2,000 hotel rooms due to come on Dublin market

Christie & Co anticipates hotels outside the city centre will suffer occupancy declines

JUSTIN COMISKEY With 2,000 more hotel rooms due to come on the Dublin market over the next five years, the sector is facing a shake-up.

This is according to a new hotels report from Christie & Co which anticipates hotels outside the city centre will suffer occupancy declines as demand becomes more focused on central areas where the vast majority of the new hotel space is due to be built.

An extra 2,000 hotel rooms in Dublin would increase the city’s stock by 14 per cent – and the national stock by 10 per cent – so occupancy levels could come under pressure and the new report predicts they will dip below 75 per cent.

However, occupancy levels have recovered strongly since 2011 and demand for hotel rooms in the city is so strong that the “occupancy ceiling is currently being reached”, says Christie & Co. Meanwhile, there has been little growth in hotel supply since 2008.

Maureen Bayley, a director of Christie & Co Ireland, says: "An increase in hotel room supply will enhance Dublin's competitiveness and attractiveness as a destination but occupancy is likely to suffer as new supply comes on stream. The biggest risk to the sector is that hoteliers will discount in an effort to retain market share."


Other negatives from a sharp increase in supply, according to Christie & Co, include a weakening in average room rates while dated hotels are likely to suffer in the face of competition from new openings.

However, on the positive side, the report notes that the planned increase in supply will mean Dublin can meet “latent demand” for hotel rooms and could attract more branded properties which would mean more “induced demand”. Supply constraints would also no longer be an issue, and this would make the city a more attractive proposition for events.

“Overall, Dublin should have the capacity to absorb this new supply,” predicts Christie & Co.

One of the biggest hotels coming on stream in the city centre is the 198-bedroom Holiday Inn Express in the former Findlater House office block on O’Connell Street. It is expected to open in June after being bought in 2013 for €6.2 million by the London-based Seraphine Hotel Group. The 1970s building was previously sold to developer Garrett Kelleher in 2005 for more than €30 million and was occupied for many years by Eircom.

In fact, the O’Connell Street area is due to have another three new hotels as a 107-bed property is planned for Moore Lane; a budget boutique hotel behind Clerys at Sackville Place is on the cards; and a 33-bed at the former Guiney’s shop on Talbot Street has planning permission. Meanwhile, the 323-bedroom Gresham Hotel on O’Connell Street is on the market at more than €80 million and, given that it adjoins the extensive DIT Cathal Brugha Street campus that came on the market last week, perhaps a major extension to the Gresham could be on the cards if new owners were to incorporate the college into the venerable Dublin institution which is approaching 200 years in business.


The Gresham also has planning permission to expand the hotel further to increase the bedroom stock to 465 and significantly enlarge the conference and banqueting accommodation as well as back-of-house facilities.

Hotels have been in recovery mode over the past few years as a lower VAT rate and rising visitor numbers pushed room rates and occupancy levels sharply up around much of the country.

Dublin occupancy levels rose from 78.9 per cent in 2014 to 83.9 per cent in 2015 as average room rates rose from €95.90 to €112.08 over the same period.

In Cork, occupancy levels were up from 76.4 per cent in 2014 to 77.5 per cent in 2015 with average room rates up almost €6 to €78.20. It was a similar case in Galway where occupancy rose 3.1 per cent in 2015 and average room rates rose more than €7 to €88.04.

However, not all regions are recovering strongly. Occupancy levels in Leinster dropped marginally in 2015 and, although Limerick’s figure was up 6 per cent in 2015, it still stands at just 68.3 per cent.