Global property experts JLL has today released a report which predicts approximately 1,300 new hotel rooms will open in Dublin City in 2018. This would represent a +6.0% increase in current room supply.
The level of hotel transaction activity fell in Ireland by -30% in 2017, compared to that of 2016. With Ireland’s legacy receiverships now coming to an end and fewer distressed hotels assets remaining, JLL predict a hotel investment level of approximately €500m for 2018. This represents 15-20% of the total long term average commercial property market volumes in Ireland.
Whilst this level of transactional activity is down on previous years, it reflects a return to the long term average. In addition, long term average price per key for Irish hotels, a key value metric, is still -28% below peak levels.
JLL believe that while the Capital’s hospitality offering will remain buoyant, the greater Dublin Area and further afield, will also see strong growth & activity through-out 2018. JLL predict significant ‘first mover’ advantage in hotel development in Galway City Centre, and new Galway hoteliers, who are open in time for its status as European Capital of Culture in 2020, will reap the rewards.
Furthermore, there also remains significant value on offer outside of Dublin City Centre and hotels can still be acquired below replacement cost, both along the M50 belt and across provincial Ireland.
Speaking this week, Senior Vice President of Hotels at JLL, Dan O’Connor said, "Whilst these figures are fantastic for the industry, the biggest challenge facing the Irish hotel market is BREXIT. Ireland is experiencing a decline in UK visitation and UK demand may weaken further as the British consumer faces into higher inflation and economic headwinds in 2018."
He added, "We will really rely on the Irish tourism industry’s ability to minimise BREXIT effects, whilst continuing to win more market share from the buoyant US and mainland European markets in order to ‘plug the gap’. This will be watched closely in 2018."