Hotel investment sector contracts by 48%

Near record levels of transactions in 2024  

The sale of the Dalata Hotel Group to a Scandinavian consortium will have a considerable impact on the Irish transaction volume.

Ireland's hotel investment market has cooled significantly from last year's near-record investment levels.

However, a report from Failte Ireland shows transaction activity within the Irish market continues to suggest investor confidence. Approximately €340m worth of assets traded in the first half on this year, down 48% ot the €1bn+ transacted in the same period last year.

The highest price achieved this year was €86m paid by Deka Immobilien for the Ruby Molly Hotel in Dublin 7. The most significant transaction outside the capital was the sale of Clayton Whites Hotel in Wexford, which was purchased by Neville Hotels for €21m. The sale of the Fleet Hotel in Dublin 2, purchased by the TMR Hotel Collection, delivered the highest price per key in the first half of this year at €400k.

The report notes that in July, Scandinavian property companies Pandox and Eiendomsspar agreed to buy Dalata Hotel Group for €1.4bn. Dalata operates 55 hotels under the Maldron Hotel and Clayton Hotel brands, and the acquisition is subject to the Irish Takeover Rules. The report states that the company sale, once closed, will have a considerable impact on the total Irish transaction volume for 2025.

In terms of the pipeline, there were 11,550 tourist accommodation bedspaces under construction at the end of June. The vast majority of these bedspaces were in hotels (80%), most of which were located in Dublin City Centre.

There were 66 insolvencies in the sector in H1, a reduction of 14% year-on-year. The hospitality sector has the highest number of insolvencies of any industry in this country when services are split into subsectors. Restaurants are disproportionately impacted, due to legacy debt issues, difficulty attracting and retaining staff, and energy in Ireland being the most expensive in Europe.

"The outlook for the hotel investment market remains solid," the report notes. "Despite an initial softening in performance indicators at the start of the year, and ongoing debate surrounding international tourist arrival statistics, the market continues to perform well."

Deloitte’s Global Commercial Real Estate Outlook ranks hotels fifth for asset classes providing the most opportunity for owners and investors. This represents a rise from 12th position in both the 2024 and 2023 outlook reports. Although Dublin fell to 11th position in the top European cities for investment in the Deloitte European Hotel Industry and Investment Survey 2024, Ireland is viewed as being on the upturn of the investment cycle.