Some progress in hotels’ recovery

  • Crowe Horwath launched their annual Irish Hotel Survey today, and it’s a case of the curate’s egg, good in spots.
  • Average occupancy at 63.8% in 2012 was 2.4 percentage points up on 2011, while average room rate increased by €2.05 to €74.72.
  • Despite that, hotel sales were still only at 76% of 2007 levels.
  • Averages are interesting but they should be treated with some caution.  As Churchill once famously said, “the best argument against democracy is a five-minute conversation with an average voter”.
  • The “national” averages are buoyed up by the strong performance of Dublin, where for instance annual occupancy was 73.9% vs the Southwest at 62.1%, or the Midlands and East (excluding Dublin) at 58.5%.
  • The report does highlight that it is a two-speed recovery, with Dublin much stronger than the rest.
  • Profit before tax per room is estimated at €6,497 nationally (Dublin at €10,038).  But the Irish Hotels Federation rightly points out that this is before finance costs are taken into account.  And with an estimated debt mountain of €7 billion on the hotel industry, the average (that word again) cost of finance per room in Ireland last year was estimated at €6,500.
  • So that certainly does not leave adequate resources for reinvestment.  Some favourable news, but a long way yet to go.
  • CLICK HERE for an excellent short summary of the report from Crowe Horwath.
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