The Buck Stops Here: Dublin's Hotel Market Tries To Sidestep U.S. Visitor Falloff

Last year was a bumper one for occupancy and investment in Ireland's hotel sector, with demand driven in no small part by U.S. visitors buoyed by a soaring dollar.

It was no surprise, then, that Tourism Ireland chose New York to launch its “Fill your heart with Ireland” marketing campaign in February, given that Americans are Ireland's second-largest source of overseas tourism revenue, with direct flights from 22 U.S. gateways, including new services from Detroit, Indianapolis and Nashville.

However, with the dollar tanking because of U.S. political instability and Dublin Airport's annual passenger cap of 32 million passengers continuing to pose a challenge to the hotel industry, the Central Statistics Office has posted contentious data showing a sharp fall in tourism during January and February compared with the same period in 2024, creating worries over prospects for 2025.

Despite those fears, owners and operators are pressing ahead with new openings, and investment transactions are predicted to be below 2024 but in line with long-term averages. 

This February, the CSO’s data showed that just over 304,000 foreign visitors made a trip to Ireland, 30% down from the 433,300 that came in February 2024.

Tourism Ireland and the Restaurants Association of Ireland have disputed these figures, but the CSO posted on its website that it remained “confident” in the trends reported, while in March the Irish Hotels Federation also warned that forward bookings for hotels were down €100M for 2025 compared with the same time last year.

The drop in tourism numbers reported by the CSO has also been highlighted by the aviation industry as it continues to rail against the Dublin Airport passenger cap, the future of which remains in the planning process.

“Ireland’s tourism industry is suffering a slump, and the only way out of this slump is to scrap the cap at Dublin Airport,” Ryanair CEO Michael O’Leary said in a statement.

Dublin average daily rates ended 2024 down 3% year-on-year from €177 to €172, while occupancy remained strong at 82%, broadly in line with 2023. CBRE predicts that Dublin ADR will continue to experience pressure because of the level of new hotel bedrooms due to open this year. 

However, CBRE has predicted that despite some challenges to trading performance, transactional activity will be strong again.

Total transaction volume for 2024 in the Dublin hotel market was €890M, with a further €30M of hotel development site sales and €60M of hostel transactions also closing. A total of 612 new hotel rooms were delivered in Dublin last year, taking total room stock to nearly 27,500.

An additional 1,500 rooms are due to be delivered in 2025, which CBRE predicted will have implications for room rates in the year ahead, while the adviser forecasts transaction volumes will approach €800M in 2025 as prime leased hotel yields compress and stabilise at less than 5%.

“Transactional activity in Ireland has been off to a strong start in 2025 with approximately €208.5M of transactions in Q1,” CBRE Ireland Head of Hotels Paul Collins said. “There is a significant pipeline of both Dublin and regional hotel deals at various stages of marketing, with investor interest holding up.”

He said Dublin is ranked in the top 10 for European markets by hotel investors.

The sale of a majority stake in The Dean Hotel Group portfolio to Lifestyle Hospitality Capital and the disposal of The Shelbourne Hotel to Archer Hotel Capital helped drive 2024 transaction volumes, while Dalata Hotel Group recently announced a strategic review, including the potential sale of the company, which has a market capitalisation of nearly €1.2B. In Dublin, it has 4,638 rooms and a circa 16% market share, with a portfolio of 10 owned hotels, seven leased hotels and two managed hotels, including eight Maldron Hotels, seven Clayton Hotels, The Gibson Hotel and The Samuel Hotel.   

In January, JLL brought the Heights Hospitality Holdings-owned, 101-room Temple Bar Inn on Fleet Street to the market with vacant possession at a guide price of more than €50M, while The Morrison on Dublin’s North Quays has also been put up for sale by UK private equity investor Zetland Capital/Centauro Holdings for €90M to €95M.

Meantime, several hotel groups have opened or expanded in Dublin, including the 272-bedroom Ruby Molly on Arran Street East, acquired by Deka Immobilien for €86M in March, and the 152-bedroom Chancery Hotel in Dublin 8 last year, while 2025 will see the introduction of two boutique brands that could help reshape the market.

Ennismore expects to debut The Hoxton in Dublin in late 2025, a restoration of the city’s former Central Hotel, which will create a new destination featuring more than 120 rooms, a café, its famous Library Bar, restaurant and late-night venue. The project was first announced in 2022, after European private equity firm Deutsche Finance International and London- and Dublin-based property investor BCP Capital signed an agreement with Ennismore to bring The Hoxton brand to Dublin.

“What appealed to us about Hoxton was obviously the strength of its brand and a loyal customer base both in the UK but also growing within Europe and the U.S. as well,” Deutsche Finance International Managing Director Paul Nearchou told Bisnow previously. “We believe in the long-term fundamentals of the Irish hotel market, and we thought it'd be a great way to capture both Europe and the UK but also U.S. tourism, which is important for Ireland.” 

CitizenM is also set to open in 2025, with the 245-room citizenM Dublin St Patrick’s situated on the site of the former Molyneux House opposite St Patrick’s Cathedral. The new-build property incorporates the facade of Molyneux House and will feature a ground-floor “living room” with a 24-hour canteen bar, a self-check-in area and a design targeting BREEAM Excellent.

One sector that has stood out is Dublin’s hostel market, which has seen renewed interest, with several hostels transacting and some planning applications lodged this year. There is an undersupply of purpose-built hostels in Dublin, and in the last year, European operator Clink has opened a 600-bed purpose-built hostel on Abbey Street, Dublin 1, while Jacobs Inn Hostel was acquired by Spanish operator Azora for more than €45M.

Meanwhile, Firethorn Trust and SW3 Capital acquired a development site at Sackville Place with planning permission for a 588-bed hostel. Several planning applications have also been granted for hostels, including Marlet securing permission for a 496-bed hostel on Macken Street and Red Rock Developments for a 665-bed hostel on Foley Street.

For now, the industry awaits the fallout from U.S. President Donald Trump’s policy pronouncements and whether international visitors, lured by the enduring appeal of the Emerald Isle, can offset any drop in U.S. visitor numbers.

To find out more about prospects for the hotel investment sector, Ireland Hotel Outlook is being held 15 May at The College Green Hotel, Dublin.