According to a new report from global hotel consultancy HVS London, rising hotel values and a glut of upscale rooms could have luxury hoteliers seeing an opportunity in Dublin.
Rising Hotel Values
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 percent 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 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 percent, average rates at the city’s hotels have grown 4-7 percent over the past three years with market-wide average rate growth of 7-8 percent anticipated for 2014, and a rise of 3 percent forecast for 2015.
Upscale Oversupply
Dublin currently has more than 200 hotels, with almost 21,000 rooms, the majority of which are in the upscale (32 percent) and upper midscale (31 percent) segments. Average daily rate rose by 8.4 percent this year to €96.19, with occupancy up 2.2 percent to 78.2 percent*.
Demand for hotel accommodation has grown slightly faster than supply over the past five years, at 1.1 percent and 0.6 percent respectively, due partly to the decline in development and hotel closures during the recession.
Visitor Numbers Grow
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 percent in 2013.
“Ireland’s return to growth is good news for Dublin’s hotel market although performance is currently still about 10 percent below previous peaks in 2006,” report author Arlett Oehmichen, director, HVS London, said in a statement. “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 report 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.”
One of the more notable transactions is a rebrand of Dublin's Four Seasons Hotel, which will become the InterContinental Dublin next month after the hotel's owner signed a franchise agreement with the InterContinental Hotels Group. According to the Irish Independent, the InterContinental Dublin will operate under a franchise agreement with Ballsbridge Hotel Limited, an affiliate of London & Regional Properties. It will be located in the former Four Seasons Hotel Dublin, one of Ireland’s top-rated hotels. The hotel has 197 rooms inclusive of 58 suites, an indoor swimming pool, spa and fitness center, two restaurants and two bars.