As Ireland's deals flatten, Dublin's pipeline surges

Dalata Hotel Group is gearing up to open 1,281 guestrooms following strong performance in 2017.
Clayton Hotel Liffey Valley, Dublin, Ireland

After two banner years, Ireland's hotel transactions are flattening. But with Dublin racing to balance its hotel supply with demand, the country's hospitality sector remains strong.

Earlier this year we noted that the pace of hotel sales in Ireland declined following two years of record highs. According to Savills Ireland, €1 billion worth of hotel deals were recorded for 2015, while 2016 had €850 million in transactions. In comparison, according to Savills, there were €600 million worth of hotel transactions for 2017 across Ireland. 

Notable sales this year include Dublin’s Gibson Hotel, which was acquired by the German-based Dekabank for more than the €87-million asking price. American businessman John Mullen completed the purchase of Carton House hotel and golf resort in Kildare earlier this month for €57 million and the MHL Hotel Collection purchased of the Radisson Blu hotel and spa in Galway for approximately €50 million. And despite diverting attention to hotel development, Dalata—Ireland’s largest hotel operator—spent more than €80 million acquiring the majority of the Clayton Cardiff Lane and Clayton Liffey Valley hotels.

Virtual Event

Hotel Optimization Part 3 | January 27, 2021

With 2020 behind us and widespread vaccine distribution on the horizon, the second half of the new year is looking up, but for Q1 (and most likely well into Q2) we’re very much still in the thick of what has undeniably been the lowest point of the pandemic. What can you be doing now to power through and set yourself up for a prosperous 2021 and beyond? Join us at Part 3 of Hotel Optimization – A Virtual Event on January 27 from 10am – 1:05pm ET for expert panels focused on getting you back to profitability.

There's also the recent sale of the Jurys Inn chain sale by U.S.-based private-equity group Lone Star to Swedish hotel group Pandox—a deal that could well account for a significant number of the total transactions in 2017.

Dublin Rising

After years of a supply shortage, Dublin is getting an influx of guestrooms, with 3,000 currently in the pipeline. That number is no accident: In November 2015, JLL Hotels & Hospitality Group said that Dublin needed an additional 3,000 guestrooms to satisfy then-current demand—and demand has remained steady since then. 

Now, at least five new hotels are slated to open in the city next year alone. Earlier this year, Savills predicted approximately 1,500 net new rooms for 2018, with as much as 2,000 possible for 2019. 

In June, PwC reported that Dublin topped the European city occupancy league in 2016 and would likely do the same this year, with an 83-percent rate expected. The city is forecast to be second, behind Porto, in terms of RevPAR growth, with 8.7 percent predicted this year and 7.4 percent for 2018. 

While high occupancy is always good, it can also pose somewhat of a threat for a destination: If there are not enough affordable rooms to be found in the most popular destinations, visitors may opt to go elsewhere, or could turn to alternatives like Airbnb. The rapid influx of hotels, especially midscale and economy properties, could keep a range of visitors coming to Dublin. And with the Brexit looming, European travelers may have an easier time visiting Ireland, which will remain a part of the EU, than the soon-to-depart UK. 

As we noted earlier this week, Irish operator Dalata saw significant performance strength this year in its Dublin hotels. The group's RevPAR in the city rose 9.5 percent for the year-to-date. Outside of Dublin, the group's regional Ireland portfolio recorded an 8.7-percent growth in RevPAR for the 11 months to the end of November. 

“Dublin remains one of the best performing cities in Europe in terms of occupancy, which will continue to attract attention from both hotel operators and investors,” Tom Barrett, director of hotels & leisure at Savills Ireland, said in a statement. “Looking ahead to 2018, we expect to see further re-trades in a stabilizing trading environment, following years of exceptional growth. In addition, the emergence of new hotels next year will also create interesting investment opportunities. So overall, the outlook for the market is very positive.”