The average daily rate (ADR) for a hotel room in Dublin in May was €209, a record high and 3.5 per cent ahead of the previously monthly record, a report by property agent CBRE Ireland has indicated.
In its second-quarter hotel market report, the company said Irish hotels are proving to be an attractive proposition for investors, with the number of properties changing hands between April and June picking up after a slow start to the year.
Some €91 million was invested in the sector across six deals, CBRE Ireland said, one of the most notable of which was the purchase of the Imperial Hotel and Spa in Cork for about €25 million by a private investor.
Development activity was “robust” despite rising construction costs and interest rates, which have pushed up borrowing costs for developers.
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CBRE said the market was dominated currently by private investors, family offices and hotel groups, with institutional investors and private equity less active due to the ongoing cycle of rates increases and the soaring cost of funding.
Underpinning all of this investor interest is the sharp rise in occupancy rates over the past year in the aftermath of the Covid-19 pandemic. CBRE said occupancy levels in Dublin averaged 78 per cent in the first five months of the year, “relatively in line” with pre-pandemic levels. “A busy summer period will see this rate continue to grow,” it said.
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Meanwhile, the ever-increasing cost of booking a hotel room in the capital shows no signs of abating. Average daily rates hit a “record-breaking” €209 in Dublin in May, 3.5 per cent ahead of the previous record set in September 2022.
“On a year-to-date basis the ADR across all stock in Dublin is approximately €170,” according to the report. “While top-line performance has been strong, hotel operators are still experiencing increased operational costs due to higher wages, utilities, and food and beverage expenses and this is impacting bottom-line performance.”
Colin Richardson, director and head of research at CBRE Ireland, said: “The hotel sector remains attractive to institutional investors and lenders given the strong trading performance of both Dublin and regional hotels.”
Paul Collins, executive director and head of hotels, meanwhile said deal volumes in the hotel sector are expected to pick up as the year progresses.
