Irish hotel sector – Poised for growth

Hotel outlook - Crowe Horwath Ireland

Fuelled by record numbers of overseas visitors to Ireland in 2016, the Irish hotel sector is poised for further growth but investment is needed if the sector is to maintain competitiveness.

“The (hotel) sector is firmly back on track and most hotels reported growth in both revenue and profitability during 2016 – particularly in Dublin, which is ahead of the rest of the regions,” says Mairea Doyle-Balfe, Director, Hotel Tourism & Leisure at Crowe Horwath.

But, after a period of growth, factors such as Brexit and maintaining competitiveness while increasing room rates are challenges facing the industry.

“We saw an immediate impact from Brexit and the Sterling exchange rate in places like Donegal and other border counties that can be reliant on cross-border tourism. The impact for the rest of the Country has been felt this year with a reduction in UK visitors to Ireland of 6% in comparison to last year. In the future, I think the real impact of Brexit could be felt in changes to the domestic economy and domestic consumer spending, which is an important part of revenues for regional hotels in Ireland. The off-set of this for Ireland is likely to be additional US and European tourists coming here and this is already evident in the most recent tourism figures this year.”

Some of the more immediate challenges facing the sector include staffing, increased operational costs and the need for some hotels to invest in their premises. “From an operational perspective, staff recruitment and retention are challenging. There is a skills shortage in certain departments in hotels. Chefs, for example, are highly sought after across the industry. Due to the nature of the business, hotels are also finding it hard to retain good staff, particularly in Dublin where it’s a lot more transient and staff can move around a lot more. All of this is also contributing to higher staff costs overall.”

A recent IHF survey noted that the vast majority of hotels (91%) indicated that they intend to undertake some capital expenditure projects during 2017, with most planning to refurbish and redecorate their premises and 15% planning to extend them. The survey also highlighted that 43% are planning to invest in guest technology, increasing the broadband speed available in their properties as well as offering the latest in Smart TVs.

“If hotels continue to invest in their product and deliver a great service to their customers, the future is bright, and I think we can compete even better amongst other financial supports and services on the worldwide stage.”

This is an extract from a recent article published in AIB’s September 2017 Hotels Outlook.