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Ireland’s hotels come roaring back, with a little help from Taylor Swift and Bruce Springsteen

The Taylor Swift effect this summer is just one in a series of big events boosting room rates

Call it Swiftonomics, or simply the Taylor Swift effect, but by the time the record-smashing pop phenomenon takes the stage over three days at the Aviva Stadium in Dublin next June, a chemical reaction will have taken place in the local economy, the impact of which will be quantifiable.

Across the breadth of her Eras tour last summer, Swift added an estimated $4.3 billion (€4 billion) to US gross domestic product, according to Bloomberg. The Federal Reserve Bank of Philadelphia said hotels in the City of Brotherly Love, where Swift played three nights at Lincoln Financial Field last May, enjoyed their highest monthly revenues as fans flocked from near and far to see the star in her home state.

In Dublin, the chain reaction is already making itself felt with hotel rates in the city – much to the chagrin of Liveline callers – already hitting staggering highs for the dates in question. The concerts, coupled with Bruce Springsteen’s Croke Park gig in May and other high-profile events across a busy summer, are likely to cap another year of strong growth for the capital’s hotels.

Since the lifting of Covid-19 public health restrictions in early 2022 and the return of international travel, hotels in Dublin and across the State have come roaring back.


That has made Irish hotels sought-after assets attracting interest from foreign and domestic investors in an otherwise moribund commercial property market. Headline assets like the Kennedy Wilson-owned Shelbourne Hotel, Press Up’s Dean Group or US fund Apollo’s Tifco portfolio among others are either on the market or have been sold in recent months. But across value segments, property agents are forecasting a pick-up in the number and value of assets changing hands in 2024 after a relatively quiet 2023 for deals.

What exactly is the attraction of Irish hotel assets for investors and how did the sector recover so quickly despite the appearance of myriad new challenges since the pandemic? Crucially, are room prices on an inexorable upward trajectory and what does that mean for domestic consumers and visitors to Ireland?

“The recovery was a lot faster than anyone imagined,” said Tom Barrett, director of hotels and leisure at Savills Ireland. “By the end of 2023, pretty much around the world, people are kind of back to where they were, give or take, and in Ireland, our occupancy is back and our prices [rates] are higher.”

One window through which to view this recovery is through the performance of the biggest players in the sector.

Earlier this week, investment bank Numis issued a buy rating for hotel group Dalata’s stock, pointing to strong cash generation across the group’s portfolio of assets in Ireland and Britain after a record-breaking 2023. In their first report on the Dublin-listed group, analysts from the Deutsche Bank-owned firm said there was potential for further rapid growth in Britain where Dalata “sees scope to add a further 5,000 rooms” beyond its current pipeline, giving it a much more significant slice of the pie on the other side of the Irish Sea.

It was no surprise the hospitality sector bore the brunt of the impact from Covid restrictions, accounting for the bulk of pandemic-related job cuts and furloughs in the first year

While Britain is the “focal point” of Dalata’s expansion strategy, Numis said the strong underlying performance of the Republic’s economy coupled with the “impressive” recovery of the hotel sector from the pandemic give the Clayton and Maldron operator a strong foundation in its home market. Room rates are now 30 per cent higher across the sector than they were pre-Covid and are expected to grow by 3 per cent in Dublin this year and at a slightly slower pace regionally.

It would be wrong to see Dalata, the largest individual hotel operator in the State, as an avatar for the rest of the industry, given its size and access to capital markets. Naturally, the Dublin-listed group was able to draw on deep reserves of cash built up since its initial public offering in 2014, a luxury not available to many other players in the market in the teeth of the pandemic.

Dalata’s balance sheet was also buttressed at the outset of the crisis by the sale and leaseback of its Clayton Hotel Charlemont in Dublin to Deka Immobilien in April 2020. A clever stroke in difficult times by then chief executive Pat McCann, the deal raised €160 million for the group.

These options were simply not on the table for a lot of operators.

Yet, the group is something of a bellwether for the sector and the hard numbers behind Dalata’s situation during the pandemic is illustrative of the stark position in which the wider hospitality industry found itself practically overnight. Group revenues plunged 60 per cent in the first year of the pandemic in 2020 to €80.8 million after it was forced to close its stable of 44 hotels for long stretches throughout the year and into 2021. The Irish Hotels Federation estimated Covid restrictions had wiped out €2.5 billion in hotel revenues across the industry in the first year of the pandemic, a decline of about 60 per cent.

Dublin – where most of Dalata’s Irish properties are concentrated – was particularly damaged by the collapse in overseas tourism, while regional hotels were able to salvage something from the summer of 2020 thanks to domestic holidaymakers. For all of these reasons, it was no surprise that the hospitality sector bore the brunt of the impact from Covid restrictions, accounting for the bulk of pandemic-related job cuts and furloughs in the first year.

All of that is ancient history by now. From supply-chain-related cost inflation to labour shortages and geopolitical strife, an entirely new set of interlinked challenges has reared its head since the final Covid restrictions were lifted in early 2022. Yet across the State, the industry has roared back since then in a way that has taken many by surprise.

Tourism Ireland is busily promoting Ireland as a destination for ‘value adding’ – subtitle: wealthy – tourists at the ‘higher end’ of the market

This was part of a global phenomenon as tourists unsheathed their wallets with gusto throughout 2022 and 2023, pushing up room rates. “It’s the same around Europe and in the States,” says Barrett. “I was looking at some research yesterday and the increase in pricing [in Dublin] was less than quite a lot of other cities compared to 2019.”

That will be thin gruel for Taylor Swift fans this summer or for anyone who booked a hotel room in the capital in the period around May 2023 when average Dublin room rates hit a record €203 per night, at a time when Bruce Springsteen and Duran Duran were in town for a series of concerts, making them among the most expensive in Europe.

Not without reason, the sector has been hit with accusations of price gouging from the public and even politicians. Against that backdrop, there was little political will to extend the 9 per cent VAT rate beyond its expiration date last August.

But looking at it from an investor or an owner-operator’s perspective, hotels, unlike other commercial property assets, are inherently better equipped to deal with periods of cost inflation because their operators can react in the moment, raising or dropping daily rates to suit the market. Renegotiating a lease with a commercial tenant – a retail operator, for example – is a different story altogether.

With rates and occupancy rates already elevated, it is not difficult to understand why new entrants like London-based Lifestyle Hospitality Capital, which agreed to acquire a majority stake in Paddy McKillen jnr’s and Matt Ryan’s Dean Hotel portfolio before Christmas, are keen to snaffle Irish assets. Big institutional investors like Blackstone, Aviva and DWS are also players in the market, particularly in Dublin.

However, it is not just a question of rates, industry sources say. From a buyer’s perspective, there are reasons to think the tourism sector here can grow in size and value over the medium term, chief among them the new runway at Dublin Airport and airport operator DAA’s planning application to increase the passenger cap at the State’s main international transport hub from 32 million to 40 million people annually.

Meanwhile, Tourism Ireland is busily promoting Ireland as a destination for “value adding” – subtitle: wealthy – tourists at the “higher end” of the market as part of its strategy for 2024.

Alice Mansergh, acting chief executive of the inbound tourism agency, recently said the body’s own research suggests foreign visitors do not see the island as a “low-cost destination”. So, to some extent, elevated prices are already baked into the average tourist’s expectations, or so the argument goes. “We’re seen as middle of the road,” Mansergh said in January. “We don’t market ourselves as cheap overseas. We’re trying to target those consumers who have the funds to travel and who prize experiences over low cost.”

Putting it all together, it means that barring any sudden external shocks – and there have been one or two of them of late – tourism bosses are expecting more tourists to arrive here over the coming years and with thicker wallets.

With all of that in mind, Irish hotels are a compelling prospect for international funds and operators, says Dave Murray, senior director at property agency CBRE Ireland’s hotel division.

“When you look at graphs of international comparisons of economic performance or in terms of foreign direct investment, Ireland is at the top of all of them. If you are one of these various funds and you have money to deploy, you would be remiss not to look at Ireland for some of your real estate allocations across various asset classes, not least hotels.”

The Irish hotels sector recorded some €350 million in transactions last year, 30 per cent below the long-term average, according to a Savills Ireland report from last month. The number of transactions, 20 in the calendar year, was also down from 28 in 2021 and 22 in 2022.

With the formal sale of Press Up’s Dean portfolio to Lifestyle and Elliott Management expected to be finalised in the early part of 2024 and some smaller and mid-sized deals in the pipeline, this year is already looking up on the transaction side.

Apollo, meanwhile, has reportedly pulled back from the €500 million sale of the Tifco platform with investors having seemingly baulked at the price tag. But a sale of all or a portion of the 24-property portfolio is not being ruled out.

Leaving that aside, transactional activity is expected to grow this year, says Savill’s Barrett. “It’s only the start of February yet, but I’d be thinking it could be more like €500 million-plus because of the Dean Hotel group and I think there’ll be probably more individual and chunkier sales than last year.”

Positive from a hotel owner’s or investor’s perspective, that sounds comparatively ominous for value-starved domestic holidaymakers and, indeed, Swift fans looking for somewhere to crash this summer.

There is no doubt that the hospitality sector has lost some of its competitiveness for Irish consumers despite an uptick in 2021 and 2022 as international travel remained somewhat curtailed. A survey last summer suggested that almost half of Irish holidaymakers were considering changing their summer plans due to the cost of living. A whopping 63 per cent of respondents indicated they could find better deals abroad than at home.

The situation is particularly acute in the capital where industry complaints about a shortage of beds are butting up against public concerns about the oversaturation of tourist-oriented and commercial development in the city centre. There is also the small matter of older properties, particularly on the periphery of Dublin and across the country, being used for emergency accommodation.

Is there a danger that in marketing Ireland, its hotels and experiences towards big-spending tourists, those hotels lose valuable domestic business?

Not really says Dave Murray. “You could not sustain yourself targeting purely US tourists and tourists from the rest of the world,” he says. “They are the people you need to secure to make it a profitable business so you need to get them. But to keep the lights on, you need to be able to attract domestic business.”

Still, the bad blood between Irish Swifties and hotel operators make take some time to heal.

Ian Curran

Ian Curran

Ian Curran is a Business reporter with The Irish Times