2018 Our expert real estate predictions for the Irish hotel market - JLL
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2018
Our expert real estate predictions for the
Irish hotel marketWhat does 2018 have in store
for the Irish hotel market?
Below is a summary of JLL Hotels & Hospitality Group’s, top five Irish hotel real
estate market predictions for 2018:
1 First Wave Of New Dublin Hotel Openings
Only one new hotel, Address at Dublin 1, opened in Dublin in 2017 and there are still
major capacity constraints in the city. At 84.0%, Dublin City now achieves one of the
highest occupancies in Europe*.
In 2018, we expect approximately 1,300 new hotel rooms to open in Dublin City,
representing a +6.0% increase in current room supply. The first new hotel to open
will be the Iveagh Garden Hotel, which opens in January on Harcourt Street. This
year, Dublin will also welcome other notable hotel openings such as The Devlin in
Ranelagh, the city’s first Aloft and the Clayton Charlemont.
We expect a +20% increase in current Dublin room supply between now and 2020.
2 Trading Performance Growth Will Slow
Trading performance (measured in RevPAR) grew by +7.8% in Dublin and +8.6%
across Ireland as a whole in 2017*. In 2018, we expect RevPAR to grow by +5.0% in
Dublin and +7.0% across Ireland, a reduction in growth on 2017 levels.
With weaker UK demand generally, growth in Irish hotel trading performance is even
more dependent on continued robust US demand.
Thankfully, US demand is currently growing at double digit levels and expanded air
lift on the North Atlantic and US dollar strength is supporting this high spending
segment.
*Statistics based on STR Global data to November 2017 1What does 2018 have in store
for the Irish hotel market?
3 Hotel Investment Activity To Stabilise
The level of hotel transaction activity fell by -30% in 2017, versus 2016.
With Ireland’s legacy receiverships now coming to an end and fewer distressed
hotels assets remaining, we predict a hotel investment volume 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.
4 BREXIT Is The Sector’s Single Biggest Challenge
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.
Key to a successful 2018 will be the Irish tourism industry’s ability to minimise
BREXIT effects, whilst continuing to win more market share from buoyant US
and mainland European markets in order to ‘plug the gap’.
Irelands ability to grow its share of international corporate demand, and indeed
BREXIT relocation demand, will be watched closely in 2018.
2What does 2018 have in store
for the Irish hotel market?
Ireland as a hotel investment location presents a wide range of exciting hotel
opportunities. Here are our top “Builds, Sells & Buys” for 2018:
5 Where To Invest Or Divest?
Build It? Galway City Centre
We see 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.
Dublin Airport
Dublin airport is experiencing unprecedented levels of passenger
growth and its catchment is undersupplied in terms of hotel rooms.
With plans for a new northern runway and an expanding office campus,
there are exciting airport hotel development opportunities ahead.
Sell It? Dublin City Centre
With hotel values now firmly in excess of €400K per key for prime Dublin
City Centre and occupancy already at peak, there is potential to ‘take
stock’ and ‘bank a significant profit’ in Dublin this year. The city centre
hotel market is ‘hot’, international buyer demand is deep and 2018 will
provide some owners with exit opportunities.
Buy It? Provincial Ireland
There 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. Savvy buys in 2018 will include
large provincial hotels and resorts, dominant within their catchments.
3JLL Hotels & Hospitality Group
Contacts
Daniel O’Connor Jack Fox Siobhan Conway
Senior Vice President Hotel Agent Team Assistant
+353 1 673 1609 +353 1 673 1656 +353 1 477 9743
daniel.oconnor@eu.jll.com jack.fox@eu.jll.com siobhan.conway@eu.jll.com
Styne House, Upper Hatch Street, Dublin, D02 DY27
T: +353 1 673 1600 F: +353 1 679 5147
COPYRIGHT © JONES LANG LASALLE 2018 All rights reserved. No part of this publication may be published without prior written permission
from Jones Lang LaSalle. The information in this publication should be regarded solely as a general guide. Whilst care has been taken in its
preparation no representation is made or responsibility accepted for the accuracy of the whole or any part. We stress that forecasting is a
problematical exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The
process of making forward projections involves affect the outcome, and we draw your attention to this factor.You can also read
