Average room rates in Dubln have risen by 14.7pc in a year, as occupancy rates rise and new hotels are still waiting to be built in a region that’s reckoned to need at least 5,000 additional rooms.
The finding are contained in the 22nd Annual Ireland Hotel Survey conducted by Crowe Horwath, advisors to the Irish hotel industry. The report, which is compiled from Irish hotels’ 2016 accounts, shows that Dublin continues to out-perform other regions with average room rates increasing by almost twice the level of Western Seaboard hotels which saw a growth in average nightly room rates of 7.5pc.
While Crowe Horwath said “the outlook for the sector remains strong, significant capacity issues in the capital could cause competitiveness challenges with double digit average room rate increases now in a third year potentially eroding a value-for-money proposition which Dublin has enjoyed for a number of years”.
And Junior Tourism Minister Brendan Griffin warned hoteliers: “While I welcome the improved viability of the hotel sector and accept the need for a fair return on investment, I must stress the critical importance of maintaining the overall competitiveness in our tourism industry at this time. Giving the tourist good value for money has been key to the turnaround in tourism performance and we cannot risk damaging our reputation in this regard.”
The headline national room occupancy level for 2016 was 74pc, up from 71.1pc on the previous year with the average room rate charged across all hotels at €104.11, up from €92.15 in 2015. Hotels in the Midlands and East region showed the highest year-on-year growth in occupancy levels, up from 65pc in 2015 to 68.5pc in 2016. “The region has benefited from growing economic activity and employment, as well as the launch of Ireland’s Ancient East demonstrating the value of dedicated marketing campaigns,” Crowe Horwath said.
Occupancy levels in Dublin continue to rise, at 82.3pc up from 80.7pc in the previous year and “highlight the need for additional hotel rooms in the city”. Levels outside of Dublin have also seen an increase and are approaching 70pc occupancy.
The average rate charged for a room in Dublin is now €128.27. Room rates in the capital have now surpassed 2006 peak prices of €120.38 by €7.89 and are significantly ahead of other regions (€91.40 in Midlands and East; €93.25 in South West; and €79.77 in Western Seaboard).
“One clear trend has emerged from recent years and continues into 2017, and that is the need for additional hotel room capacity in the capital which Crowe Horwath estimates at over 5,000 rooms,” said company Partner Aiden Murphy.
“According to a Fáilte Ireland report published recently, there are 1,958 new rooms being built as of summer 2017 and a further 2,219 which have full planning but remain on the drawing board with another 1,205 rooms which are moving through the planning process. Only 36pc of the anticipated supply of 5,382 rooms is now coming on board. Until this much-needed capacity comes on stream, rates will continue to increase as occupancy levels rise further.”
He added:“When last year’s report was published, there was much concern about how the Brexit vote would impact the sector, given the traditional reliance on the market for inbound tourism, in particular in Dublin. It was encouraging, therefore, to see tourist numbers from Britain increase from 3.5m in 2015 to 3.9m last year. However, it is clear that, as the impact of Brexit takes hold, in particular with a weakened sterling against the backdrop of a less competitive offering, that it is having an impact on visitor numbers with growth stagnant in the period July 2016 to June 2017. However, on a more positive note there was a strong uptake in North American tourists.”
On the outlook for 2017 Mr Murphy added: “2016 has been a very positive year for the Irish hotel sector. The improvements to a hotels profit before tax have allowed hotels to refurbish and upgrade areas within the property. Generally, the sector is more resilient and not as leveraged. Greater scrutiny of hotels’ performance is clearly evident with increased due diligence for hotel purchases and cost-benefit analysis around further investment projects which demonstrates that lessons from heady boomtime days of the early 2000s have been learnt.”
According to Fáilte Ireland, the Republic had 820 registered hotels in 2016. In total, these properties provided 57,596 rooms, the majority of which are classified as either three and four-star hotels (646 hotels with 50,744 rooms).