to acquire more than 50 new hotels and a potential 9,500 new guestrooms before 2008. This growth in hotel development is primarily developer-driven, stimulated by government tax incentives, with global hotel operators likely to play a key role in operating the vast majority of these new hotels operating within Ireland. It is evident that both the fiscal incentives and internationalisation of the Irish hotel product represents the most important developments in the changing structure of the modern Irish hotel industry and subsequent valuation of hotels.

The number of hotels in Ireland has increased by almost 20 per cent over a ten year period, with the room stock increasing significantly by almost 75 per cent. While a review of the Ireland and Northern Ireland, Hotel Industry Surveys, 1996 – 2006, shows that there has been a steady increase in national room occupancy (OCC) and average room rate (ARR) during this period as shown by Figure 1.

Figure 1.

Source: Howarth Bastow Charlton, Hotel Industry Surveys 2001-2005

In terms of spatial coverage, Dublin, the Midlands and Eastern regions have seen the greatest increase in new hotels and bedrooms due to the higher demand levels and highest return on investment achieved in the eastern half of the country. Dublin hotels have consistently outperformed all other regions, with occupancy levels performing 10 per cent above all other regions.

According to consumer consultancy firm Mintel International, more than 20 per cent of all hotel rooms in Ireland are linked to an international brand. While most of those are custom-built developments, many traditional hoteliers have chosen to sign up to a brand to increase their marketing power.

International Brand Hotel Market in Ireland

Five years ago there was hardly a world known Brand Hotel name in Ireland, but now we have Radisson SAS, Hilton, Ramada, Marriott, Four Seasons, Westin, Park Inn, Malmaison, Crowne Plaza, Tulip, and Clarion. Meridien and Ritz Carlton are due to open in the next year.

With the continued development of hotel properties throughout the country, Ireland has followed the worldwide trend of the expansion of international hotel brands in the market, with 9 out of the top 10 worldwide chains now operating in the Irish market.

By 2010 the global hotels and motels industry is forecast to have a value of $554.3 billion, an increase of 23.7% since

2005 (Figure 2).

Figure 2

Source: www.datamonitor.com

Mount Juliet.

Hotel chains specialising in the midrange and lower priced segments are the hotels that have expanded the most worldwide, occupying 25 separate brands.

Hotel chains in Ireland have a choice of whether to align themselves with an international brand, or to rely on their own name.

In an Irish context, hotels have traditionally been family-run businesses, although there has been a huge increase in the number of branded hotels - in the last decade in particular.

While many Irish hoteliers have so far resisted aligning themselves with international brands, many are now beginning to question