Galway hotels show growth in room rates, occupancy, and profit levels in annual survey

Room occupancy and rates as well as profits before tax for hotels in the western seaboard region, including Galway hotels, experienced an increase between 2011 and 2012, giving encouraging indications of growth in the hotel industry.

Crowe Horwath, leading advisor to the Irish hotel sector, recently launched its 18th Annual Irish Hotel Survey. The 2012 report provides the most comprehensive analysis available of the financial performance of Irish hotels and is the only published report which provides details of profitability in the sector. It breaks down the performance of Irish hotels both by region (western seaboard, Dublin, midlands and east, and the south west ) and by classification (luxury, first class, mid-price, and economy ).

Among the key findings for the western seaboard region, which includes data from Galway hotels, are as follows: Room rates rose from €58.93 to €61.87, an increase of five per cent, the highest outside Dublin and well above the national average increase of 2.8 per cent; occupancy levels increased from 59 per cent to 62.9 per cent, a rise of 3.9 per cent from 2011 levels; and profits before tax grew from €4,278 to €5,471, an increase of 28 per cent.

The Crowe Horwath Annual Irish Hotel Survey reveals that during 2012 the Irish hotel market experienced a further increase in occupancy levels to reach 63.8 per cent, a 2.4 percentage points increase on 2011, while average room rates increased by €2.05 to €74.72, a 2.8 per cent increase on 2011 levels.

Although the western seaboard region which includes Galway did well in 2012, the pace of recovery in room occupancy levels is behind that of the midlands and east region (+3.9 per cent in comparison to +5.3 per cent ) and behind the Dublin region in annual room rates (+5.0 per cent in comparison to +6.2 per cent ). However, in room occupancy levels the western seaboard region is above that of south west and Dublin at +3.9 per cent.

Commenting on the state of the Irish hotel sector, Aiden Murphy, partner at Crowe Horwath said: “It is encouraging to see that hotels in the western seaboard region which includes data from Galway hotels, are seeing growth in the Irish hotel sector following significant decline since the onset of the economic downturn. However, it is clear from the analysis that a two speed recovery is in train with Dublin outpacing the rest of the country across all major industry metrics - occupancy, room rates, and profitability.

“With overall sales levels at 76 per cent of activity in 2007 the market remains some distance off peak levels. While profitability has increased in the sector, substantial investment in hotels will be necessary to ensure that the product remains attractive both for domestic and international guests. The retention of the nine per cent reduced rate of VAT in the sector will aid price competitiveness and ensure maintenance of margins to enable the necessary reinvestment in the sector which, in itself, will lead to further job creation.”

The report also found that online discounts sites and social media platforms have become increasingly popular over the past few years. More than 85 per cent of hotels have used an online discount site with an average of three per cent of their total annual room sales being generated via this platform.

Furthermore, an estimated 37 per cent of hotel room sales are being generated via third party intermediaries with an average commission payable of 15 to 20 per cent. Booking.com and Expedia are the top providers of third party bookings for Irish hotels. Hotels are also utilising online social media platforms to support their business development. More than 95 per cent of Irish hotels use Facebook to promote their hotel, while a further 78 per cent manage Twitter accounts. In turn, there has been strong growth in average room rates with premium hotels benefiting with increased numbers of overseas tourists to Ireland.

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