Hotel room rates rise by 30% but sector continues to face labour and cost challenges

The average hotel room rate in Ireland reached €177.48 in July, a 30% increase on July 2019

Separate data from Fáilte Ireland's monthly hotel survey for July found that Clare (+3%) and Waterford (+1%) also had occupancy levels in July that were above the July 2019 pre-pandemic figures while Kerry was down 8%.

Ireland's hotel sector will face continued challenges for the remainder of the year and into 2023 despite budget measures to ease energy costs, a review from Fáilte Ireland has found.

While hotel occupancy rates across Munster rebounded strongly this year rapidly rising energy, labour and food costs continue to impact the pricing of rooms.

In its Hotel Sector Review for Autumn 2022, Fáilte Ireland said the average daily rate (ADR) charged by Cork hotels in July was €167, which was 37% above July 2019 rates. Limerick hotels' ADR was €173, up 8% on 2019 while Dublin hotels' ADR was €192 in July, up 25%. 

Nationally, the average rate for a room in July was €177.48 up 30% compared with July 2019.

The report found that demand for hotel rooms soared in cities across Europe this year as Covid-19 pandemic restrictions were lifted releasing significant pent-up demand for travel.

Room occupancy rates in July reached 86% in Cork, remaining slightly below July 2019 levels. It was the same for hotels in Dublin and Galway whose occupancy rates were down 2% and 1% respectively. Limerick, however, saw occupancy rates 10% above pre-pandemic levels.

Despite the demand for hotel rooms, the Fáilte Ireland report notes that hotels' ground floor operations such as meeting rooms, conferences, bars and restaurants remain under threat in city hotels as hybrid and homeworking continues.

Separate data from Fáilte Ireland's monthly hotel survey for July found that Clare (+3%) and Waterford (+1%) also had occupancy levels in July that were above the July 2019 pre-pandemic figures while Kerry was down 8%.

Fáilte Ireland said the Temporary Business Energy Support Scheme (TBESS) announced in the Budget last week would provide some support but rising inflation and energy costs continue to pose a risk to hotel operations.

"The resilience and agility shown by the sector over the past two years are needed again as we look ahead," the review states. Despite the announcement of the TBESS, the hospitality industry will also see the 9% VAT rate revert back to 13.5% on March 1 next year despite a strong lobbying campaign to maintain the reduced rate.

Labour shortage

The Fáilte Ireland review also noted the continued labour shortage in Ireland's hotel sector. Just half of accommodation and food service workers moved from the Pandemic Unemployment Payment (PUP) back to work with their pre-pandemic employer. 

Almost a third of workers in the sector moved to a new job in a different industry after the pandemic highlighting the challenge the hotel sector has in finding workers.

"This dearth of experienced staff has caused operational and service challenges," Fáilte Ireland said. "A good first step for hoteliers would be to review internal business processes and reduce, simplify, or automate accordingly." 

They also urged hotels to consider using more technology to replace time-consuming manual tasks.