Ireland Market Beat H1 2024
Investment Trends
For H1 2024 a total of €655M was transacted, a near fourfold increase on the approximately €173M traded in H1 2023 – this pushed transaction volumes over the past year to an all-time high of almost €790M. Activity was supported by continued good operational performance across the sector and a couple of large deals including the sales of the Shelbourne Hotel and a majority stake in the Dean Hotel Group.
Prime Yields
Prime yields have moved modestly higher over the past twelve months but looking forward we expect them to stabilise, boosted by gradually looser ECB monetary policy with the first steps in this journey occurring in June with a 25 basis point interest rate cut. With growing appetite among investors and liquidity in the debt markets, we expect to see a gradual yield sharpening for prime assets as we progress into 2025.
Market Performance
Despite ongoing supply growth, the occupancy and ADR in Irish hotels remained healthy in H1 2024, with only minor softening relative to H1 2023. While RevPAR in Ireland declined by 1.2% to €125 in H1 2024, it was the 3rd-highest level in Europe. In Dublin, the occupancy reached 80% in H1 2024, the second highest in Europe, albeit a minor decline from 2023. This, combined with a 4% drop in ADR, resulted in a 5% RevPAR decrease, although 23% above pre-Covid level in 2019.
Supply Outlook
510 new rooms were delivered in Dublin in H1 while Premier Inn also opened their first hotel in Cork in January. We estimate there are currently in excess of 1,700 hotel rooms under construction in Dublin (around 6% of Dublin’s room stock) while two hotels in Cork are also due to open later this year. The new supply is welcome to satisfy growing demand, particularly in the Dublin market, albeit the increased competitiveness might constrain occupancy and ADR growth.
Demand Outlook
Ireland’s economic outlook continues to support the hotel sector. Employment hit another all-time high of 2.71 million while wages (up 4.7% year on year in Q1) are now growing in real terms as inflation (2.2% in June 2024) eases. Tourist trends also continue to be strong. Overnight trips by foreign visitors (over rolling 12-month periods) gradually rose in the first half of the year as has the average spend.