€22m for Hilton Hotel at Grand Canal

The profitable Hilton Hotel overlooking the Grand Canal at Charlemont Place in Dublin 2, is to be offered for sale through Savills at a guide price of €22 million.

The 193-bedroom hotel, which made a profit of over €2 million in 2012 and is trading even better this year, was owned by property developers Jerry O’Reilly and Bernard McNamara whose loans were transferred to Nama.

Funding for the four-star hotel was originally provided by AIB in 1997. As one of the key hotels in the city, the Hilton is expected to be of interest to both Irish and overseas investment funds because of its steadily growing profit margins over the past three years and the fact that there is a shortfall in city centre hotel rooms during the increasingly frequent busy periods.

Unfortunately the recovery taking place in the Dublin hotel market, both in capital values and room rates, is not evident in most provincial cities and towns where a great many hotels have declined in value by up to 50 per cent and continue to trade at a loss.

Even hotels in some of Dublin’s outer suburbs and in the greater Dublin area have hardly benefitted from the buoyant city trading.

The Hilton achieved a room occupancy level of almost 90 per cent in 2012 when the average room rate exceeded €100 per night. Tom Barrett of Savills says the fee structure is strongly incentivised towards the property owner and there is a significant reserve fund in place to ensure the property is maintained to the Hilton brand standard.

Hilton’s 20-year management contract dating back to 2005 has proven a highly successful arrangement both for the international hotel group and the property owners.

Hilton Worldwide is recognised as the number one global brand with 3,900 hotels and 640,000 rooms in 90 countries.

Brand portfolio
In Dublin, Hilton has added both the Morrison and the Burlington hotels to its brand portfolio with both of them now trading as DoubleTree.

The Morrison, sold for €22 million 18 months ago and since upgraded at a cost of another €7 million, worked out at a value of €210,000 per bedroom while the Burlington, sold for €67 million and undergoing a €17 million capital investment, will have a value of €167,000 per room.

If Savills achieve the asking price of €22 million for the Hilton, the valuations will be around €114,000 per room.

The Hilton was upgraded at a cost of €5 million in 2008 and since then there has been an annual allocation of capital expenditure to ensure that the facilities remain among the best in the city. A conference hall with a theatre-style layout to accommodate up to 400 people has been provided and earlier this year three further meeting rooms were added to meet business demands.

A courtyard patio with outdoor seating and a barbecue area have proven popular and guests have also had the use of a gymnasium and basement car park with 80 spaces.

Savills say that whoever buys the Hilton will be able to grow revenues as average room rates continue to pick up and additional income comes from the development of new meeting rooms.

The hotel also has the benefit of an income stream from a number of phone masts and car-parking licence agreements.