Fáilte Ireland has highlighted major investment opportunities in hotel stock in key cities. Its latest report on the current and future availability of accommodation shows that there is significant opportunity in Kilkenny for further bed capacity, while Galway also has scope for greater accommodation supply, following strong year-on-year growth in the number of overseas tourists coming to Ireland.
If Ireland’s recent strong performance continues, then overseas tourist numbers will be up more than 20% over the next five years, which will Fáite Ireland says will put pressure on current accommodation stock levels, particularly in urban areas which traditionally grow at a faster rate, amplifying any accommodation squeeze.
"Analysis Of Tourism Accommodation In Cork, Galway and Kilkenny"
The "Analysis of Tourism Accommodation in Cork, Galway and Kilkenny" report commissioned by the national tourism body was carried out by Fitzpatrick Associates Economic Consultants and looks at the current and projected level of bed stock across all accommodation types. The analysis focuses on hotels predominantly, as they constitute the primary source of accommodation in each of the cities, accounting for more than 80% of bed spaces.
The report highlights that the biggest squeeze is in Kilkenny, where 41 new rooms are likely to come on stream by 2022 to add to the current supply, an increase of just 4%, which presents a strong opportunity for investment in this sector.
Galway, which is currently at 82% annual occupancy, also has significant room for investment. With an estimated 17% increase in hotel bed stock over the next five years (500 new hotel rooms), this increase is likely to fall short of expected demand growth.
Looking at Cork, the report shows that there is a steady pipeline of new hotel stock coming on stream for the city. With current figures projecting a 35% increase (over 920 new hotel rooms) in Cork by 2022, this positions the city well to take full advantage of all future growth potential.
Fáilte Ireland’s CEO Paul Kelly set out the figures at Bank of Ireland’s Annual Hotel Sector Breakfast Briefing, where he made the case for further investment in hotel space in each of the cities.
Addressing The Delegates
Addressing the delegates, which included developers and investors, Paul Kelly said, "This year the Irish tourism industry has once again made another significant increase in its contribution to the Irish economy. We estimate phenomenal growth of 8% in revenue this year, and our economic modelling predicts that tourism will have spurred employment growth of a staggering 20,000 jobs in the year, bringing the total number up to 260,000. This performance is very much reflected in the growing visitor numbers and high occupancy levels we’re seeing in Dublin, Cork, Galway and Kilkenny.
"In 2019, we believe that there is potential to grow by a further 5% in overall tourism revenue, an upward trajectory that is likely to continue in the coming years. The challenge of sustaining this growth in the long-term is to ensure Ireland has an adequate accommodation supply, particularly in these four key cities. While there is a future supply of hotel beds in the pipeline for Cork and Galway, looking at the current and projected levels of visitor demand, there is certainly still a strong case for more investors and businesses to move into the sector and consider each of these cities for investment.
"This is particularly true for Kilkenny, where the current projection of hotel rooms is unlikely to match the growth levels we’re expecting in the market over the next five years. Galway could also benefit from increased capacity as projected growth in the city exceeds the current planned increase in beds. Getting a future view of supply and demand in this way allows us to be ahead of the curve in calling for investment now, and ensuring that cities don’t suffer excessive price inflation down the line. At Fáilte Ireland, our efforts are focused on driving growth into the off-season where there is more capacity and bandwidth to accommodate increasing visitor numbers."
© 2018 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.