Dublin’s Capacity Crunch

An update on the shortfall in hotels in the capital

Irish tourism’s strong recovery and performance in recent years has shone a spotlight on the shortage of hotel accommodation particularly in the capital city. The Irish Tourist Industry Confederation (ITIC) has long highlighting this issue as being one of the most important ones to address if tourism into Dublin and Ireland is to continue growing. Fáilte Ireland, the National Tourism Development Authority, through consultants Fitzpatrick Associates, published a report entitled Analysis of Visitor Accommodation in Dublin in June and it outlined that a significant number of hotel developments are planned for the coming years. The Fáilte Ireland report estimated 5,500 additional bedrooms in Dublin open and trading by 2020 which would be needed to meet projected visitor numbers.

This is an extremely pressing issue for Irish tourism and thus it is vital that concerted attention is focussed on this area and proposed developments and plans are monitored carefully. Corrective and proactive policies will need to be deployed should planned developments not materialise. This is now more valid than ever in light of the new economic uncertainties of Brexit and a Trump presidency; two factors that were not envisaged within the Fitzpatrick Report.

A shortage of hotel stock in Dublin has potentially serious consequences. Tourism numbers into the city have increased by 33% over the last 5 years at the very time that hotel bedroom stock has actually declined by 6%. This of course is a legacy of the property and financial crash that the country suffered but with demand and supply so out of sync there has been upward pressure on prices and Dublin risks becoming uncompetitive. With occupancy over 85% throughout 2016 in Dublin according to STR, the leading hotel benchmarking index, one wonders how much better again tourism numbers may have been if additional capacity had been available. Certainly some tour operators have been unable to place business in Dublin due to availability limitations. And of course adequate capacity within Dublin is critical for the health of Irish tourism as a whole; the majority of international visitors to Ireland spend at least one night in the capital.


Actions to Date

According to Fáilte Ireland, and the Grow Dublin Tourism Alliance, there is an annual target of 6.4 million international visitors to Dublin by 2020. The question of course is where are they to stay? The Fitzpatrick Report highlighted that Dublin needed circa 5,500 new bedrooms by 2020 if supply was to adequately match a steady rate of projected demand. Room size regulations for new builds have subsequently been standardized to European norms meaning that hotel developers can now increase the number of bedrooms within a site thereby improving economic returns. Fáilte Ireland and the Irish Hotels Federation are also in discussion about revised hotel classifications and Dublin City Council has approved Poolbeg West as a Strategic Development Zone which should hasten redevelopment of the area. There have been welcome construction developments including the opening on O’Connell Street of the new 198 bedroom Holiday Inn and announcements including a planned new hotel at Dublin Airport. However objections and delays to sites such as the €40 million 263-bedroom hotel near Saint Patrick’s Cathedral show that developments are a costly and complex process and need ongoing review. Tourism isn’t the only sector that badly requires adequate hotel stock – businesses and multi-nationals considering relocating to Dublin as a result of Brexit are also analysing the situation carefully.


Market Analysis

ITIC has consulted with a number of commercial property agents and financial institutions on the subject in recent times including CBRE who are happy to share its most recent views on new hotel developments for the Greater Dublin Area. It should be noted that this is a fluid situation and CBRE have highlighted that their figures are constantly adapting.

The CBRE analysis makes for interesting reading and shows that there has been significant activity of late. Currently there are 49 “shovel ready” schemes with full planning consent granted – if constructed this would provide an extra 4,642 bedrooms open for business by 2020/21 with 935 in extensions and 3,707 in new builds. 16 other schemes have been lodged or are under appeal. A further 22 other schemes are at pre-planning stage and 7 schemes have been refused, some of which may be resubmitted for planning. Funding of hotel developments has been an issue to date but signs are that this has been improving in recent times with finance becoming more available for the sector.



As the graphic below highlights CBRE are expecting quite a number of new builds and extensions to go on site in the next 12 months. Regrettably due to construction and planning timelines the bulk of new hotel bedrooms will not be open until 2018 and 2019. The situation needs to be carefully monitored as a slow-down in funding or delays due to planning obstacles could have serious consequences.



A Close Eye

ITIC urges a close eye to be kept on planned and intended developments and compare actual builds on an ongoing basis against previous projections. It is vital that the right environment is in place to allow hotel development to happen. Planning permission granted does not necessarily equate to constructed and trading hotels. In this regard the Department of Environment and Local Authorities have a role in ensuring that strategic mixed-use development zones are in place to ensure a good balance of residential and business. Hotels are a key piece of infrastructure for an export industry such as tourism. In particular ITIC urges Fáilte Ireland to publish a 6 monthly review of Demand and Supply projections for the period up to 2020 in light of latest strong tourism numbers, changes in regulatory regimes, and the possible economic shocks of Brexit and Trump presidency to the hotel development economy. Should the supply of hotel developments slow or not materialise ITIC urges prompt intervention including:

  • Fast track planning unit to be established within local authorities for hotel developments.
  • Encourage financing from Irish banks for hotel development or if necessary other EU banks.
  • Early completion of classification criteria to be agreed by Fáilte Ireland and the Irish Hotels Federation.
  • Hotel Prospectus pitching Dublin as an investment opportunity – online and in print – to be funded and implemented by Fáilte Ireland and local authorities if hotel developments do not materialise.
  • New Strategic Development Zones within Greater Dublin Area.
  • Review and update status every 6 months of hotels that are planned.
  • Identify reasons why hotels with planning permission granted have not proceeded.



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