Two of the world's biggest hotel operators as well as multiple investors and developers are looking to expand their Dublin and Irish hotel footprints amid strong demand from tourists.

Speaking on a panel at Bisnow’s Hotel Outlook event at The College Green Hotel Dublin, Marriott and Accor said they were looking to increase their presence in the city and in some of Ireland’s other markets, while extended-stay specialist Staycity pledged to continue developing schemes in Ireland, backed by a more favourable debt market.

“Investment interest is unprecedented among our investment partners, not just in Dublin but elsewhere. But it has been more concentrated in Dublin,” said Tim Walton, Marriott International senior vice president of hotel development for Western Europe. “We are seeing unprecedented [investor] demand across all open hotels, much of which is coming from America.”

Walton described Marriott as “relatively well represented today in Dublin” but said the global hotel group would like “more and more luxury, quite frankly,” as he highlighted the company’s Mount Juliet golf resort in Kilkenny.

“Our biggest membership bases are the U.S. and UK, two of the biggest inbound visitor groups,” he said.

“We would like to create more product like that on the west coast, which enables us to package trips in a way in which the American customer is particularly keen,” he said. “We also see a good opportunity in midscale conversion. Eighty percent of Irish hotels are unbranded, which will be first to suffer in any downturn. We like conversion, as it offers quick returns [compared with development]. Out of adversity comes opportunity.”

In terms of midlevel hotels, Walton conceded that Marriott has been “conspicuous by its absence” and had seen groups such as Accor grow in the segment, but Marriott recently commissioned research from the University of Surrey on the opportunity in Ireland to help identify suitable sites.

“At the other end, then, luxury is well established and viable in Dublin and Ireland,” he said of further expansion opportunities.

A hotel that will bring something new to the Dublin market is the upscale lifestyle brand The Hoxton, which is scheduled to open this year.

Accor Vice President and Head of Luxury Development for Northern Europe Maria Ashton said that with 49 brands under the Accor umbrella, the group sees The Hoxton as an important addition and Dublin as a “place we want to have more presence, but also in wider Ireland.”

“When we look at capital cities across Europe, most have recovered on occupancy, and the UK and Ireland are exceeding 2019 levels,” she said. “On the investor side, the lower the risk, the more attractive the offer, and we know there is a lot of international interest for buyers — people waiting and wanting to buy, although planning is slowing development.”

There is an active pipeline this year and next, Ashton said, but the firm is also seeing very high occupancies, which normally means the market will absorb supply and investors will be looking for more opportunities.

Ashton added that Dublin, along with Edinburgh and Madrid, were atop investor wishlists.

“The profile of investors is changing. Many are first-time now,” she said. “There is a lot of interest in Ireland and lots of different investors who would jump at an opportunity, with quite a lot of the recent deals off-market. It’s an interesting dynamic to see that change over time.”

While Ashton said office conversions could be suitable for midscale opportunities, which she felt was an undersupplied segment in Dublin, she added that Accor “would love to have more in the luxury market,” as demand for suites was outpacing supply.

While Marriott and Accor have shifted to asset-light models, Staycity is an active developer, and Chief Development Officer Andrew Fowler said that he anticipated 25% of growth going forward would be through development.

“In Dublin, the development numbers are starting to stack up again through improving yields and debt, despite construction costs still going up,” he said, as revenue per available room growth annually was above the consumer price index. “In Dublin, the numbers realign quite quickly. Development in northern Europe doesn’t stack up, while southern European asset prices are still going up.”

Fowler said he expects Staycity to develop at least three to four more hotels in Ireland, with the company having “put boots on the ground” with a new development director for Ireland starting and the company seeing a good investment case for not just Dublin but also Cork and Galway.

“I feel like we should have got in faster,” he said. “You need to get in quick, as a lot of capital is coming in. I could see yields contracting in the next 12 to 18 months.”

Fowler said he expected to see more ground-up development and office conversion, and he maintained that in terms of potential, “Dublin is right up there” along with London, Edinburgh, and Galway and Cork. While he said that currently, “regional UK doesn’t work,” he put Dublin in the top five for investment appeal.

Dublin should also be able to absorb any increasing hotel room supply, Colliers Associate Director Abigail Holland said. She pointed to Madrid as an example of a city that had seen increased luxury provision but had maintained room rate increases despite more competition.

“The debt market is improving, tourism is strong, yields are tightening,” Holland said of Ireland. “The limited supply for investment makes the market hard to benchmark, but given the opportunity, the likes of Deka and Blackstone will acquire along with high-quality partners. Lending is also evolving. The pillar banks have generally been supportive, but there are more alternative lenders and new entrants.”

She also pointed to underserved segments, such as purpose-built hostels, especially compared with provision in cities like Amsterdam and Berlin, and she said there was a “huge opportunity” for properties aimed at the 18-to-25-year-old visitor or budget-conscious traveller. She also said that many investors may pare down their offers to maximise returns.

“Investors looking at the bottom line could look at operations with limited staff and F&B, more like a bed factory or limited-service offer, with much higher margins, especially in strong, prime locations,” Holland said.

Bisnow’s next Dublin event is the Data Centre Investment Conference and Expo: Ireland on 26 June. More information is available here.