Irish Hotel Occupancy Returns To 2019 Levels

The Irish hotel industry returned to pre-pandemic performance levels in 2023, according to the latest insights report from Savills Ireland.

The property advisors noted that 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 League Final and concerts by Taylor Swift and Coldplay.

‘Stronger Pricing’

“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 and 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.”

Challenges

However, Savills warned that 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.

Dublin Hotel Sector

“The gap between buyer and vendor expectations has widened, influenced by frequent interest rate hikes throughout 2022 and 2023,” said Barrett.

“This has temporarily slowed down investment transactions in the Dublin hotel sector.”

‘Fragmented’

Savills claims that, despite lower year-to-date transaction levels – compared to the €400 million 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 €10 million-to-€30 million price range.

The property advisors noted that 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.

‘Attractive Proposition’

“With strong cash flows and high barriers to entry, hotel property continues to be an attractive proposition for investors,” said Barrett.

“The industry’s adaptability and robust performance, even in challenging times, underscores its potential for sustained growth and resilience.”

Looking  Ahead

Looking ahead to 2024, Savills noted that 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.

Savills claims that these developments, along with the ongoing interest in converting office spaces to hotels, underline the sector’s attractiveness as a high-potential investment avenue.

 

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