Thursday 26 April 2018

Dublin's room rates likely to grow for up to five more years

 

Dublin skyline seen from the rooftop area of the upmarket Marker Hotel in the docklands area. The capital’s hotels are currently enjoying high occupancy levels, as rooms remain to be built
Dublin skyline seen from the rooftop area of the upmarket Marker Hotel in the docklands area. The capital’s hotels are currently enjoying high occupancy levels, as rooms remain to be built
Gavin McLoughlin

Gavin McLoughlin

Dublin hotel room prices are set to continue to grow strongly for as long as four or five years, according to an expert at professional services firm Crowe Horwath.

Aiden Murphy, a partner at Crowe Horwath, said that while the capital needs an estimated 5,000 new rooms to cope with increasing demand, currently there are only "shovel-ready" sites for 1,400.

He said predictions that there would be 4,000 or 5,000 new rooms in the system by the end of 2019 are likely to prove too optimistic.

"I think the expectation probably is that because of risk associated with the new developments - in terms of the difficulty in getting funding for development-type projects - these projects will all get delayed by an extra year or so. It might take an extra one or two years to deliver those 5,000 rooms," Murphy said.

"There's probably a four or five-year window where the existing hotels can enjoy an environment where occupancy levels will be high and rates will be strong," Murphy said, adding that growth will probably reduce below the current double-digit rates.

Crowe Horwath will next week launch a report providing analysis on hotel turnover, profitability and other performance indicators across the industry.

Murphy said the market for buying hotels has changed in the last 18 months, with international funds making a splash in the marketplace. During the crisis, many hotels that were being sold were in distressed situations whereas now there are more commercial transactions, Murphy said.

"Back in 2014 the Temple Bar Hotel, with 132 rooms, would have been sold for €28m and probably just over 15 or 16 months later that property was resold at €55m. The value per room in the marketplace would have almost doubled.

"That probably leaves a lot of hoteliers wondering whether the market is topping out and whether it's a good time to sell rather than buy...I think what we're seeing is confidence by investors in the core Dublin city centre marketplace," said Murphy.

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