Irish hotel occupancy rates improved in 2023 and are expected to remain “robust” this year, according to a survey by Deloitte which sees extreme heat elsewhere in Europe driving up future demand for tourist accommodation in Ireland.
A survey of the European hotel industry by professional services firm Deloitte found that the greatest demand increase last year was for five-star luxury hotels in Dublin, where occupancy levels increased by 10.2 per cent.
The surrounding Dublin areas boasted the highest occupancy levels at 85 per cent in the year to date in October 2023, followed by Dublin city centre at 83 per cent and the rest of Ireland at 77 per cent.
It notes that customers were not deterred by an increase in room rates in the first 10 months of 2023, with an average daily rate last year of €210 in Dublin city centre, followed by €165 in the surrounding Dublin area and €160 in the rest of Ireland.
Breda McEnaney, associate director in the travel, hospitality and leisure advisory team at Deloitte Ireland, said that strong domestic demand has played a “significant” role in recovery of the sector after three challenging years, with demand also driven by events, concerts and sporting fixtures.
She added that interest from overseas visitors is expected to continue growing “as climate change and extreme heat elsewhere in Europe contributes to a rise in Ireland’s popularity as a holiday destination”.
“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,” she said.
There were approximately 66,200 hotel rooms in the Republic of Ireland as of the final quarter of 2023, with more than 1,800 rooms completed last year. However, the survey highlighted that as 12 per cent of tourist beds are under contract to the State, there is reduced availability of beds for tourism, corporate and leisure purposes.
McEnaney added that hospitality executives cite rising costs, higher interest rates, a shortage of skilled labour and increased staff costs as the “top risks they face in trying to grow this year”.
The survey placed Ireland as the eight most attractive European city for hotel investment, as London ranked in first place, Lisbon in second, and Amsterdam in third.
Private equity continues to be the main source of equity capital for hotel acquisitions in Europe, with more than half of respondents expecting hotel investment to be sourced from Europe.
Rebecca Robinson, director in corporate finance at Deloitte Ireland, highlighted that the Middle East and North Africa were “increasingly becoming important sources of investment”, with nearly 40 per cent expecting investment to come from the region, a 22 per cent increase compared with 2021.
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