Hotel rates 'at 1999 levels'
Published 21/07/2010 | 13:52
Profits in Irish hotels plummeted by a half in two years while room rates are at levels not seen in more than 10 years, a new survey has found.
The average price of a room dropped from €97.69 in 2007 to €77.81 last year, a 20pc fall.
Rates in 1999 stood at €77.50, according to accountancy firm Horwath Bastow Charleton which carried out the cross-border survey.
It warned the hotel sector was in a very unstable position with profits too small to pay off bank loans.
Paul Gallagher, Irish Hotels Federation (IHF) president, said there was no sign of improvement in the market.
"I can't see an upturn at all, I think market conditions remain very flat," he said.
Mr Gallagher said with increasing numbers unemployed, the hotel sector is not likely to recover soon.
According to the postal survey, carried out last year, 25,000 hotel rooms (40pc) were built in the last 10 years, with 10,000 extra rooms now on the market than needed.
Horwath Bastow Charletone estimates the average debt per room is around €135,000, leaving one third of hotels in difficulty repaying interest on loans.
A room in a five star hotel could be snapped up last year for €130.57, down from €168.78 in 2007.
Although profits have fallen across the island the survey shows a marked difference between the Dublin and regional markets.
In the capital rates are €16 higher than elsewhere with around 10pc higher occupancy levels.
The annual Ireland and Northern Ireland Hotel Survey suggested recent investment in infrastructure in the capital including the Grand Canal Theatre, The Aviva Stadium and The Convention Centre would help boost the market.
In Dublin the annual room rate stood at €87.51, down from €116.59 in 2007. In the midlands the price is €77.48, €74.25 in the south west and €63.79 in the west.
Mr Gallagher said of the IHF's 900 members around 36 have gone into receivership, although the figure is expected to double by the end of the year.
"Clearly some of those don't have a future," he said.
The IHF president said hotels that have failed should no longer be allowed to trade.
Meanwhile the Courts Service revealed 21 hotel licences were granted by the circuit court last year - a 43pc decrease on 2008.