Following what has been a tumultuous 13 months for the hospitality sector internationally, in their report “The Future of Demand for the Dublin Hotel Market”, CBRE have considered what the Dublin hotel market will look like once international markets re-open – what the medium term drivers for demand will be and ultimately what the implications may be for the future supply of hotel accommodation in Dublin city.
There are 4,075 hotel rooms currently onsite across Dublin City and the level of new supply openings are estimated to take place between late 2021 and spill into the early months of 2023 predicting hotel stock to reach just under 26,000 bedrooms, according to the latest research from global real estate advisor, CBRE.
The Dublin hotel market has outperformed most European capital cities over a number of years in the lead up to Covid and this was driven by robust macroeconomic fundamentals from consistently high GDP growth to considerable growth in employment in high skilled and high earning roles increasingly within multinational companies. Through these strong fundamentals Ireland has seen record levels of household savings, giving confidence to the prospects of future domestic leisure demand once hotels reopen for business.
But what of corporate demand? There is a great deal of speculation as to how much corporate travel will be affected by the acceleration of use of telecommunications and how this will reduce the need for short hop travel which drove a significant portion of corporate demand in international cities. CBRE assess in their report the categories of corporate travel and likely permanent impacts resulting from the past 13 months and consider that in the context of the growth in multinational corporate occupiers in the city centre. For example, the top ICT employers in Dublin have increased their committed and occupied space by 259% since 2014, accounting for 451,000 sq. m. or 16% of the overall market with over 50% of committed but not yet operational. While individual corporate travellers might fly less frequently, CBRE believe the demand drivers in Dublin are highly likely to exceed any permanent impacts on the reduction in corporate travel by virtue of Covid-19.
Dave Murray, Director CBRE Hotels in Ireland said: “The factors that drive long term domestic consumer confidence appear strong in Ireland relative to its European competitors. Along with forecasted growth in population and high levels of household savings, domestic demand should prove strong in Ireland. From a corporate business perspective, the significant expansion in the size of the office market and the increasingly international nature of the city’s corporate occupiers will sustain corporate demand for Dublin’s city centre hotels into the medium term”