Irish hotel sector resurgence continues in September

DUBLIN hotel room rates have continued to rise, with the revenue per available room jumping 9.2pc in September and average room rates up 10.1pc, according to data from STR Global.

The increases came just before this month’s Budget, when Finance Minister Paschal Donohoe said he would retain the special 9pc VAT rate for the hospitality sector.

The figures from STR Global confirm the resurgence of the capital’s hotel business, which has recovered sharply since the downturn.

An under-supply of rooms has helped operators to squeeze more profits from existing room stock. It’s been predicted that

5,000 new rooms could be added to the capital’s hotel stock by 2020.

The data shows year-to-date revenue per available room rose

7.5pc in Dublin, with occupancy having edged 0.3 percentage points higher in the period.

The STR figures also reveal that hotels outside Dublin have continued to see an improvement in their performance.

Outside the capital, revenue per available room jumped

12.1pc in August, with occupancy increasing 3.8 percentage points. Average room rates in regional hotels here rose 7.1pc.

In the year to date, revenue per available room is 9.9pc higher outside Dublin.

Mr Donohoe said earlier this month he was aware that hotel room rates in Dublin were rising, but said he had to take into account the sector across Ireland, not just in one city.

Mr Donohoe said in the Budget that in deciding whether or not he should retain the special 9pc VAT rate, he had to look at the country as a whole.

“While I note that prices in Dublin continue to rise, I have said before that VAT policy cannot be decided on the basis of one location only but in the context of the national interest,” Mr Donohoe said in his Budget speech.

“Accordingly, I have decided not to change the VAT rate on the tourism and services sector in Budget 2018.”

A recent survey by accountancy and advisory firm Crowe Horwath found that average room rates in Dublin jumped by €16.44, or 14.7pc, to €128.27 a night during 2016.

The special 9pc VAT rate was introduced in 2011 in an effort to boost the tourism sector in particular.

It also applies to a limited number of other enterprises, including hairdressing, takeaways, cinemas, fairgrounds and newspaper publishing.

Dalata is Ireland’s biggest hotel group.

Davy Stockbrokers said yesterday that Dalata should continue to outperform the broader Dublin market given its on-going efforts to improve room rates in hotels acquired during the past couple of years.