STRICT EMBARGO 00.01, Wednesday 31st August 2016. Crowe Horwath, leading advisors to the Irish hotel sector, launched its 21st Annual Ireland Hotel Survey today which shows substantial improvements in the Irish hotel sector. The report, which is compiled from Irish hotels’ 2015 accounts, reveals that key performance metrics have improved for the fourth year running with Dublin outperforming other regions. However, hotels outside the capital reporting better performance levels, the Midlands and East region primarily driven by a 19% increase in non-accommodation sales which contributed to bumper profit levels. The headline national average room occupancy level for 2015 stood at 71.1%, up from 67.8% on the previous year with the average room rate charged across all hotels in Ireland at €92.15, up from €82.29 in 2014.

As highlighted in previous reports Dublin hotels lead the recovery in the sector with the capital’s hotels showing occupancy levels at 80.7% up from 77.2% in the previous year. The average rate charged for a room in Dublin is now €111.83, up from €97.25 on the previous year, representing a 13% increase. Room rates in the capital are €8.55 off 2006 peak prices of €120.38, the average nightly cost per room is significantly ahead of other regions (€84.20 in Midlands & East; €84.71 in South West; and €74.20 in Western Seaboard).

Among the themes to emerge from the survey as key drivers of growth in 2016 were:

  • Exchange rates, in particular with sterling
  • Increase in international visitor numbers
  • Commencement/ completion of a hotel refurbishment
  • Increase in conference and event business
  • Improving business and consumer sentiment
  • Retention of the 9% VAT rate

The Crowe Horwath Annual Ireland Hotel Industry Survey 2016 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 (Dublin, Midlands and East, South West and the Western Seaboard) and by classification (luxury, first class, mid-price and economy). The analysis features room occupancy average; average daily room rate; revenue per room and profit before tax per available room.

The key findings of the 2016 survey are:

  • Continued growth in average occupancy, up 3.3 percentage points to 71.1% (from a low of 59.4% in 2009).
  • Average room rate increased by €9.86 to €92.15 a 10.6% increase on 2014.
  • Due to strong US visitors to Ireland, 5 star hotels have attained an average rate increase of €23.94 to €181.08, or a 14% annual increase.
  • January has the lowest monthly average room rates at €76.81. While the monthly average room rates rises to €106.19 on average in August. The lowest monthly average room rate is in the Western Seaboard region at €60.32 in January with the highest average in Dublin during September at €123.97.
  • Dublin hotels are more dependent on room sales with 55.1% of revenue derived from that income stream whereas rooms account for just 27.4% of turnover in Midlands and East hotels (38% in South West and 36.5% in Western Seaboard).
  • On average 54.6% of bookings are made through a direct enquiry to a hotel or via tour operators and travel agents with 45.4% through a hotel website or 3rd party website.
  • Great Britain continues to be Ireland’s largest market with 12.1% market share and the USA in second with 10.3%.
  • Dublin hoteliers are more profitable as their counterparts in the Western Seaboard with profit before tax per available room at €16,913 in the Capital versus €8,053 in the Western Seaboard.
  • Dublin experienced high occupancy levels of over 85% for 6 months in 2015, May to October whereas the rest of Ireland only exceeded occupancy of 85% in the peak summer months of July and August.

Commenting on this year’s report, partner at Crowe Horwath, Aiden Murphy said: “The hotel sector in Ireland saw continued growth in 2015 with key performance metrics such as occupancy, average room rate and profitability seeing increases for the fourth successive year. Room rates increased by 10.6% on average last year and profit per room by 23.2%. The 5-star market has seen profit levels double over the last 2 years, which signals substantial turnaround for these hotels. Although these increases may be perceived as excessive, hotels have endured a number of challenging years resulting in an inability to invest in existing facilities. The return to profitability now provides hotels with the scope to embark on much needed refurbishment projects, and invest in new capacity.

The capital in particular is suffering from capacity constraints with occupancy levels at 85% for 6 months of 2015 – this is a clear sign that new supply is urgently needed. There are signs too that increased profitability in urban areas such as Cork and Galway makes a business case for building new hotel stock.

Speaking about the outlook for 2016 Mr. Murphy added “2016 looks very positive and is set to deliver another year of growth for the Irish hotel market as overseas visitor numbers increase, as employment and the economy improve further. However, the effect Brexit and the recent falling Sterling rate will have on the Irish hotel sector in 2016 is relatively unknown. Travel plans are unlikely to be changed for 2016 but future visitor numbers could be affected. As sterling weakens the UK market will start to feel the full impact of increases in Dublin rates and UK visitors may opt for other more competitive Sterling destinations.”

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