Billionaire Malone Takes on Brexit and Sterling in Irish Betby
Liberty Media chairman adds to his hotel portfolio in Ireland
Sterling plunge makes visits to Dublin more expensive
Liberty Media Corp.’s Chairman John Malone is doubling down on his Irish bet, and he’s pretty relaxed about it even as the U.K.’s decision to exit the European Union threatens the nation’s recovery.
Worth an estimated $7.9 billion, Malone, 75, led a partnership that last month paid about 150 million euros ($165 million) for three hotels in Dublin, a city marked by a scarcity of accommodation. In all, Malone reckons he’s spent about $500 million in Ireland.
“In all honesty, I’m already pretty wealthy. I don’t really need my investments in Ireland to be home runs,” Malone said in a phone interview on Thursday. “I think we’ll be fine no matter which way Brexit goes.”
Malone, who traces his Irish roots back to the 1830s, is buying as hotels face their single biggest threat since the financial crisis -- a Brexit-fueled sterling decline. Since the U.K. vote to leave the EU, Ireland is no longer a cheap getaway for the Brits who have helped make Dublin the busiest hotel market in Europe outside London, by occupancy.
While Malone said he’s “very much concerned” about Brexit, it could be that Dublin will benefit from Brexit.
“Brexit may well spur more economic activity in Ireland of an investment nature, while it may detract somewhat from the affordability for British tourists,” he said. “As an investor, you always scratch your head and say ‘these things cut multiple ways.”’
The hotel sector is a microcosm of the Irish story, running from boom to bust and now boom again. Only London had a higher occupancy rate last year than Dublin, according to PWC, a stark contrast to the so-called zombie hotel era that followed the collapse of Ireland’s real estate bubble in 2008.
During the nation’s Celtic Tiger boom, at least 200 hotels opened, leaving a glut of rooms and mountain of debt as visitor numbers dwindled.
In 2013, as Ireland worked its way through an international bailout, Malone checked in, buying the Trinity Capital hotel in Dublin’s city center. He now controls some of the Irish capital’s most exclusive hotels, and his strategy is paying off.
The economy has regained its title as the fastest-growing in the euro region and hotel occupancy in Dublin rose to 82 percent last year from 67 percent in 2010, according to a report prepared for the Irish tourism agency.
The largest private landowner in the U.S., Malone added to his punt last month, buying The Spencer and Morgan Hotels in central Dublin, just as threats to the economy multiply.
Exporters are already feeling the pain as Brexit drives down the value of sterling to a five-year low against the euro, while about 40 percent of visitors to Ireland come from the U.K.
BI Estimates of Brexit Impact on 2018 GDP by Country
Malone is still confident his hotel investments will pay off.
“I want them to succeed, particularly to do well for my partners but for me it’s just a good happy place to invest money,” said Malone. “I’m kind of in love with Ireland - I even like my lawyers!”