As Ireland recovers, there is more and more money passing through the capital's pubs.

Pre-tax profits at one of Dublin’s magnet-like bars for tourist traffic, The Oliver St John Gogarty, in Temple Bar, jumped by more than 80% in the past financial year to €3.1m.

The pub is owned by the Martin Keane-controlled Drayton House company, which also expects to commence its planned retail, pub and distillery redevelopment of the Victorian Iveagh Markets near Christchurch within months.

There was further evidence of a resurgent city centre pubs market last night with the announcement that two of the country’s largest pubs and hospitality groups, the Mercantile Group, owned by long-standing pubs operator Frank Gleeson and Capital Bars, owned by Michael O’ Rourke.

The new entity involving 12 prominent Dublin social spots such as Whelans, Cafe en Seine and Pichet restaurant, will have turnover of over €40m and employ about 600 people and says it has ambitious plans for growth at home and abroad.

Breakfast Business talked to CBRE’s licensed premises specialist John Ryan, who indicated that trading and valuations have recovered strongly in Dublin's pub sector, but we’re still a long way from boom-time prices.

He says that there has been a two-tiered recovery in Dublin's pub trade, with city premises enjoying strong sales while many suburban pubs struggle - although he points out that pubs outside the centre experienced improved Christmas sales and that "green shoots" are starting to show.

After 18 months which saw a lot of distress selling, Mr Ryan believes that the market is normalising.

While he was not involved in yesterday's merger - but  says that both parties will benefit from improved economies of scale and buying power and that considering the amount of money involved in the industry, it will also benefit from operating with a new corporate structure.