Global Appeal Keeps Ireland's Hotel Market On Track Amid Complexity

Dublin’s hotel investment market remains strongly placed, but the sector is becoming increasingly complex as investment partners, hotel offers and financing structures blur the traditional norms, according to Bisnow’s Ireland Hotel Retail Conference in Dublin on 14 May.

In addition, with investors using different financial structures to make hotel investments, the mix of equity types and geography of inward investment have also become blended, challenging traditional assumptions, CBRE Ireland Head of Hotel Valuation Ann Marie O’Byrne told attendees.

“Often, finance may seem to be domestic or pan-European but could actually be backed by U.S. money, so the old models of how schemes are acquired or developed no longer really apply,” she said.

And while she noted that investors were being more selective and increasing their due diligence on deals, she said the strong transaction market experienced last year, driven in particular by the Pandox acquisition of hotel group Dalata, is expected to continue during 2026.

“The fundamentals that have made Dublin and Ireland popular — because we should not forget the regions for both tourism appeal and high-end industries — have continued to drive demand,” she said.

Bob W Chief Development Officer Philip Grace said the geopolitical backdrop had made investment more complicated. Nonetheless, the company has ambitious plans for Dublin as it builds on its planned debut. Property developer Keith Craddock secured planning permission to demolish a Circle K petrol station opposite Donnybrook Stadium in Dublin and replace it with a seven-storey Bob W aparthotel late last year.

The Finland-based hotel brand operates across Europe, and Grace said the tech-led, no-frills operation has resonated with guests and allowed it to focus on the profitable elements of providing accommodation.

“We’re in an era where I would question why, as a hotel, you run [food and beverage] because at some point in the next 20 years, it will close down. And why have a small gym when visitors can use a full gym five minutes’ walk away?” he contended, saying this focus solely on rooms helped with revenue density by doing away with back-of-house space.

“We believe we have a model that works for the modern traveller and provides value for money," he said.

Firethorn Director and Head of Strategic Investment Charlie Ingham said his company was also looking for more opportunities in Dublin, which he felt continued to show strong fundamentals.

Firethorn acquired a development site in central Dublin to create a purpose-built hostel off O’Connell Street and has partnered with SW3 Capital on the acquisition and future operation of the asset, with planning permission to develop a 588-bed hostel.

“We see a great future for this type of hybrid accommodation,” he said of what is intended as a higher-end hostel offer.

“Inevitably, the conflict in the Middle East has created more investor uncertainty, and I think capital is a little more cautious, but Dublin and London remain very strong draws for visitors, which we believe will continue,” he added.

That backdrop of political upheaval has also meant that investors, developers and operators need to double down on their plans and finances as they examine hotel opportunities.

“For underwriting, the key is discipline and detail," Staycity Development Director Alix McAliden said.

"We take a very disciplined view because we are looking at agreeing a 25-year lease [when signing for properties], therefore underwriting on rents and due diligence is vital.”

The company operates under two brands: the more premium Wilde banner and the Staycity moniker, with both also undergoing an uplift in design and offer.

“With Wilde, we are taking a bet that F&B will take a bigger part, so we’re looking to create destination F&B that complements the offer. But we see F&B as a free hit because the numbers for rooms have to stack up first,” McAliden added of the model.

He noted a trend for increasing density to make hotel development viable, with rooms being built at 14-16 square meters, while average room size is 23 square meters. Because of that, he said the company worked hard with design guidelines for its format to create clarity for investors, while it was “obsessed with review scores” rather than star ratings.

The company is looking to develop more sites in Dublin and would also like to expand in other Irish cities, but McAliden said construction costs meant viability remained an issue.

“I would love to think we could go to Cork, but it’s only 5% to 10% less to build there, and to expand, we need higher room rates. Cork is, however, now on the viability threshold, while Galway works, but we won’t take chances on location. Our model is city centre, high average day rates, and we’re pursuing a flight to quality as we don’t want to drop brand standards because we have a model we feel works,” he said.

Reddy Architecture Director Lisa Wynne added that to try and improve scheme feasibility, the developers often push hard on value engineering concepts, but she warned that for long-term solutions, developers had to be careful not to cut corners. 

“We are seeing a huge variety of offers, and it’s important to have something unique about the building, something special to talk about,” she said.

Meanwhile, NDY Associate Director Michael Karling added that to protect margins, operational costs through smart building integration, linked to the hotel’s booking system, could help to respond to actual rather than predicted energy demand.

“There’s a building performance gap and hotels have one of the largest, with many operating 30% to 100% worse than expected between how they are commissioned and how they are operated. Hotels run 24/7, people leave the aircon on overnight, and so on, so it’s something that needs to be addressed,” he said.