Irish hotel transaction volumes are expected to be in the region of €600 million for year-end 2023. This is being driven primarily by the recent Dean Hotel Group/Press Up portfolio sale at a reported €350 million, which is expected to complete in the coming weeks. The balance of activity comprised five Dublin hotel sales, with a combined value of approximately €120 million, and 11 hotel transactions outside of Dublin for a further €140 million.
The Irish hotel market has also enjoyed strong trading conditions during 2023 with occupancy levels, as of year-to-date October, trending in Dublin at 84 per cent, Cork at 79.8 per cent, and Belfast at 79.2 per cent. RevPAR (revenue per available room) also achieved record levels with Dublin reaching €152, Cork at €124, and Belfast at £84 over the same period (Source: STR). The sector also had to contend with the many challenges, experienced by all businesses, in particular higher interest rates, increased VAT rate from 9 per cent to 13.5 per cent, prolonged expensive utility costs and a shortage of skilled labour.
In the first 10 months of 2023, over 27 million passengers passed through Dublin Airport, which is broadly on par with 2019 levels, but up significantly on the same period in 2022 (+25 per cent).
The most significant hotel transactions for 2023 include:
Receivers appointed to McKillen jnr company behind Bray Central shopping centre
Mike Ashley firm gets green light to open large gym on one floor of former Debenhams stores on Henry Street in Dublin
Cork office and retail opportunity offers gilt-edged investment for €6m
Potential for boutique guesthouse in trendy Dublin suburb of Phibsborough
Portfolio – sale of eight Dean Hotel Group assets including The Dean Hotels, The Mayson, The Clarence, The Devlin and Glasson Lakehouse
Dublin – The Dawson Hotel and Brooks Hotel
Provincial – Park Hotel Kenmare, The Imperial Hotel Cork, Crowne Plaza Dundalk, The D Hotel Drogheda, Springfield Hotel Leixlip, Trim Castle Hotel, Co Meath and Tulfarris Hotel, Co Wicklow.
Hotel Developments – The sale of a 100-bedroom hotel site at Usher’s Quay and Red Carnation’s disposal of Hatch Hall in Dublin 2.
Private investors, high net worths/family offices and hotel groups have dominated transactional activity in the Irish market this year with institutional and private equity groups less active. This has the potential to change somewhat in the new year should these investors get more comfortable with asset pricing and cost of debt.
Buyers this year included Irish hotel group Cliste Hospitality who acquired two hotels in Leixlip and Belfast, Irish businessman and entrepreneur Bryan Meehan who purchased the Park Hotel Kenmare while the Louis Fitzgerald Group secured the Imperial Hotel Cork.
In the last number of years, the hotel sector has attracted an additional buyer type for the provision of emergency accommodation. Hatch Hall Dublin was offered for sale earlier this year with planning for hotel conversion and purchased for emergency use, having previously been in use for student accommodation.
New hotel development continued, particularly in Dublin with 713 bedrooms opening by October. These included Motel One Abbey Street (310 rooms), Easy Hotel Benburb Street (160 rooms), Premier Inn Gloucester Street (113 rooms), and The Rezz Dame Lane (51 rooms).
In terms of future openings, there are currently approximately 2,758 hotel bedrooms on site in Dublin and of these 1,800 hotel rooms are scheduled to open between now and the end of 2024. These will include the anticipated Hoxton Hotel located in the former Central Hotel on Dublin’s Exchequer Street and the Ruby Molly on Arran Street in Dublin 7.
Another emerging trend this year was the interest from hoteliers and developers in repurposing legacy office buildings in Dublin, and a good example of this was the acquisition of Telephone House on Marlborough Street by JMK Group for the proposed development of a 296-bedroom hotel.
In terms of further hotel development in Dublin there has been some concern raised among industry stakeholders regarding the impact of a new planning policy which was adopted by Dublin City Council under their new development plan 2022-2028. Its introduction is to avoid an overconcentration of hotel development in certain areas of the city centre but it is unclear how it will affect future hotel development in the city.
Looking ahead to 2024, it is anticipated that strong hotel operational performance will continue. This positivity will help to support future asset pricing and ensure that Dublin continues to be considered by investors as a liquid market relative to other European locations. We also expect regional Irish hotels and resorts to continue to be sought after among investors.
Like this year, we anticipate buyer profiles for hotels to be private capital and existing hotel groups continuing their portfolio expansion strategy.
John Hughes is a director of CBRE Ireland’s hotel division
