The Irish hotel industry has demonstrated resilience and a return to pre-pandemic performance levels in 2023, according to the latest insights from property advisor, Savills Ireland. Despite challenges such as the aftermath of Covid-19, the Ukrainian conflict, and inflationary pressures, the sector has seen a robust recovery.
"The past year has been a period of significant recovery for the Irish hotel industry. Occupancy rates have returned to their 2019 levels with even stronger pricing, reflecting the industry's adaptability and resilience," said Tom Barrett, Director and Head of Hotels & Leisure at Savills Ireland.
"While we faced cost pressures across various sectors, including payroll and energy, the growth in top-line revenue has largely offset these challenges, making 2023 a positively memorable year for many hotel operators."
The industry is witnessing a cautious yet optimistic outlook for 2024, with forward bookings indicating strong months ahead, driven by major events such as the UEFA Europa Cup Final and concerts by Taylor Swift and Coldplay. However, surpassing the €326 average rate achieved in Dublin during the Notre Dame v Navy American football game in August 2023 remains a challenge.
The investment market in prime Dublin hotels has also seen shifts, with yields moving from 3.6% in early 2022 to around 4.75%/5.0% presently.
"The gap between buyer and vendor expectations has widened, influenced by frequent interest rate hikes throughout 2022 and 2023. This has temporarily slowed down investment transactions in the Dublin hotel sector," Barrett added.
Despite lower year to date transaction levels compared to the €400m average of recent years, significant activity was noted in regional Ireland, with key transactions including the sale of The Imperial Hotel Cork and several other properties in the €10m to €30m price range.
The Irish hotel ownership landscape remains fragmented, but along with the large high profile groups of Dalata and Tifco, others continue to expand with Cliste, JMK, MHL, Staycity and TMR all with over 1,000 rooms open, or in the pipeline by the end of 2023.
Looking ahead to 2024, the Irish hotel market anticipates significant transactions, such as the completion of Press Up Hotels' majority stake sale to LHC, the potential sale of Tifco's portfolio and some off-market transactions. These developments, along with the ongoing interest in converting office spaces to hotels, underline the sector's attractiveness as a high-potential investment avenue.
"With strong cashflows and high barriers to entry, hotel property continues to be an attractive proposition for investors. The industry's adaptability and robust performance, even in challenging times, underscores its potential for sustained growth and resilience," concluded Barrett.