Almost a quarter of the 145 hotels put into receivership at the end of last year are yet to come to market creating a pipeline of properties that will help transactions reach record highs again this year.
The large number of buyers coupled with improving economic fortunes and a strong supply line of hotels is likely to see transactions reaching peak-2014 levels when 68 hotels were sold.
With Ulster Bank, Nama and IBRC set to continue feeding demand in the sector and large buyers with acquisition funds in place, further consolidation is likely.
Aiden Murphy, partner with business advisory firm Crowe Horwath told delegates at the Irish Hotels Federation annual conference in Co Cavan that buyers such as Brehon Capital, Dalata and foreign private equity firms like Blackstone and Lone Star are actively seeking acquisition opportunities and have capital to reinvest in the businesses they acquire.
Those buyers are mainly attracted to larger hotel properties in the upper rung of what he describes as a three-tier hotel real estate market.
Dublin city centre hotels which account for more than 9,500 rooms or 16% of the national supply are categorised as tier one properties while properties on the outskirts of the capital and in Cork, Galway and Killarney are in the second grouping.
The bottom rung, Mr Murphy said, is populated by the more than 600 regional hotels who rely more on food and drink sales to survive.
Meanwhile, IHF chief Tim Fenn heralded the reduction of VAT to 9% for the tourism industry as one of the most successful job creation initiatives in modern times.
He was speaking as a report compiled by economist, Alan Ahearne was published which found the measure has proved to be a highly cost-effective way of boosting competitiveness and employment.
The reduction brings Ireland’s VAT rates more in line with Bulgaria, Cyprus and Estonia at 9%. Luxembourg with a 3%rate has the lowest level in Europe while Denmark at 25% is the highest.
Over 30,000 jobs have been created since the measure was introduced, Mr Ahearne said.
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