More than 1,800 new hotel rooms came on stream here in 2023, bringing total stock to an estimated 66,200, an analysis by Deloitte has concluded.
But the new supply did not result in lower prices with the average room rate increasing in the three broad areas outlined in the report.
The average daily rate in Dublin City Centre stood at €210 in the first ten months of the year, followed by €165 in the surrounding Dublin area and €160 in the rest of Ireland.
The higher prices have not deterred customers, however, with occupancy levels remaining robust throughout the year, a situation that is expected to persist into 2024.
The surrounding Dublin area had the highest occupancy levels at 85% as of October 2023, closely followed by Dublin city centre at 83% and the rest of Ireland at 77%, the report states.
“Despite three very challenging years for the hotel industry, these insights highlight the recovery of the sector, and that strong domestic demand has played a significant role in this. In 2024, we expect occupancy rates to remain robust and be comparable to 2023, while new supply coming back on the market might soften rates,” Breda McEnaney, Associate Director in the Travel, Hospitality and Leisure advisory team at Deloitte Ireland said.
While supply has been increasing, a greater proportion of hotel rooms are being contracted by the state for the provision of accommodation for international asylum applicants.
According to Fáilte Ireland research, 12% of the registered tourism bed stock is under contract to the state.
“While many hotels are benefiting from government contracts with business spread over a consistent 12-month period – which significantly combats seasonal fluctuations that would otherwise be experienced – it also means there is reduced availability of hotel bedrooms for tourism and other purposes, including corporate or leisure,” Breda McEnaney said.
Deloitte’s 2023 European Hotel Industry Survey shows that Dublin is the eighth most attractive European city for hotel investment.
London was the most attractive European city for investment followed by Lisbon in second.
Amsterdam dropped two places to third and Paris remained in fourth place.
The report also highlights that private equity continues to be the main source of equity capital for hotel acquisitions in Europe in 2024.
Sovereign wealth funds have jumped to become the third largest source of equity capital for hotel acquisitions.
“More than half of respondents – 56% – expect hotel investment to be sourced from Europe. Funding from the UK (20%) and North America (39%) declined in 2023 due to slowing economic activity, but the Middle East and North Africa are increasingly becoming important sources of investment, with nearly 40% expecting investment to come from the region, a 22% increase compared with 2021,” Rebecca Robinson, Director in Corporate Finance at Deloitte Ireland explained.