Dublin hotel room rates to hit boom levels in 2017 - PwC
Published 08/03/2016 | 02:30
Hotel room rates in Dublin rose at the fastest pace in Europe last year - up by almost quarter and on course to hit boom levels.
Research in PwC's European Cities Hotel Forecast shows hotel prices in the capital still represent relatively good value for money but are creeping up.
Dublin had the highest growth in 2015 for revenue per available room (RevPAR) in Europe, growing by 23.3pc.
The main driver of RevPAR was an increase in room rates, which rose by 17.5pc to €111 in 2015 compared to €77 in 2010.
That pace is expected to slow next year, though Dublin is again expected to top the 2017 growth league.
Anecdotal reports of room shortages in Dublin during busy periods are borne out by the research. Dublin scored 82.3pc for occupancy in 2016, ranking second place in Europe and just behind London.
The average daily rate for a room has risen to €120.9 in Dublin in 2016, and is forecast to hit €130.6 next year. That would mark a return to 2007 levels.
Despite recent rises, Dublin hotel rates compare favourably for customers to much of Europe.
Last year Paris retained its position as the most expensive city, with an average daily rate of €252.5 - despite the impact of terrorist attacks. In London the average daily rate is €202.2, while customers can expect to pay 156.5 a night in Rome, and €129.1 in Barcelona.
The industry in Ireland had a strong year in 2015, with most hoteliers reporting an upturn in business, boosted by the weakness of the euro and the economic recovery, according to PwC. Occupancy rates here are now among the highest in Europe, a dramatic reversal from the era of zombie hotels experienced immediately after the crash.
That is partly because the number of hotels in Dublin has remained relatively static in recent years at 155. That adds up to 8,900 rooms, and represents a third of the entire hotel stock in Ireland, according to PwC.
Planned schemes could see a further 13 hotels built in Dublin in the coming years, adding 3,500 new rooms.
That will help keep pace with demand, up 12pc last year, but is likely to maintain downward pressure on prices and margins.
Strong customer demand and a number of cash-rich consolidators in the sector, including Dalata, helped drive a wave of buying last year.
In 2015 there was a total of 56 hotel sales recorded nationally, worth a combined €650m. That compared to 60 transactions worth €440m in 2014.
"Demand for hotels continues, underpinned by our economic recovery and Dublin's growing reputation as a tourist destination and location of choice for foreign direct investment," said Ann O'Connell, hospitality & Leisure practice, PwC Ireland.
Ms O'Connell said 2015 "marked double-digit growth in revenue per available room for two years in a row driven by further recovery in room rates.
"With little supply putting pressure on prices, hopes are high for continued growth in 2016 and 2017," she added.
However, she warned that the sector faces disruption that could knock its recovery off course, notably from room-sharing services like Airbnb.
Occupancy rate for Dublin hotels in 2015
Average room rates in Paris, the most expensive in Europex
Amount spent buying Irish hotels last year