Hotel room revenue growth outside Dublin overtakes growth in capital

Hotel room revenue growth outside Dublin has overtaken growth rates in the capital, as State policymakers’ focus on better spreading the benefits of the tourism boom starts to bear fruit, according to a major new industry report.

The authors of the annual Hotel Industry Survey, by consultancy Crowe (recently rebranded from Crowe Horwath) warn, however, that while the good times are still rolling, hotels face a “concerning” slowdown in food and drink revenues. This is due to competition from a boom in new restaurants and alternative wedding venues.

The authors also suggest that the local authority commercial rates system be utilised to extract a higher take take from booming city hotels, in preference to raising the special 9 per cent tourism VAT rate.

They also say Irish hotels should forge links with the sector's arch competitor, Airbnb, which Crowe says will deliver bookings at cheaper commission rates than traditional middleman such as Booking. com, as Airbnb moves closer to the hotel market.

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The Crowe survey, traditionally seen as the most comprehensive annual health check of the industry, draws upon detailed financial data on sales and profits in hotels all over the State. The study for 2017 found record profit levels, occupancy and average room rates in all regions.

Occupancy rates

Across the State, occupancy last year rose from 74 per cent to 75.4 per cent. The national average hotel room rate was €111.25, up more than €7. The average rate in Dublin was almost €137 per night.

Dublin room rates grew at just below the national average rate, and at less than half the growth rate achieved in 2016. But rates grew by 8 per cent in the southwest, which enjoys proximity to the Wild Atlantic Way, and by almost 10 per cent on the western seaboard. These regions also easily beat Dublin’s 12 per cent rate of profit growth.

Aiden Murphy, the Crowe partner who helped oversee the study, said the strong growth rates were needed to justify investment in the 11,000 new rooms he said were required over the next seven years to meet tourism expansion.

“The growth opportunity is on the rooms side,” he said, flagging “concern” over the slowing performance of hotel food and drink sales compared with accommodation revenues.

He also called on the Government to clarify the situation around the 9 per cent VAT rate, the uncertainty surrounding which he said is delaying investment decisions. He also warned the tourism industry not to get too over-reliant on the US market for future growth.