Friday 23 March 2018

It's a beautiful day for hotels as prices soar

Visitors are stunned by high prices for hotels - not just for big events in Dublin such as tonight's U2 concert, but across the high season. Many in the hospitality sector fear that tourists will go elsewhere - because they still haven't found the rates they're looking for.

John Brennan (right), with brother Francis.
John Brennan (right), with brother Francis.
Kim Bielenberg

Kim Bielenberg

Hoteliers may be counting their profits in Dublin and some other tourism enclaves, but the soaring cost of hotel rooms is causing widespread alarm - even in the tourism industry itself.

Fans are naturally furious when hotel prices are hiked up to extortionate levels for rock concerts and big sporting events in the capital. According to a survey by the hotel bookings site Kayak, the average hotel room in Dublin is 28pc more expensive this weekend as a result of the U2 concert in Croke Park - and some rooms have had much bigger increases in rates.

Already there are massive price hikes for hotel rooms for Ed Sheeran's concerts in Dublin, Cork and Galway next year.

But it is not just prices during big events that are a bugbear for visitors to Dublin from Ireland and abroad.

In high season generally, tourists are flabbergasted at the extravagant prices for modest hotels, where three star rooms are sold for more than €300 on some nights. Visitors are so put off by this experience that in some cases they promise never to return.

Disgruntled visitors

Michael Hall, Professor of Marketing and Tourism at the University of Canterbury in New Zealand, was among the disgruntled visitors when he flew into Dublin earlier in the summer.

He told a tourism and hospitality conference in Sligo he was "horrified" when he went to book a hotel room for a Saturday night in Dublin two months before his arrival. He found that he was charged €400, double the price for a hotel in the same chain in Helsinki.

"I would never, ever recommend anyone to come to Dublin for a short break because I think it is an absolute rip-off," said the academic, much to the embarrassment of tourism officials.

Professor Hall told Review this week: "The point I was making at the conference was that I felt that this was a real disincentive for short-break leisure travel.

"Dublin is potentially going to miss out in the long-term unless there are some changes relative to other destinations."

Soaring rates

Although there are signs that prices are stabilising in Dublin, overall room rates have soared by 40pc in over the past three years, according to Aiden Murphy, who tracks hotel performance for accountants Crowe Horwath.

He estimates that room rates for three star hotels have rocketed by 45pc during the period, while prices at four star properties are up 30pc.

He says the hikes in prices are much more modest outside Dublin, with the cost of an average room up by 23pc over three years.

The report by the booking site Kayak this week showed how hoteliers in Dublin introduced spectacular price hikes for tonight's U2 concert.

The average prices of three-four star hotels in Dublin this weekend is €201, 28pc more than the price next weekend, July 28-31.

We tend to take this type of profiteering for granted, but the Kayak survey seems to show that a U2 concert did not result in similar extravagant prices in other European cities on the band's tour.

According to Kayak, U2 fans in Dublin are paying 53 per cent more for hotel accommodation over the concert weekend than any of the other European cities hosting the tour including Paris and Amsterdam.

There were still some hotels available for tonight's show when we checked in the middle of this week.

The Regency Hotel in Drumcondra, site of a notorious gangland killing last year, had a room still available for €340 for a couple. The middle-of- the-road Jury's Inn in Christchurch still had a double room for €409; and those with a taste for luxury could shack up in the Shelbourne, but the cheapest room on offer on was €1,149.

To some extent this kind of price rise is to be expected, as the world and his wife seem to want to see U2 performing in their home city.

But there is a growing fear, even among hoteliers themselves, that the soaring costs in high season are damaging Ireland's reputation as a tourism destination.

Calculating the long-term cost

Hospitality consultant Conor Kenny says: "There is a difference between meeting supply and demand - and being greedy.

"You can take advantage of circumstances, but what is the long-term impact on a customer if they feel they were taken advantage of? The reality is that they will be reluctant go back.

"Why do hoteliers charge so much when U2 are playing? The answer is because they will get it. It damages our reputation and it can look like we are being exploitative."

Professor Michael Hall agrees. He says the pricing may make short-term sense financially, but there was little forethought for the long-term when it comes to customer satisfaction and word of mouth.

Clare hotelier Michael Vaughan, past president of the Irish Hotels Federation, tells Review: "The important thing is that there should be a fair price that allows for a bit of profit and reinvestment for the hotelier. But we have now gone beyond reasonable prices in many hotels in Dublin."

There are other tourism hotspots where prices have soared including Cork, Galway and Killarney. But there are still bargains to be had in more remote areas and traditional resorts.

Family-run hotels outside the capital that know their guests well may like to keep prices reasonably stable, so that they come back year after year.

But many hotels in Dublin are now owned by investment companies and vulture funds with a short-term outlook, according to Michael Vaughan. They may have little personal involvement with their customers, and when times are good, they may care little about whether they come back.

Figures supplied by the booking sites Kayak show that the average price of a double room in a three-four star hotel in Dublin is €160 this month.

That does not seem wildly expensive by European standards, but the problem is that there are extreme fluctuations in price. And at certain times a bog standard hotel can cost double the normal rate.

Hotels commonly keep a number of rooms for late bookings and prices for these can often be extremely expensive - over €300 for a three star hotel.

One of the problems for consumers is the recent change in the way hotels take their bookings. Rather than having a certain price that fluctuates within a narrow range, depending on the season, they have computer systems to extract the maximum profit from guests, particularly with late bookings.

Michael Vaughan says: "Hotels are now using the software which airlines have been using for the last 20 years.

"Once they see the demand coming for rooms, the computerised systems starts putting the prices up. It happens automatically.

"The commercial city centre hotels try to maximise the price of the last remaining rooms. That gives the impression that all the rooms are sold at an inflated price. I would be the first to admit that it is not a very good PR job."

Dermott Jewell of the Consumers Association of Ireland puts it a lot more bluntly.

He says: "This form of price gouging shows that some hoteliers have eliminated any consideration of customer relations. Put simply, they don't seem to be bothered.

"The rise in hotel prices at certain times is a growing concern. They were always known to rise for certain events, but prices have risen at other times for reasons which are not always apparent.

"When times were bad the industry was given great assistance in reductions of VAT (from 13.5pc to 9pc), but to all intents and purposes they have abused it."

Seasoned observers of the travel business point out that getting a better deal in an Irish hotel is not always about price.

Too often, travellers go online and just look for the cheapest room without checking the quality.

The value question

John Brennan, managing director of the Park Hotel in Kenmare, Co Kerry, has watched the ebb and flow of the hospitality sector in recent years. Until 2015, he presented the RTÉ show At Your Service with his brother Francis (Francis now presents it on his own).

He says: "On the international stage Ireland is still good value, but we should always be conscious of that because there is ferocious pressure on costs in hotels, such as higher wages and the price of food."

He says there is still good value at the top end of the market in Ireland and in the Bed & Breakfast sector. But he says some hotels in the middle are over-priced.

"In three star hotels, we are expensive in Ireland. There are also a number of hotels that are trading as five star hotels when they should be four star. In those kinds of places, you get one sausage and one rasher - and single-ply toilet roll."

The spike in prices in Dublin is being driven by a shortage of rooms, and many hotels are effectively operating at full capacity.

According to Aiden Murphy, occupancy rates in Dublin are 84pc, and outside Dublin they are 70pc.

With eye-wateringly high rates during periods of peak demand, the tourism authorities may have to consider measures to put a dampener on excessive prices for big events.

Michael Vaughan says certain European cities have "fair days", where a reasonable price must be set by hoteliers for certain events such as big conventions and that there will be an agreed pricing level for the Rugby World Cup in Ireland (which Ireland is bidding for in 2023).

"This suggests that hotels will charge no more than 20pc more than its average room rate. That kind of a mechanism is quite good, and it could be brought into effect for events such as concerts."

Dermott Jewell says this kind of measure may be well-intentioned, but it could be difficult to implement, because of concerns about price fixing.

There is no doubt that the extravagant prices for some hotel rooms is causing concern in the tourism industry. Aiden Murphy says coach tour operators and conference organisers are finding it hard to get big allocations of rooms far in advance. In a rising market, hoteliers in Dublin are holding onto rooms until relatively late to maximise prices.

Inevitably with high prices in the capital, developers are building new hotels to meet the demand, and there should be 3,000 new rooms by 2020.

"The market will find its own level," says Wexford hotelier and former hurling manager Liam Griffin. "They are now building a clatter of new hotels in Dublin. When that happens the rates will come down - and they will be sweating like holy Hell for the business."

It may be a beautiful day for hoteliers now, but how long can it last? Until the new hotels arrive, the best advice for those hoping to stay in the capital is - buyer beware.


· Compare the price of a hotel room on different booking websites, on the hotel's own website and by ringing the hotel directly.

· Book a room on a Sunday, traditionally the quietest day.

· Be flexible with dates. When filling out online forms try different dates to find the cheapest rates.

· Book months in advance. If it is an event, book within minutes of an announcement.

· Focus on quality as well as price. Seek an upgrade to your room when you book directly.

· Ask if there are any deals at the hotel for free meals


40pc rise in Dublin hotel prices over the past three years

45pc rise in Dublin 3 star prices

23pc rise outside Dublin

28pc hike in prices for tonight's U2 concert

€201 Average cost of a hotel room in a 3-4 star hotel this weekend

84pc Occupancy in Dublin hotels

70pc Occupancy in regional hotels

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