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Hotel Investor interest in Ireland expected to increase in 2012

According to Jones Lang LaSalle Hotels


London, 27th March 2012 – Despite improved hotel trading performance in Dublin and some regional Irish cities, the Irish Hotel Investment Market remains relatively subdued and investment activity is confined primarily to Dublin, according to Jones Lang LaSalle Hotels’ latest Hotel Intelligence report for Ireland

Jonathan Hubbard, CEO Northern Europe, Jones Lang LaSalle Hotels, says; “The hotel market in Ireland is still plagued by oversupply and, despite an improvement in hotel trading performance in 2011, revenue per available room (RevPAR) remains well below its peak in Dublin and is still declining in some provincial Irish markets.”

“The divergent trading performance of the Dublin tourism and hotel market compared to Ireland’s provinces has created something of a two-tiered market place, with the Dublin hotel market attracting the majority of investor attention.”

“In the short term we anticipate increased hotel investment activity driven by International Capital, however this will be concentrated onto prime assets or high yielding hotel opportunities.”

Dublin hotel ownership remains primarily domestic, currently representing 78% of the market, with a large proportion of the market effectively bank-owned.  As at January 2012, Dublin’s total graded hotel supply consisted of 150 hotels totalling roughly 19,000 bedrooms.  Hotel supply is dominated by the 3-star segment, which holds a share of 46.3%, followed by the 4-star segment (40.4%).  The 5-star segment accounts for only 7.8% of the market and is dominated by international brands including Radisson Blu, Four Seasons, Westin, Conrad and Rennaissance, together with some well-established Irish hotels such as the Westbury and the Merrion.

Worsening economic conditions in Ireland had a profound impact on Dublin’s hotel industry; as a consequence, Dublin hotels suffered room yield falls of 13.4% and 22.9% in 2008 and 2009.  Jonathan Hubbard added, “The decline in Dublin room yield started to slow in 2010, due to a rise in occupancy levels alongside a slower decline in average room rates. 
 
Hotel performance rebounded strongly in 2011, with Dublin hotels posting a 10.0% growth in room yield at year-end 2011.  We anticipate continued room yield growth in 2012, albeit at a slower pace of growth than 2011.”

Daniel O’Connor, Associate, Jones Lang LaSalle Hotels concludes; “For 2012, Dublin hotel performance is expected to continue to improve, boosted by a strong events calendar in the city and recently opened key demand generators including Convention Centre Dublin.  However, the outlook for provincial Irish cities is mixed, with areas of acute oversupply, such as Limerick, likely to continue to experience trading performance decline.”

“Throughout Europe, our hotel teams are seeing international hotel buyers invest when they find good hotel product, a stable or improving hotel trading environment and GDP upside.”

“A perception that the Dublin hotel market is past the bottom and now on an upwards trajectory, is continuing to fuel hotel international investor appetite”.