Hotel rates rise but report warns of 'two-speed' recovery

Average room rates rose by €2.77 to €77.49 in Ireland in 2013, to 79 per cent of 2007 peak prices, says a survey.

The report, by accountancy firm Crowe Horwath, said the average occupancy rate in Irish hotel rooms was 65.9 per cent in 2013, up 2.1 per cent on the previous year, but it warned of a "two-speed recovery" as Dublin pulled ahead.

Average occupancy in Dublin was 76.3 per cent in 2013, just 0.5 per cent below what it was at the top of the boom.

"The first six months have continued to see more growth," said Aiden Murphy, a recovery and restructuring specialist with Crowe Horwath.

High occupancy in Dublin

Average room rates in Dublin hit €90.73 in 2013, about €4 more than in 2012, he said. This was still 22.2 per cent less than in 2007.

He said the average room rate in Dublin was now 40 per cent above the €64.51 Western seaboard price.

The Midlands and east region had the “lowest increase” in average room rates, with prices up €1.86 to €76.14, or 2.5 per cent year on year, said Mr Murphy.

He said occupancy rates in hotels in Dublin 1, 2 and 4 are now at 80 per cent to 90 per cent which was pushing up numbers in hotels on the periphery of the city centre too.

“There is now a shortage of hotels in Dublin city centre,” he said.

Factors driving growth include improved Irish consumer sentiment and the continued increase in overseas visitors, said Mr Murphy, but “there is still oversupply in the Midlands and east region.”

He said hotels needs to remain focused on costs and investing to ensure they do not become run down after reducing expenditure in the recession.