Aiden Murphy presents are 2022 IHF investment conference

Aiden Murphy speaks at the 2022 IHF Hotel Investment Conference

Aiden Murphy presents are 2022 IHF investment conference

Crowe partner Aiden Murphy presented at the Irish Hotels Federation's Eighth Irish Hotel Investment Conference on Wednesday 1 June 2022. The following is a short summary of what he covered and below there is a link to download his full presentation.

Addressing the requirement for investment during the current period of unilateral post-pandemic economic recovery and inflationary environment, Aiden underlined the importance of optimising cash flow by way of reviewing revenue potential and decreasing costs to enhance profitability and asset value. 

Reviewing the growth of hotel stock between 1999 and 2019, Aiden noted a significant increase in stock between 1999 - 2010 (+58%) and then a deceleration of growth following the global financial crisis. While growth in stock softened, there was a marked increase in the quality of hotel stock over the period analysed. In 1999 over 80% of hotel stock was graded 3-star and under compared to now where only 35% of stock is less than 3-star.

While there has been investment in stock to lift quality and grading, there is still an opportunity for hotels to increase their room count which can release efficiencies as centralised cost centres already exist. 

Aiden highlighted the primary focus of where investment should be targeted to support businesses in this volatile period as well as the key investment priorities.

Why is investment required?   Investment priorities
  1. To protect profit levels
  2. To respond to new limiting factors
  3. To reposition for emerging demand
  4. To maintain asset value
  5. To expand in a ‘capital light’ way
  1. Technology
  2. People
  3. ESG

Aiden provided different illustrations on the impact of increasing costs on a variety of property types across Ireland and through this analysis it was identified that if properties cannot surpass 2019 levels of revenue, it would be difficult to counterbalance increasing costs. 

  • The sector is facing into a period where payroll costs will be higher. Labour market shortages, combined with significant demand, will further exacerbate payroll requirements. 
  • Hotels with accompanying leisure centres are experiencing the greatest cost increase due to their energy consumption requirements. These hotels will find it more difficult to recoup the costs given the lower levels of income directly attributed to the department.

To find out more about our Hotel, Tourism and Leisure advisory team contact Aiden Murphy or one of our dedicated HTL team members. 

Download Presentation

Review of Business Strategies for a Recovery and Inflationary Marketplace

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2022 IHF Investment conference presentation - Crowe Ireland