The future pipeline for the development of Irish hotels is very positive, according to a recent report from construction consultants Mitchell McDermott, with just under 3,000 keys expected to be delivered by 2025.
The Mitchell McDermott Annual Construction Sector Report 2024 shows a further 7,281 keys with planning, meaning that the next five years will see a continued increase in hotel numbers.
Dublin Region
The report shows that the 2023 hotel supply has continued in the same trend from last year, with a further increase in hotel keys being added to the market.
A total of 2,530 keys were added to the Dublin region, which included a mix of newly registered hotels and newly completed hotels.
Construction Consultants
Mitchell McDermott is an independent firm of construction consultants founded by Paul Mitchell and Anthony McDermott in 2015.
The firm provides project management, cost management, funder advisory services and specialist services across all sectors of the construction industry.
Forecast
Last year saw only a small number of existing keys removed from the register.
Mitchell McDermott predicts that this steady growth outlines the continued demand for hotel property in the city, with further growth forecasted over the next number of years.
Hotel Investment
Meanwhile, the latest Deloitte 2023 European Hotel Industry Survey, released in January, showed that Dublin is the eighth-most attractive European city for hotel investment.
London was the most attractive European city for hotel investment, and Lisbon the second. Amsterdam dropped two places, to third, and Paris remained in fourth place.
Global Survey
Deloitte’s survey took place between September and October 2023, taking the views of a sample of senior figures from the hospitality industry, including owners, operators, lenders, developers and investors.
The survey also highlights that private equity continues to be the main source of capital for hotel acquisitions in Europe in 2024 (31%), while sovereign wealth funds have jumped by 10%, to become the third-largest source of equity capital for hotel acquisitions.
‘Slowing Economic Activity’
“We can also learn where we expect this investment to come from, with more than half of respondents – 56% – expecting hotel investment to be sourced from Europe,” said Rebecca Robinson, director of corporate finance at Deloitte Ireland.
“Funding from the UK – 20% – and North America – 39% – declined in 2023, due to slowing economic activity, but the Middle East and North Africa are increasingly becoming important sources of investment, with nearly 40% expecting investment to come from the region – a 22% increase, compared with 2021.”
Contract To State
There were approximately 66,200 hotel rooms in the Republic of Ireland as of the fourth quarter 2023, as completions in the 12 months reached over 1,800 rooms.
According to Fáilte Ireland research, 12% of all registered tourism bed stock is under contract to the state.
‘Rising Costs’
“Rising costs, higher interest rates, a shortage of skilled labour and increased staff costs are cited by most executives in the hospitality sector as the top risks they face in trying to grow this year,” said Breda McEnaney, associate director in the travel, hospitality and leisure advisory team at Deloitte Ireland.
“The top priorities this year are managing inflationary pressures, maintaining profitability, increasing cash flow, and hiring and retaining talent.”
Former Jury’s Hotel
Meanwhile, property advisors Savills acted in six of the top ten Irish residential development land deals during the year.
The most substantial deal involved the disposal of the former Jury’s Hotel in Ballsbridge to the US State Department for €152 million, representing the price paid for a cleared site.
Savills noted that, as the sole commercial deal in the top five – and the only deal over €50 million – it swayed the share of volumes attributed to commercial assets to 36%.
