Profits per hotel room were up by almost 30% in Ireland last year, according to the latest Crowe Horwath Ireland Hotel Industry report, which highlighted a strong year of sales and profit growth for the Irish hotel sector.
Crowe Horwath, whose annual report is drawn from the financial year ending 2015, found that profit levels for Irish hotels are now higher than levels achieved at the peak of the market in 2006, while occupancy levels increased by 3.3 percentage points nationally to 71.1% as all regions benefited from stronger levels of demand.
The report stated that all key metrics for the hotel sector have recorded improvements, with average room rates across the country increasing by 12% to €92.15.
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Dublin hotels lead the recovery in the sector with occupancy levels at 80.7%, up from 77.2% in the previous year. The average rate charged for a room in Dublin is now €111.83, up from €97.25 on the previous year, representing a 13% annual increase.
Crowe Horwath found that the 5-star market and larger hotels also benefitted from an increase in demand which allowed these hotels to yield a higher average room rate and stronger profit levels.
Aiden Murphy, a partner with Crowe Horwath, has overseen the production of the report for the last 18 years. He notes that the profit levels within the hotel sector is 'now at a sufficient level to support the development of new hotel builds in Dublin and extensions to hotels outside Dublin'.
Murphy said the Dublin hotel sector is dealing with capacity issues and new room supply is required to deal with increasing demand levels.
"2016 looks very positive and is set to deliver another year of growth for the Irish hotel market as overseas visitor numbers increase, as employment and the economy improve further," said Murphy. "However, the effect Brexit and the recent falling Sterling rate will have on the Irish hotel sector in 2016 is relatively unknown. Travel plans are unlikely to be changed for 2016 but future visitor numbers could be affected. As sterling weakens the UK market will start to feel the full impact of increases in Dublin rates and UK visitors may opt for other more competitive Sterling destinations."
The Crowe Horwath Ireland Industry Survey covers key issues in Ireland’s hospitality sector including hotel performance, room occupancy, average daily rate and profit before tax. The annual Hotel Industry Survey serves as a benchmarking tool for the sector.
Earlier this month, hoteliers were in the firing line as Dublin room rates spiked 19%.