Hotels face test to keep profits up
Demand for Dublin hotel rooms will need to increase by 15pc over the next five years if current profit and occupancy levels are to be maintained as extra capacity comes onto the market.
That's according to a new report which showed that about 4,000 new hotel bedrooms are due to come on stream in Dublin over the next five years.
Last year, 5.6 million hotel rooms were sold in the Dublin hotel market, with an occupancy rate of 82pc.
An additional 845,000 rooms would need to be sold every year within five years to maintain current profitability and occupancy levels, according to business advisory and accountancy firm Crowe Horwath and property services group Cushman & Wakefield, the firms which commissioned the report.
Aiden Murphy, a partner at Crowe Horwath, said that of the 4,000 planned new hotel bedrooms, 3,100 were earmarked for Dublin city centre. He said that the increased competition from new city centre supply will probably adversely impact the suburban Dublin market, as lower room rates entice customers back into the city centre.
Jonathan Hubbard, the head of hospitality for the EMEA at Cushman & Wakefield, said that there were about 13,500 new hotel bedrooms in the planning pipeline in Dublin between new build hotels and extensions to existing properties.
But just 2,500 of those rooms will be delivered by the end of 2019, he said.
About 9,200 of the planned hotel rooms are being built on a speculative basis. He added that 2017 has been a significantly quieter year in term of hotel transactions here.