2021 European Hotel Industry Update: Spotlight on Ireland

These are the key findings from the 2021 Deloitte European Hotel Industry survey, conducted as part of the annual European Hotel Industry Conference. The survey was closed on Friday 12 November 2021, before the Omicron variant was prevalent and associated impact on hospitality evident. The survey represents the views of a sample of senior hospitality figures, including owners, operators, lenders, developers and investors.

Disruption and recovery

Distressed activity

While over a third of our respondents do not expect to see distressed activity in the short term, 42% expect it to emerge in the first half of 2022 and 16% in the second half of 2022.


Top priorities

Top Priorities

The hospitality sector is not just focused on recovery but also on growth in the next 12 months.

In terms of learnings from the pandemic, the hospitality leaders in our survey ranked the ability of their staff to adapt, reskill and assume new roles as the most important factor helping their organisations to navigate future disruption.

Investment opportunities

Assets with a focus on sharing experiences such as co-working, co-living, student housing and hostels continue to be less attractive for investment in 2022, with only a total of 14% of respondents rating any of these categories as attractive.

Risks for the next five years

The hospitality leaders in our survey expect the main risks for the European and UK hospitality sectors for the next five years to relate to talent and the ongoing impact that the COVID-19 pandemic might have on predictability of demand. The impact of the pandemic is expected to be a bigger risk for the European sector, than for the UK. The increased staff costs has particularly risen as an important risk in this year’s survey, with the share of respondents selecting this for the UK sector surging from 9% last year to 59% and from 6% to 38% for the European hospitality sector.

Climate change action

While climate change action is seen to be appreciated by shareholders and stakeholders, less than half of our respondents think consumers are willing to pay more for sustainable products and services.

Top 10 European cities for investment

This year saw Dublin reclaim its place on the ‘Top 10 European Cities for Investment’ in 2022, placing 7th overall. Amsterdam narrowly holds on to the top position for the 6th year in a row as the most attractive European city for hotel investment in 2022. While London is seen to remain resilient holding on to its second place, Madrid has jumped from 10th place to third place in 2022. Lisbon and Barcelona have become more attractive to hotel investors, climbing up two places, and are now fourth and fifth in the ranking, ahead of Paris.

Financing the European hotel market

Private Equity investment remains the preferred source of equity capital for hotel acquisitions in Europe but real estate funds and REITs as well as hotel funds are expected to feature more strongly in 2022. Almost three quarters of the respondents (74%) expect hotel investment to come from domestic sources within Europe. Increased investment activity is expected from the UK (42% up from 30%) and North America (54% up from 50%). 72% of respondents view senior bank loans as the most common source of debt financing but real estate asset managers and direct lenders are expected to increase in importance (increased from 40% to 59% and 30% to 42% respectively compared with the previous year).

European outlook and investment cycle

Hospitality leaders in our survey predict UK (45%), Spain (42%), Greece (38%) and particularly Portugal (49%) to be in an upturn in 2022.

Performance Statistics

The Irish hospitality sector came full circle in 2021. The lockdowns of mid-winter and spring were followed by a renewed sense of optimism in summer and late autumn, only to be dampened with a new wave of uncertainty and restrictions brought upon by the Omicron variant.

The impact of the above is demonstrated in performance statistics, in 2021 we continued to see the disparity between regional and Dublin hotels, with regional hotels occupancy at 52% and Dublin hotels at 38% for the year, but demand has been steadily climbing with occupancy up 7% for Dublin in 2021 versus 2020.


Rate has held up reasonably well across the country with 2021 average daily rate (ADR) outperforming 2019 & 2020 levels in the Regions and Dublin achieving approx. 80% of 2019 ADR.

On the supply side, Dublin bedroom numbers will grow as the pipeline of up to 4,000 hotel bedrooms reach completion in the medium term. This may see tension between occupancy percentage and ADR, where new entrants will chase market share (occupancy %) at the expense of ADR, resulting in subdued RevPAR.

There remains a level of uncertainty around 2022 performance, however, it is expected that domestic travel is likely to remain the key to recovery during early 2022.

Funding Market

The full financial impact of Covid-19 on the Irish hospitality sector has yet to fully materialise, many are relying on Government Covid supports and/or creditor forbearance.

The withdrawal of the Government’s supports will impact struggling companies, some of which have a high level of arrears (tax etc.), and while debt providers (both banks and direct lenders) have continued to be been largely supportive of the hospitality industry, forbearance cannot continue indefinitely.

As the market proceeds along a recovery phase, there is likely to be an increase in refinancing, restructuring and disposals. Banks’ risk appetites regarding new hospitality opportunities remains limited, it is therefore likely that financing will become more diverse with direct lenders becoming more active as they can tolerate a greater degree of risk, albeit at a higher cost to the borrower.

There is still a large volume of capital looking to invest in hotels and, while the availability of distressed acquisition opportunities is likely to be less than expected when the pandemic began, signs point to an accelerating transactional market with specialist equity houses and debt funds looking to deploy capital into borrowers seeking long-term solutions to their capital structure.

The Deloitte Debt & Capital advisory team can help borrowers navigate through these unprecedented times and are available to provide advice and guidance on the most appropriate approach to adopt going forward.

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