According to international real estate advisor Savills, 2013 was a bumper year for hotel investment in Ireland with 39 hotels being traded during the year in transactions worth over €200 million. In its latest report on the Irish hotel sector, Savills notes that this was driven partly by an underlying improvement in tourism performance.

Dr. John McCartney, economist and director of research at Savills Ireland, comments: “2013 was a strong year for tourism in Ireland with the number of visitors from our key markets in Britain and North America rising strongly. This fundamentally stems from a robust recovery in both economies, and from the success of events such as the Gathering.”

Savills finds that domestic tourism has also contributed to this improvement. Led by a strong recovery in the labour market, household disposable incomes began to edge up in 2013 and, as a result, consumer sentiment has reached its highest level for almost seven years. Additionally the firm reports that the savings ratio has come right down, resulting in  people once again beginning to contemplate holiday breaks.

Tom Barrett, director of hotels & leisure at Savills, adds: “The Dublin market has maintained its status as the best performer in the Irish hotel sector and one of the strongest investment capitals in Europe. International buyers continue to show interest in prime city centre hotels and trophy assets, while domestic buyers are more focused on regional stock. This is a trend we expect to continue this year as more hotels come to market. A number of properties have already been put up for sale, and NAMA has recently announced its intention to bring further assets to the market this year.”

Savills reports that RevPAR (revenue per available room) grew by 11% to €71 per room in 2013 (STR Global). Regional cities also experienced positive RevPAR growth with Cork up 10% to €52, Galway up 9% to €53, Kilkenny up 12% to €50 and Limerick up 7% to €30 (Trending.ie). Outside of the cities a recovery has begun, albeit at a slower pace.

Savills, which was involved in almost 80% of hotel deals in the €5 million+ bracket, states that improved bank lending conditions and capital investment has also helped boost the investment market.

Tom continues: “Another positive indicator in the market is the number of sold hotels that are undergoing extensive refurbishments. For example, following its sale to a Russian buyer last spring, the Morrison Hotel underwent a €7 million capital expenditure programme. The Double Tree Hotel on Dublin’s Burlington Road is currently being transformed at a cost of €16 million, while a €20 million refurbishment programme is also underway at Ashford Castle in Mayo.”

Properties launched in 2014 by Savills include Oriel House Hotel and Blarney Hotel & Golf Resort, both in Cork, with asking prices of €6 million and €2.5 million respectively. The Charleville Park Hotel in Cork was also launched recently with an asking price of €3.75 million.