Cushman & Wakefield Divisional Director Says Some Hotels That Were In The Planning System Before The COVID-19 Pandemic Are Becoming Unfeasible
Cushman & Wakefield divisional director Isobel Horan has said that some hotels that were in the planning system before the COVID-19 pandemic are becoming unfeasible and might never be built.
As reported by The Irish Times, speaking at an online hotel industry webinar organised by Bank of Ireland, Horan said, "What we are seeing with hotels that have applied for planning or have their final grant is that some of them are becoming a little bit unfeasible."
Horan stated that some property developers are now weighing whether to target different parts of the economy due to the hospitality industry being majorly impacted by the continuing pandemic and expectations that the hospitality industry will be among the last sectors to recover from the pandemic's impact.
New Rooms In the Planning Systems And Deferrals
Approximately 18,320 new hotel rooms are in the planning system, and 6,223 of those have final planning permission, while 5,832 are under construction, but expected completion dates have been delayed.
Cushman & Wakefield estimates that approximately 1,920 hotel rooms have already been deferred by developers and believes that that number is likely to increase as developers scout other opportunities for proposed hotel sites.
2020 And 2021 Room Delivery Expectations
Horan said that Cushman & Wakefield expects that just 500 new hotel rooms will be delivered in 2020, compared with a pre-COVID-19 expectation of 3,000 new rooms, and approximately 3,000 new rooms will be delivered next year, compared with a pre-COVID-19 expectation of 5,000.
2020 Hotel Openings And Transactions
The Bank of Ireland webinar also heard that Ireland's overall hotel market has "stalled", with Dublin's Hard Rock Hotel, which opened in February, being the only new hotel that opened this year.
There have only been five hotel transactions this year, which were worth a total of €124 million, and approximately €35 million of that figure is sale agreed, as international investors that have traditionally been active in the Irish market have adopted a wait-and-see approach.
In 2019, there were 20 hotel transactions worth a total of €583 million.
Additionally, Cushman & Wakefield estimates that the value of economy hotels has decreased by 15% to 20%, and that the value of higher-end hotels has decreased by 20% to 30%. However, due to the current low level of transactions, these valuation estimates are gauged on sentiment and are materially uncertain.
© 2020 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.