Hotels reap benefits of recovery but disparity exists

Increased tourism, a weak euro, and recovering domestic demand are helping hotels across the country to reach healthier financial positions. 

However, a disparity exists between those in Dublin and elsewhere.

The national average room occupancy level for 2014 climbed to 67.8% — up almost 2% on the previous year — while average room rates increased by €5.

Both these factors contributed to profit per room surging over 25% last year as the effects of a recovering domestic market, allied with overseas demand, painted a rosier picture for hoteliers.

Those benefits were not spread equally across the country, however, with data from the Crowe Horwath annual report on the hotel sector showing Dublin hoteliers enjoying profits twice that of their counterparts on the western seaboard, with respective pre-tax profit per room of €13,790 and €6,790.

The average rate charged for a Dublin hotel room is now €97.25, up from just over €90 — a 7.2% increase.

The recovery in occupancy rates is also most evident in Dublin at 77.2% — almost ten percentage points above the national average — and rising to 85% between May and October of last year, indicating a need for further capacity in the short-term.

If not addressed, this shortfall will drive up rates across the city and erode competitiveness, according to Crowe Horwath partner Aiden Murphy.

“While the focus of industry leaders has been on delivering higher tourist numbers, there needs to be a strategy to ensure that new hotel supply is introduced to the Dublin market so there is sufficient room supply to cope with the projected increase in tourism numbers through the ongoing marketing strategies that are yielding success,” he said.

“To date, the primary obstacle to new room supply in Dublin has been the lack of availability of long-term funding to support large capital investment for start-up enterprises. The second challenge is the complexity and timeframes around the planning process which has delayed new hotel developments for the city.

“We would urge immediate attention be given to fast-tracking a pipeline of new supply to meet the growing level of demand in the Dublin market.”