Belfast booming despite Brexit, economic challenges
 
Belfast booming despite Brexit, economic challenges
26 FEBRUARY 2020 8:53 AM

A surge in tourism tied to popular attractions and television fame has hoteliers looking favorably at the Northern Irish capital Belfast, but economic challenges might take off a little of the gloss.

BELFAST, Northern Ireland—Hotel supply is growing in Belfast, as travelers increasingly discover the region, but challenges include business rates and uncertainty over Brexit, though the United Kingdom has now officially left the European Union.

Attractions in the region that are drawing tourists include the geological marvel of the Giant’s Causeway, golf and food, historic palaces and castles, the Titanic Experience and film and TV locations, notably for the HBO drama “Game of Thrones.”

The 110,000-square-foot “Game of Thrones” studio lot tour in Banbridge, County Down, is expected to attract 600,000 visitors per year when it opens this year.

Hoteliers have noticed the buzz.

Howard Hastings, managing director of family-run, Belfast-based Hastings Hotels, said “Belfast has been growing in popularity as a destination for over 10 years and has seen a significant increase in bedroom inventory at all classification levels over the past three years.

He added that “it is an increasingly important conference destination, following the remodelling of Belfast’s Waterfront Hall into the much larger (International Convention Centre) Belfast.”

One huge conference coming to Belfast is the European Association of Archaeology, a week-long event in 2022 with approximately 2,500 attendees.

Recently announced hotel developments include Propiteer Ltd.’s planned conversion of the former Nambarrie tea factory into a 151-room hotel that might be branded as a Moxy, a Marriott International brand; and a £30 million ($39 million), 276-key hotel at Hamilton Dock in the Titanic Quarter by family-run owner-operator JMK Group.

Managed by RBH, the 165-room Ramada by Wyndham Belfast City Centre completed a £450 million ($585.3 milion) renovation last May.

Healthy tourism
London-based JMK is seeking a Belfast franchise under an international brand (likely Marriott International), with construction due to begin in spring 2020 and opening projected for summer 2021, said its group financial controller, Chandresh Gandhi.

“Over the past two years, Belfast has been booming, hence our decision to look for a site. A lot of infrastructure has been developed to attract more tourism; there is the Titanic and the area holds events all the time,” he said.

Gandhi said 2019 was not the best year for the region, with uncertainty surrounding Brexit, but he believes it will soon bounce back.

Data from STR, the parent company of Hotel News Now, shows hotel occupancy in the region declined 4.1% year over year to 72.5% in 2019, as average daily rate was down 2.8% to £77.81 ($101.20), resulting in a 6.8% drop in revenue per available room to £56.39 ($73.34).

Visit Belfast, the city’s conventions and visitors bureau, recorded 1.7 million visitors to the city in 2018, which generated £395 million ($513.7 million) in tourist spending.

“Now it is time to build,” Gandhi said.

“The hotel will take approximately 24 months, and I am sure by then the market will have stabilized,” Gandhi said, noting his firm has 11 hotels in operation or in the pipeline, including four in Dublin, but this would be JMK’s first in Belfast.

“(Hastings Hotels) opened the Grand Central Hotel in Belfast in 2018—at 300 bedrooms, the largest, and at £53 million ($68.9 million), the most expensive hotel project ever in Northern Ireland,” Hastings said of the group’s seventh opened asset in a portfolio that has more than 1,000 rooms.

Another notable hotel project is the George Best Hotel from Liverpool-based Signature Living, a hotel firm specializing in large-group bookings of parties and events. The property is named for Belfast-born George Best, who many regard as Manchester United and the U.K.’s greatest ever soccer player.

The hotel has been delayed by cash flow problems and investor concerns, with Signature putting two of its other hotels on the market to help fund developments.

Lawrence Kenwright, Signature Living’s chairman, says the hotel’s development has undergone challenges, notably investor disquiet, but he is confident it will open this summer.

Signature Living’s investors invested their money into various apartment blocks and hotels, all of which have significantly increased in value. We have already successfully completed investor buy-backs in the James Street and Stanley Street Hotels, with investors in James Street making a 50% (return on investment) over a five-year period,” Kenwright said, referring to two operating assets in Liverpool.

“Brexit uncertainty reduced liquidity in the property development sector, which for us resulted in delays in securing the necessary finance from banks to buy-out investors from some of our schemes. … Our sense in recent weeks is that there is now a lot more confidence in the market,” he said.

“Completing construction on development projects such as the Exchange Hotel in Cardiff and the George Best Hotel in Belfast as quickly as possible and securing a healthy valuation is the key to being able to buy-out our individual investors and pay back their full entitlement as quickly as we can,” Kenwright said.

He added that across his firm’s portfolio, the combined increase in valuations since initial investments was well over £100 million ($130.1 million).

Hastings, who is currently chair of Visit Belfast, said it remains to be seen if all planned and approved hotel projects, including some of his own, will come to fruition.

“While (Hastings Hotels) is interested in further expansion, recent business-rate revaluations across the hospitality sector have cast a shadow over potential future investment returns,” he said.

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