04 Oct, 2017
Dublin: One Of The Best Place To Grow
A myriad of factors including the continued economic recovery and improved air access, has helped demand for hotels in Dublin continue apace. 2016 marked double digit growth in RevPAR for the third year in a row, primarily driven by a further increase in room rates. The impact of Brexit is unknown, however with limited new supply coming on stream in 2017, further RevPAR growth is expected.
Dublin is Ireland’s capital and economic centre, home to 40% (Greater Dublin Area) of the population, and host to a vast array of corporate European headquarters, such as Google, LinkedIn and Facebook. In 2016, Dublin was voted third in Lonely Planet’s cities to visit and the world’s third friendliest city according to Condé Nast Traveller. Dublin has c.5 million overseas visitors a year, drawing an ever more international and dynamic visitor base through conferences, festivals and large sporting events.
Continued GDP growth, combined with an increase in overseas visitors, improved Irish consumer confidence, and continued lack of new supply, has led to another strong year for the hotel industry. RevPAR increased by 16.1%. This was driven in part by occupancy rates, which are now some of the highest in Europe at 82.5% representing a 0.6% increase on 2015.
However, the main driver of RevPAR has been an increase in rates, which increased by 15.5% to €128, compared to €77 in 2010.
The number of hotels in Dublin has remained relatively static over the last 10 years, with only five openings since 2007. Currently there are 147 registered hotels. This equates to 18,500 rooms, and represents a third of the bedroom stock in Ireland. With visitor numbers continuing to grow year-on-year (14% H1 2016) there are ongoing concerns regarding the lack of new supply. According to a Fáilte Ireland report, 80 prospective new hotel projects are in the pipeline, of which 65 are likely to be open by 2020.
New bedrooms capacity is estimated to be c.5,550, with 3,800 of these being from new hotel projects and the balance being from extensions to existing hotels. It is estimated that Dublin will have up to 300 new bedrooms in 2017 and 700 in 2018.
According to CBRE, there were 66 hotels sold in Ireland in 2016 with a total value of over €800 million. Sales included some well-known Dublin hotel properties such as The Gresham Hotel, the Doubletree by Hilton and the Lifestyle Collection (The Spencer, Morgan and Beacon hotels). Two of the largest hotel groups in the country, Dalata and Tifco, acquired various leasehold hotel interests. The volume of hotel sales is expected to ease in 2017, following two record years.
The impact of Brexit and the election results in the US on the Irish economy and tourism is unknown. Early indications are that 2017 may see a fall off in UK visitors, Ireland’s largest single source market, due to the weakness of Sterling. But, further growth in tourism numbers is expected from North America, mainland Europe and Asia. Tourism strategies such as the ‘Destination Dublin' and the ‘Ancient East' are continuing to attract more visitors. Dublin Airport had a record- breaking 28 million passengers in 2016, which exceeded the 2015 record by more than 2.8 million. Additional new routes and capacity are expected in 2017.
The Irish economy is forecast to continue to grow but at a more moderate pace with GDP growth forecast at 3.3% in 2017 and 3.0% in 2018, compared to 4.0% in 2016. Although consumption and investment growth remain robust, driving further growth, external risks such as Brexit and trade-related uncertainty are likely to hinder export growth in 2017.
The Irish hotel market has experienced double digit growth in RevPAR for three years in a row, driven mainly by further recovery in room rates in 2016. With little new supply putting pressure on prices, hopes are high for continued growth in both 2017 and 2018.
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