Irish hotel market set for record breaking sales in 2024
According to CBRE Ireland, total annual Irish hotel sales could surpass €1.2 billion in 2024 (Photo by pixabay via Pexels)
CBRE Ireland’s research team issued a detailed report on the Irish and European hotel markets.
In Ireland, after an exceptional opening few months of the year for hotel transactions, vendors are still electing to test the market through discrete processes. CBRE estimates that there are in excess of €600 million of Irish hotels currently on the market or being prepped for sale.
Total annual Irish hotel sales could surpass €1.2 billion in 2024 – a record level of spend. The previous peak year was 2006, when €1 billion worth of hotels traded, including the Great Southern Hotel Portfolio and Jury’s Inn in Ballsbridge. There are several notable hotels on the market at present, including the Morrison Hotel in Dublin 1, the G Hotel in Galway, and the Slieve Russell in Cavan, along with several off-market trophy assets both in Dublin and in regional Ireland.
Hotels Investment Case – Solid Fundamentals & Supportive Macro Trends
The investment case around Irish hotels is particularly strong at present. This is due to a number of factors, including: the strong trading performance of hotels; the advantage of dynamic hotel room pricing in a high inflationary environment; the shift away from investment in traditional core sectors at present; the undersupply of ‘beds’ across Europe; and the projected growth in air travel.
According to data from STR, in 2023 Dublin achieved the highest hotel occupancy rate (83%) out of 35 European markets. Dublin also ranked 7th highest in terms of RevPAR. The strong occupational fundamentals of the sector are attracting investors.
Due to structural supply/demand imbalances present across many European cities, ‘beds’ (living sector properties) continue to be one of the most in-demand sectors for investors.
With core investment into sectors like offices and the private rental sector (PRS) less attractive in Ireland at present, institutional investors and private equity groups are now more focused on less traditional sectors, including hotels, where values are more stable, and fundamentals solid.
While the high inflationary environment of recent years has presented certain challenges for operators, the ability of hotel operations to pass on the effects of inflation on an ongoing basis through the adjustment of room rates has been cited as a key advantage by investors. Compared to other sectors (e.g. offices and retail), where rents are typically only reviewed every five years.
Colin Richardson, director of research, CBRE Ireland, said: “The investment case around both Irish and European hotels is particularly strong at present. This is due to several factors, including, the strong trading performance of hotels; the advantage of dynamic hotel room pricing in a high inflationary environment; the shift away from investment in traditional core sectors at present, a general undersupply of ‘beds’ across Europe, and the long-term structural growth in air travel.
“We believe that the passenger cap at Dublin Airport should be increased to ensure the Irish hotel market and economy continues to benefit from the huge growth anticipated in global air travel over the coming years.”
