With Dublin’s economic recovery well under way the city is now offering exciting opportunities for hotel developers, particularly in the luxury and economy sectors, according to a new report from global hotel consultancy HVS London.Hotel values continue to rise in Dublin as investment gains momentum. This year saw nine hotels with a value of over €7.5 million gaining new owners compared with just two sales at that level in 2012.
Furthermore, the average room value of Dublin’s hotels rose by 6.6% in 2013 to €179,400 with values expected to rise further to €212,000 by 2018.
Ireland’s hotel sector experienced five years of RevPAR (revenue per available room) decline following the country’s demise into recession in 2008 when banks stopped lending and development ground to a halt. A series of measures, including an EU bailout package, has helped the Irish economy return to growth.
After declining by an average of 3.4%, average rates at the city’s hotels have grown 4-7% over the past three years with market-wide average rate growth of 7-8% anticipated for 2014, and a rise of 3% forecast for 2015.
Dublin currently has over 200 hotels, with almost 21,000 rooms, the majority of which are in the upscale (32%) and upper midscale (31%) segments. Average daily rate (ADR) rose by 8.4% this year to €96.19, with occupancy up 2.2% to 78.2%*.
Demand for hotel accommodation has grown slightly faster than supply over the past five years, at 1.1% and 0.6% respectively, due partly to the decline in development and hotel closures during the recession.
Visitor numbers to Dublin have been boosted by the opening of several new event venues and improved demand from the arrival of multinational corporations such as Google, Facebook and Amazon. Visitation to the city rose by 9.8% in 2013.
“Ireland’s return to growth is good news for Dublin’s hotel market although performance is currently still about 10% below previous peaks in 2006,” commented report author Arlett Oehmichen, director, HVS London.
“While we are unlikely to see a return to previous levels of room rate and occupancy, because a more cost-conscious European visitor is now coming to the city, there is still the potential for further growth and development opportunity in Dublin’s hotel market.”
With upscale properties making up a huge percentage of the city’s supply, there is only one new hotel build in the pipeline, highlighting potential opportunities for economy or luxury development.
“As developers and investors return to Dublin a supply/demand balance could be on the horizon,” added the report’s co-author Louise Fury, senior editor, HVS London.
“With a positive forecast for the Irish economy and steady increases in visitation, investment and values, Dublin seems to have become a hot spot for investors.”
A copy of In Focus: Dublin by Louise Fury and Arlett Oehmichen can be downloaded by clicking here.
*Data supplied by STR Global
