Fáilte Ireland, through consultants Fitzpatrick Associates, published a report entitled Analysis of Visitor Accommodation in Dublin in June, which estimated that there would be 5,500 additional bedrooms in Dublin open and trading by 2020. These additional rooms would be needed to meet projected visitor numbers. Should the planned developments not materialise, corrective and proactive policies will need to be deployed. 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 five years at the very time that hotel bedroom stock has actually declined by six per cent. 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 in Dublin over 85% throughout 2016, according to STR, the leading hotel benchmarking index, one wonders how much better  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 attracting 6.4 million international visitors to Dublin by 2020. The question, of course, is where are they going 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 standardised 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 240m 263-bedroom hotel near St 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 their 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 (late November/early December 2016) 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. Sixteen other schemes have been lodged or are under appeal. A further 22 other schemes are at pre-planning stage and seven schemes have been refused, some of which may be resubmitted for planning. Funding of hotel developments has been an issue to date, but there are signs 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 slowdown in funding or delays due to planning obstacles could have serious consequences.

Ongoing Monitoring

ITIC urges the industry to compare actual builds to previous projections on an ongoing basis. The Confederation is calling on Fáilte Ireland to publish a six monthly review of demand and supply projections for the period up to 2020 in light of the latest strong tourism numbers, changes in regulatory regimes, and the possible economic shocks of Brexit and a Trump Presidency to the hotel development economy. Should the supply of hotel developments slow or not materialise, ITIC urges prompt intervention, including: a fast track planning unit to be established within local authorities for hotel developments; the encouragement of financing from Irish banks for hotel development or, if necessary, from other EU banks; the early completion of classification criteria to be agreed by Fáilte Ireland and the Irish Hotels Federation; hotel prospectus pitching Dublin as an investment opportunity to be funded and implemented by Fáilte Ireland and local authorities if hotel developments do not materialise; the creation of new Strategic Development Zones within the GDA; and the identification of reasons why hotels with planning permission granted have not proceeded.