Hotel Rates Rise in 2023
Hotel room rates increased in the first ten months of 2023, with an average daily rate of €210 in Dublin City Centre, followed by €165 in the surrounding Dublin area and €160 in the rest of Ireland. These prices are not however deterring customers, and hotel occupancy levels are expected to be retained this year.
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 and Lisbon the second. Amsterdam dropped two places to third and Paris remained in fourth place. Milan and Edinburgh rose in the rankings, placing ninth and tenth respectively.
Breda McEnaney (pictured), Associate Director in the Travel, Hospitality and Leisure advisory team at Deloitte Ireland, commented:
“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.
“Consumer demand has shifted to be experience-led, which is bringing more lifestyle brands into the market. 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. We are also seeing that events, concerts and sporting fixtures continue to drive demand.
“Increased focus on customer personalisation is becoming critical. For example, we are seeing hotels like Citizen M entering the market with new concepts, putting technology at the centre of the customer experience. This means self-check-in, iPad control, and accessible, self-serving experiences for guests while not compromising on location. Getting the concept right will be essential, along with accurately positioning the hotel in the market.”
The survey also highlights that private equity continues to be the main source of equity capital for hotel acquisitions in Europe in 2024 (31%) while sovereign wealth funds have jumped by 10% to become the third largest source of equity capital for hotel acquisitions.
Rebecca Robinson, Director in Corporate Finance at Deloitte Ireland, commented:
“We can also learn where we expect this investment to come from, with more than half of respondents (56%) expecting 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.”
There were approximately 66,200 hotel rooms in the Republic of Ireland as of Q4 2023, as completions in the twelve months reached over 1,800 rooms. According to Fáilte Ireland research, 12% of all registered tourism bed stock is under contract to the state.
Commenting on these figures, McEnaney said:
“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.”
“Rising costs, higher interest rates, a shortage of skilled labour and increased staff costs are cited by most executives in the hospitality sector as the top risks they face in trying to grow this year. The top priorities this year are managing inflationary pressures, maintaining profitability, increasing cashflow, and hiring and retaining talent.”