Fáilte Ireland has warned that the current shortage of hotel accommodation in Dublin is posing a double risk to the growth of tourism in the capital.
In a new report, the tourism agency claims the high number of nights when hotels in the city have near-full occupancy rates is creating difficulties for visitors in finding accommodation, while also resulting in higher room rates.
It claims such “compression” not only deters tourists on the nights in question but also impacts on the overall perception of Dublin as an expensive destination.
The report said average room rates soared last year against a background of a 12% increase in overseas visitor numbers. A recent survey indicated hotels in the city centre and near Dublin Airport averaged room occupancy rates of around 90% on over half of all nights last year. The average room rate for a Dublin hotel with a 90% occupancy rate has increased from €95 in 2014 to €140 last year.
At lower occupancy rates, prices have remained largely unchanged over the past three years.
The report estimated room occupancy for hotels in Dublin city centre last year increased by one percentage point to 83% - a record high occupancy level.
It added that Dublin had the highest occupancy rate for hotels among major European cities last year and the third highest increase in average room rates after Kiev and St Petersburg.
The report estimated that new hotels and extensions to existing ones will provide almost 6,000 additional bedrooms in the city by 2020. At the start of last December, there were 69 projects in the pipeline in the city which will provide an additional capacity of 5,964 bedrooms.
The figures represent an update on a similar report published by Fáilte Ireland last year and show four extra projects providing more than 400 additional bedrooms.
The latest report maintains the conclusion of the original one that there will be an ongoing accommodation shortage in the capital up to 2018 but there will be surplus capacity for most of the time from 2019 onwards.
“Investor sentiment about hotels in Dublin does not seem to have been too strongly dented by the general pessimism about the economic impact of Brexit on the Irish economy,” it added.
The report noted some changes in the anticipated capacity of development as some hotels had returned to the drawing board to take advantage of new regulations about room sizes and maximum permitted heights.
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