The Irish hotel market has seen over €360m of investment year to date and is on track to exceed €500m of completed deals by year-end, a 25% increase on 2021 levels.

Daniel O’Connor of JLL told the annual hotel market briefing organised by the property adviser and sector specialist Crowe that while private equity buyers are impacted by rising debt costs, Irish hotels are still transacting regularly, with hotel operators and institutional and private buyers remaining active.

“We expect the next few quarters to present some exciting hotel acquisition opportunities, particularly for those buyers who are in funds and have the foresight to see through the short-term market disruption,” O’Connor told the 120 attendees at the briefing in Intercontinental Hotel in Ballsbridge.

Crowe partner Aiden Murphy described the bounce back for hotel trading performance in 2022 as remarkable, considering that the year started under travel restriction conditions.

“There would have been widespread solvency issues for Ireland’s hotels without the state Covid supports,” said Murphy.

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“The continuation of payroll supports up to the end of April 2022 provided a foundation for hotels to rebuild their teams and regain some operational efficiencies.”

Murphy noted that the big step change across the sector is higher Average Room Rates, though he argued that the price increases have been necessary cover the increased cost of doing business that hotels have now to deal with.

Murphy expects that the room rates achieved in 2022 will form the new baseline in hotel room prices.

“Considering the trajectory of rising payroll costs, which account for over 40% of hotel outgoings, the scope for cost reductions and bringing down room prices any time soon is remote,” he explained.

The VAT levied on hotel room charges will increase by 50% from 9.0% to 13.5% from April 2023.

Photo (l-r): Aiden Murphy, Daniel O’Connor, and John Brennan, chairman of Klarent Hospitality