Business News

Irish hotel sector enjoys third successive year of growth

By Business & Finance
12 August 2015
Hotel Survey Crowe Horwath
Pictured (L-R): Aiden Murphy, recovery and restructuring partner, Crowe Horwath and Paschal Donohoe TD, Minister for Transport, Tourism and Sport

Crowe Horwath, leading advisors to the Irish hotel sector, recently launched its 20th  Annual Irish Hotel Survey, which shows a continued improvement in the fortunes of the Irish hotel sector.

The report, which is compiled from Irish hotels’ 2014 accounts, reveals that key performance metrics have improved for the third year running with Dublin again outperforming other regions. The headline national average room occupancy level for 2014 was 67.8%, up from 65.9% on the previous year with average room rate charged across all hotels in Ireland at €82.29, up from €77.49 in 2013.

Dublin hotels continue to lead the recovery in the sector with the capital’s hotels showing occupancy levels at 77.2% up from 76.3% in the previous year.

The average rate charged for a room in Dublin is now €97.25, up from €90.73 on the previous year, representing a 7.2% increase year-on-year. While room rates in the capital are some way off 2006 peak prices of €120.38, the average nightly cost per room is still significantly ahead of other regions (€79.36 in midlands and east; €79.43 in south-west; and €67.50 in Western Seaboard).

Respondents to the survey identified the key drivers of growth in 2014 as:

  • An increase of 8.9% in overseas visitor numbers
  • Weakening euro against sterling and US dollar
  • GDP growth of 4.8% in 2014 indicating increased domestic activity
  • Improving business and consumer sentiment

The Crowe Horwath Annual Hotel Industry Survey 2015 provides the most comprehensive analysis available of the financial performance of Irish hotels and is the only published report which provides details of profitability in the sector.

The report breaks down the performance of Irish hotels both by region and by classification. The analysis features room occupancy average; average daily room rate; revenue per room and profit before tax per available room.

Commenting on this year’s survey, recovery and restructuring partner at Crowe Horwath, Aiden Murphy said: “The fortunes of the Irish hotel sector improved again in 2014 with increases recorded in all key performance metrics such as occupancy, average room rate and profitability. While profit levels are increasing significantly, the returns will need to be directed to much-need renovation of existing stock given that many of Ireland’s hotels were unable to allocate funds during the downturn.”

Addressing the key issue of supply in the Dublin market, Murphy added: “The accelerated pace of recovery in average room rate being achieved by Dublin hotels is being driven by the limited capacity as occupancy levels for hotels in Dublin reaches 77.2%, with occupancy levels for the period May to October over 85%. It is expected that the Dublin hotel market will continue with its upward average room rate trajectory in the coming years. Any over-pricing of hotels rooms in the Dublin market, which acts as a gateway for travel into Ireland, could thwart the potential for continued expansion of the overseas tourism numbers to Ireland and have a negative impact on tourism and economic recovery if new supply is not delivered.

Speaking at the launch of the Crowe Horwath report, Minister for Transport, Tourism and Sport, Paschal Donohoe TD said: “I welcome the publication of Crowe Horwath’s annual Ireland Hotel Industry Survey which provides a significant insight into the health of this crucial sector. The findings of this survey show that, although some regions are performing better than others, the recovery in the hotel sector is continuing across the country. The results show continued annual increases over the past number of years in key performance indicators such as room occupancy, rates, revenue and profits. Indeed occupancy levels in some parts of the country, in particular Dublin City Centre, mean that we will need to increase the size of our hotel stock to ensure that Ireland and its capital continue to have a competitive tourism product both for domestic consumers and overseas visitors.”

Optimism levels in the sector remain strong with 94% of hoteliers predicting an improvement on profitability in 2015. Among the key factors driving the optimism are favourable exchange rates with two key markets, UK and North America, successful promotional efforts from both Tourism Ireland and Failte Ireland such as Ancient Ireland East and Wild Atlantic Way with domestic confidence feeding into increased bookings from the home market.