Dublin City Council’s decision to double development contributions for hotels, tourist hostels and aparthotels will add to upfront development costs and may impact supply in the sector, according to new analysis from a real estate group.Earlier this month Dublin City Council announced that development contributions for the sector of €244 per square metre would apply from July 1st. This is twice the rate applied to most other commercial development. Now analysis from Colliers shows that doubled contributions “could pause marginal schemes and shift focus toward existing assets”.“Investors and developers will have to re-evaluate their assumptions in light of this change. When costs rise this sharply upfront, it directly impacts returns and shifts capital towards lower-risk opportunities, including existing assets rather than new supply,” said Abigail Holland, divisional director of hotels and leisure in Colliers.According to Colliers, the change adds “materially” to upfront development costs, which come at the most sensitive point in a project’s life cycle – “before construction begins and before any revenue is generated”. It gives the example of a typical 150-bed select-service scheme at 55sq m per key. At 8,250sq m, the development contribution would have been €1 million under the old rate. Under the new revised rate, however, it will double to €2 million. “In a market already constrained by elevated construction costs, tighter and more expensive debt, planning delays and utility connection bottlenecks, a step change of this scale can be the difference between a scheme proceeding and being shelved,” Holland said.Colliers also points to weaker viability on marginal schemes, such as mid-market and conversion developments. “We expect some currently consented or near-consented schemes to be paused or repriced,” it says, noting that financials will need to be reviewed as a result of the levy increase, which, in some cases, may lead to a need to “renegotiate land values to preserve target returns”. The new levy comes as reports suggest a continued shortfall of tourist accommodation. Recent analysis for the Irish Tourism Industry Confederation points to a shortfall of 10,000–15,000 hotel bedrooms by 2031, compared with national targets. The Irish Hotel Federation previously said that the move “sends the wrong signal at the worst possible time”.