The year 2024 has been a bumper period for transactions in the Irish hotel market. Exceptional trading performance in 2023, and a spate of domestic hoteliers seeking to exit the sector following the pandemic, have led to several prime hotels coming to market. On the demand side, established hotel companies and high-net-worth investors have shown a strong appetite to acquire assets that have managed to sustain operational profits and healthy margins in the face of inflation.
About €800 million of Irish hotel transactions across 12 deals have been completed to the end of October, and total deal volumes are expected to surpass €1 billion for the full year 2024. This will be a record year for the market.
Hotel transaction volumes in the opening quarter of the year have been largely driven by two deals: Paddy McKillen’s sale of a majority stake in the Dean Hotel Group portfolio to Lifestyle Hospitality Capital (LHC), and the sale of The Shelbourne luxury hotel to Archer Hotel Group.
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We expect that 2025 will see some similar large-scale, platform and portfolio opportunities come to market in Ireland.
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Following an exceptional year of trading performance in 2023, operational performance dipped slightly during the opening months of 2024 but rebounded in the second half of the year due to seasonal factors and stabilising inflation. Occupancy levels in the year-to-date to September are: 83 per cent in Dublin; 78 per cent in Cork; and 79 per cent in Belfast, according to STR data.
The decline in operational performance over the opening months of this year was in part attributed to the quantity of new hotel stock that has recently opened. Furthermore, the increased VAT rate from 9 per cent to 13.5 per cent, staffing costs and shortages, and the cost-of-living crisis have affected hotel performance earlier this year.
Dublin hotel development remains strong, with 612 new bedrooms opened in the year-to-date November. These include: the Chancery Hotel in Dublin 8 (152 rooms); the Leinster in Dublin 2 (52 rooms); and the Ruby Molly in Dublin 7 (272 rooms).
In terms of future openings, the Dublin hotel supply pipeline remains active, with just over 1,400 bedrooms expected to be delivered in 2025. There have also been several positive planning developments this year. Planning permission has been granted for a 218-bedroom Premier Inn on Abbey Street, Dublin 1, and Sretaw PE also received planning permission for a 61-bed hotel in Dublin 2. Separately, several planning applications for hotel developments have been refused this year based on “overconcentration”. A number of these decisions have been appealed to An Bord Pleanála and it will be interesting to see its decision.
Looking ahead to 2025, it is anticipated that strong occupancy fundamentals will continue to encourage operators and investors to acquire assets in the sector. The buyer profiles will be a mix of private capital, institutional investors, and hotel groups. Given our visibility on assets on the market, agreed deals and what’s being prepared for sale, we expect that transaction volumes in 2025 could reach up to €800 million, which will mean another busy year for the sector.
John Hughes is a director of CBRE Ireland’s hotel division.
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