Ireland's capital city Dublin is back in the spotlight for hotel investors and industry analysts as transactions have started to heat up in the city.
Two major hospitality transactions in Dublin from earlier this year indicate how buyers and sellers are evaluating the market.
In March, Archer Hotel Capital acquired the 265-room Shelbourne Hotel for $281 million, or just over $1 million per room. The property was built in 1824 and is part of Marriott International’s Autograph Collection. The seller was Beverly Hills-based Kennedy Wilson Holdings, which made a profit of $99.1 million on the sale, according to a May 9 filing with the U.S. Securities and Exchange Commission. Kennedy Wilson acquired the Shelbourne Hotel in August 2014 for $149.8 million, or about $565,000 per room, according to CoStar, Hotel News Now's parent company.
Then in November, Dublin-based Dalata Hotel Group acquired the 229-room Radisson Hotel Dublin Airport for €83 million ($90.5 million). Dalata said the deal on the leasehold property should close in the first half of 2025. The company is Ireland’s largest hotel firm and in October announced a €600 million ($655.5 million) refinancing package to expand its portfolio.
“Dublin is certainly in vogue right now, and we think [it is] likely to stay that way through 2025,” said Patrick Ryan, head of hotels and leisure for Ireland at business consultancy Colliers.
Dublin's hospitality transaction market is “looking to exceed €1 billion in 2024, which is well ahead of the average [that] trended in the €350 million to €400 million range previously,” Ryan said.
Dublin's hotel supply shortage
While approximately 5,000 new hotel rooms have been added to the city’s stock in the last two years, the government agency responsible for tourism, Failte Ireland, insists that Dublin has the capacity to add a further 10,000 hotel rooms, Ryan said.
“International flags are not that well-represented in the city, and many of the major players are trying to ‘elbow’ their way in, the challenge being that many do not necessarily want to deploy their own capital but prefer to franchise or manage,” he said.
One hurdle is that hotel development in Dublin remains difficult as city officials have decreed that planning permission for new hotels will be rigorously examined.
“The public perception, however ill informed, is that Dublin is suffering from a plethora of new-build product,” Ryan said.
Hotel performance highlights
In the meantime, Dublin's hotels marketwide are performing well, said Weldon Mather, director of hotels, tourism and leisure in the Dublin-based office of business consultancy Crowe.
“As of year-to-date September 2024, the Dublin market continues to perform well with an average daily rate of approximately €179 for Greater Dublin and slightly above €200 in the city center, while occupancy remains solid around 82% for Greater Dublin, although this is slightly below 2023 levels,” he said.
According to CoStar hospitality data, Dublin hotel occupancy reached 83.5% year to date through September, marginally down year over year and down from the same month in 2019 before the COVID-19 pandemic. Average daily rate and revenue per available room year to date through September were €180.11 and €163.56, respectively, and both metrics were slightly down compared with the same period in 2023.
Pre-pandemic, year to date through September 2019 ADR was €145.64 across Dublin's hotel industry. Over the same period, Dublin's hotel RevPAR was €137.35.
Mather said hotel supply in Dublin remains “relatively constrained, resulting in high occupancy.”
“The outlook for demand remains strong,” he said.
Dublin 1, the postcode/zip code name given to the city’s center is “remains very solid” after a slow start in the first quarter of this year, Ryan said.
He added the neighborhood has “picked up steadily during the year and has been helped by the myriad number of concerts, sports occasions and celebrations such as St. Patrick's Day … all of which sprinkle a little fairy dust on hotel occupancy and rate.”
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“A feature of 2024 has been the enduring [ADR] rises across all hotel categories, which bodes well for profitability levels,” he said.
He added that most new-build hotels coming online in the last few years have been select-service hotels, with no or limited food-and-beverage options.
“This converts to a far healthier earnings before interest, taxes, depreciation and amortization percentage,” Ryan said.
Regional Ireland
Outside Dublin, hotels throughout regional Ireland are experiencing good year-on-year growth, too, Mather said.
“Galway in particular has shown strong rate performance with an ADR of €160, and Limerick leads on occupancy at over 85%, partly due to reduced accommodation capacity in nearby counties resulting from ongoing government contracts,” he said.
In Ireland, approximately 10% of hotel rooms are under government contracts and not available to tourism use, Mather said.