Kennedy Wilson, a real estate firm based in California, made a remarkable $99 million (€92 million) gain from a ten-year investment they made in Dublin’s five-star establishment, the Shelbourne Hotel. Such prime assets like the Shelbourne require heavy spending on their preservation, often calling for a great deal of cash to improve aspects that may not be readily noticeable to patrons. Furthermore, the hotel business was heavily hit by a two-year period of pandemic which substantially limited the hotel’s operations.
However, Kennedy Wilson appeared to have sold the hotel to Archer Hotel Capital at a perfect timing. The selling decision came in the same week the Shelbourne’s revenues dropped by 12%, as a result of lower room occupancy and decreased food and beverage sales. The hotel was reportedly listed for approximately €260 million, a value that equals nearly €1 million for each of its 265 bedrooms. In comparison, Tetrarch is demanding €45 million for their Mount Juliet hotel and golf resort in Co Kilkenny, equivalent to €360,000 per bedroom. Moreover, Irish Bank Resolution Corporation (IBRC) liquidators are advertising a 224-bedroom resort, the Slieve Russell located in Co Cavan, at €35 million, or €156,250 per key.
On a note of interest, Singapore entrepreneur Stanley Quek, who has invested in some Irish hospitality assets such as the five-star Castlemartyr hotel in Cork, was astounded at the Shelbourne’s sale price. Quek admitted that it is a mystery how one could profit from such a deal. It appears that Quek’s perplexity is shared among others in the hospitality sector, and Archer’s investors might eventually be contemplating the same question.