Most emergency accommodation in Dublin will not return to hospitality use in the medium to short term, report from Savills Ireland has claimed. The new research from the real estate company also reported that the Irish hotel sector’s total transactions in 2023 were 30% below the historical average.
The value of Irish hotels were down last year, with the property advisors noting that this was largely due to fewer Dublin sales and no Dublin investment activity.
The report noted that hotel room supply remains “constrained” – with the figures showing that just 1,200 hotel rooms were added in the capital last year.
The Irish hotel sector saw €350 on transactions over the course of last year. While Savills claimed that regional transactions were still very strong, there was no single hotel sale for €50 million or more in 2023.
The report also referenced the use of emergency accommodation – citing figures which show that an estimated 12 per cent of all beds in Fáilte Ireland properties were contracted to the Irish State for the provision of emergency accommodation as of the end of last year.
“Additionally, a number of regional counties had over 20% of capacity out of normal and tourist use,” the report noted.
The report added that in regional Ireland, hotel beds were mainly occupied by Ukrainian guests.
In contrast, it said, the majority of the contracted accommodation in Dublin was for asylum seeker and homeless accommodation, which is seen as longer term business.
Savills said it believes most of this Dublin accommodation will not return to hospitality use in the short to medium term.
The research pointed to inflation and higher interest rates pushing yields up and reducing the value of investment properties, but said that demand for regional hotels had “persisted” throughout 2023.
Regarding new supply, the company said it expected an average growth of just 3.0% per annum in the Irish hotel pipeline over the next five years.
This would lead the total stock of hotel rooms in Dublin to exceed 30,000 by 2029, it said.
Tom Barrett, director of hotels an leisure at Savills Ireland, said:“2024 transactional activity will grow from last year’s levels, with signs that interest rates have plateaued providing investors and prospective buyers with firmer foundations on which to make decisions.”
The company said that it predicted some small RevPAR growth over the next year for the Irish sector.
“With rising energy costs putting pressure on margins, investing in sustainable practices will enable hotels to reduce their costs, improve profitability and boost their brands,” said Tom Barrett.