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An Extra 5,000 Hotel Rooms Needed in Dublin, Survey Finds

Published on Aug 12 2015 12:49 PM in Hotel tagged: Featured Post / Dublin / VAT rate / hotel occupancy

An Extra 5,000 Hotel Rooms Needed in Dublin, Survey Finds

An additional 5,000 hotel rooms will need to be created in the next three to five years to cater for demand as occupancy rates hit their highest since the boom, an industry report has found.

A survey carried out by accounting firm Crowe Horwath revealed occupancy rates in Ireland rose by nearly two per cent to 67.8 per cent in 2014, with Dublin rising 0.9 per cent to 77.2 per cent.

Occupancy rates in Dublin are now higher than in 2006 and are "virtually full" during peak times.

Despite the high occupancy levels, room rates are still down considerably since 2007. An average rooms now costs €97.25 in Dublin, down from €116.59 in 2007, a 17 per cent drop. Profitability per room, however, is almost in-line with pre-recession levels.

Speaking to the Irish Independent, Aiden Murphy, a partner at Crowe Horwath said that 5,000 new rooms must be constructed or room prices will continue to rise.

"If rooms are not delivered it could damage tourism for Ireland as a whole. If there is a perception abroad that Dublin is expensive it could cause tourists to choose other locations. As tourists who holiday in Dublin often spend some time in rural Ireland, it could have a knock-on effect for the country as a whole," said Murphy.

Some 4,800 rooms were added in Dublin between 2006 and 2014. The fear of so-called "ghost hotels" appears to be dissipating with the demand to add an extra 5,000.

Despite room rates being reduced since 2007, profitability is almost in-line, which Murphy links to increased efficiency and reduced taxes.

"Hotels are able to offer rooms at the prices that they are and still make a profit because they are more efficient," he said. "Also, what helped hotels to maintain their rates was that the Government protected the hotel sector in bad times with the cut in VAT from 13.5 per cent to 9 per cent [and] the hotels have delivered."

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