The year to date has been one of muted Irish hotel trading performance, juxtaposed with large hotel deal volume – a year of contradiction.
Consider hotel trading performance. Last year, the Irish hotel market posted RevPAR (revenue per available room) growth of more than 14 per cent, with growth in Dublin at a lower but still impressive rate of more than 12 per cent.
So far this year, however, Irish hotel RevPAR is flat, year-on-year, while in Dublin, it is trending down by about 3 per cent.
There are myriad reasons for weaker performance in 2024, including new hotel supply in Dublin, an end to “revenge travel” and increased VAT. Suffice to say this has taken some “froth” out of the market. It mightn’t be a bad thing.
On the deal side, our research shows more that 2,000 keys (bedrooms) have already changed hands across Ireland in 2024, representing about €900 million in gross deal volume. Given total deals across all commercial property sectors of between €2 billion and €2.5 billion this year, the hotel sector accounts for about 40 per cent of total deal volume – and therefore represents the most active sector of the market in 2024.
Of the €900 million spent on hotels year-to-date, we estimate that 76 per cent of deal value was in Dublin. Furthermore, 2024 was the year of the big hotel deal, with the top five hotel deals making up almost 80 per cent of total volumes.
With several Irish hotels currently sale agreed and pending approval with the CCPC – including Mount Juliet Estate and the Radisson Dublin Airport – we forecast hotel deal volume to exceed €1.05 billion by year end. Put bluntly, if you are an Irish real estate investor and you do not yet have a strategy for the hospitality sector, you better get one fast – it’s now 40 per cent of your transaction market.
There are numerous trends that deserve mention in 2024, whether it be the lifestyle hotel, best embodied by the Dean Hotel Group, or investors’ insatiable thirst for luxury Irish hotels. However, instead of cracking open the champagne this Christmas, I will opt for a can of beer because, for me, 2024 is the year of the lowly hostel.
This trend is exemplified by landmark 2024 transactions such as Jacobs Inn Hostel, which was the most valuable hostel to ever sell in Ireland, at about €30 million. Furthermore, in recent days Firethorn Trust and SW3 Capital announced a big hostel site acquisition in at Sackville Place in Dublin city, where they will deliver new-generation PBHA (purpose-built hostel accommodation).
This year is a proud anniversary for me personally, because it marks the 10th anniversary of JLL’s hospitality team in Ireland. I was its first team member. Our 10th anniversary has coincided with arguably the most active Irish hotel investment market ever, so I am very and I’m helped by an amazing team.
In 2025 my expectation is that hotel trading performance will recover and return to growth. As much as I would like hotel deal volumes to remain elevated, I expect transaction levels to fall somewhat, to about €750 million, in 2025 – still a healthy level.
Finally, whether it be the latest office and co-working lounges, or Ireland’s newest build-to-rent apartment developments, the “hotelisation of real estate” will continue.
Service with a smile – better still, a laugh – has never been more important.
Dan O’Connor is head of hotels & living for JLL Ireland
Top hotel sales 2024
1 Dean Hotel Group
2 The Shelbourne Hotel
3 Hard Rock Hotel
4 Radisson St Helens Hotel
5 Jacobs Inn Hostel
Source: JLL
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