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Irish hotel transactions increase in second quarter

Written by Robert McHugh, on 25th Jul 2023. Posted in Ireland

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A new report from CBRE has found that transactional activity in the hotel sector picked up in the second quarter of the year following a slow first quarter.

A total of €91 million worth of Irish hotel transactions completed in the second quarter, across six separate deals, while a total of €135 million of capital was deployed on Irish hotels in first half 2023.

Notable Deals

One of the most notable deals of the year was the sale of the Imperial Hotel & Spa in Cork city. CBRE described the hotel as one of the most famous in the country and a place of historical significance for both Cork and Ireland. 

A private Irish hotel operator acquired the hotel for approximately €25 million.

Occupancy Rates

Occupancy rates across all Irish cities, including Dublin, remain strong. On a year-to-date basis (to the end of May), occupancy in Dublin has averaged 78%, relatively in line with levels achieved for the same period pre-pandemic in 2019. 

CBRE predicts a busy summer period will see this rate continue to grow. Average daily rates (ADR) have also continued to increase sharply.

Irish Market 

The report shows that private investors, family offices and hotel groups have dominated transactional activity in the Irish market this year, with institutional investors and private equity groups less active. 

CBRE believes this has the potential to change late in the second half of the year, should these investors get more comfortable with asset pricing and the cost of debt.

Record Breaking

May saw a record-breaking Average daily rates (ADR) of €209 achieved in the city, 3.5% ahead of the previous monthly record, achieved in September 2022. 

On a year-to-date basis the ADR across all stock in Dublin is approximately €170. 

While top-line performance has been strong, CBRE said hotel operators are still experiencing increased operational costs due to higher wages, utilities, and F&B expenses and this is impacting bottom-line performance.

'Strong Trading Performance'

“Deal flow picked up pace in the Irish hotel market in the second quarter and we saw a total of €91 million of transactions close," said Director and Head of Research at CBRE Ireland, Colin Richardson. 

"Private investors and family offices are particularly active in the current market. The hotel sector remains attractive to institutional investors and lenders given the strong trading performance of both Dublin and regional hotels.”

Source: www.businessworld.ie

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