Prem Group chief sees ‘modest’ increase in hotel room rates next year

Prem Group, the Dublin-based hotel operator behind the Premier Suites brand of serviced apartments, is forecasting further increases in room rates across the group next year despite the worsening economic backdrop.

The hospitality group’s chief executive Jim Murphy said in an interview that 2022 had been a “good year” for the business across its portfolio. Occupancy levels and revenues were ahead of expectations on foot of a “strong recovery after Covid,” he said, with business returning more rapidly than expected in Ireland.

Prem Group, in which US-based Fortress Investment Group took a majority stake last December, owns, leases and manages 32 properties in Ireland, Britain, Belgium and the Netherlands under brands including its own Leopold Hotel Collection and Premier Suites. It also operates in partnership with other international brands including Holiday Inn and Crowne Plaza.

On Tuesday the company announced that it has been contracted to operate a new, state-of-the art 92-bedroom hotel in Brussels on behalf of Intercontinental Hotels Group (IHG) in conjunction with designers Living Tomorrow, which is expected to be completed in autumn 2023.

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Mr Murphy said 2022 had been a “transitional year” for the group after the equity investment by Fortress. “We spent a lot of the year adjusting to their presence in the group,” he said, describing it as a “very positive experience”.

The investment has allowed Prem to refinance some of its bank loans, he said. The group also negotiated a new loan facility, which Mr Murphy said will allow it to acquire more freehold properties in its target markets: Ireland, Britain, Germany, Belgium and the Netherlands.

In April, Prem bought a new property near Edinburgh’s Haymarket district, which Mr Murphy said would open under the Premier Suites brand in April 2023.

However, 2022 has also been a challenging year in many respects, he said, particularly in relation to costs. “We had an energy bill for Ireland in 2019 of €1 million. This year it will be €2.8 million.”

To offset the impact of soaring utility bills, Mr Murphy said Prem Group was accelerating sustainability and energy-saving initiatives across its existing portfolio. “We’re surveying every building at the moment,” he said with a view to fitting out the properties with solar panels in the first quarter of 2023.

Looking ahead Mr Murphy said he expected room rates to rise a “a modest” 5 per cent across the entire group.

Asked whether Prem Group had done enough to ensure value for money for its customers this year amid a cost-of-living crisis and surge in hotel prices in Ireland, he said the group was very conscious of how its rates could impact on consumer demand. “On average the rate we charge is €128 per night across our group, which is not a huge rate. That will rise to probably €133 next year.”

He said the average rates at the Premier Suites property in Ballsbridge, Dublin, was €143 this year. “In Amsterdam the average is €166 so I do think we’re offering value for money for the product.”