Belfast hotels facing slow 2019 with supply exceeding demand
Hotels in Belfast experienced a tough time in 2018 following a growth in supply despite there being a rise in demand across Northern Ireland as a whole, according to a report.
The annual survey of the sector by business advisors ASM said the growth in supply in Belfast - with 1,100 bedrooms added over the last two years - had brought occupancy rates down by 1.3% to 75.6%.
It also predicts a slow 2019 for Belfast hotels as demand continued to lag supply.
But at 5% across Northern Ireland, the rate of growth in demand for rooms during 2018 had been more than double that of the previous year, with a record 2.36 million rooms occupied in 2018.
However, there was more demand for rooms in rural hotels, ASM said.
New openings in Belfast during 2018 included Hastings Hotels' Grand Central in Bedford Street, the nearby Maldron Hotel, opened by Dalata Group, and the AC Marriott Hotel at City Quays.
However, despite the fall in occupancy, the price of a room was up by 7% to £96.90 - a record high.
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Michael Williamson, director of consulting at ASM, said the growth in supply should not disguise the substantial rise in demand for rooms.
He said: "The overall occupancy results for 2018 can be misleading in that the material increase in new supply entering the market place of 1,100 bedrooms, or 12%, completely overshadows the overall increase in the demand for bedrooms which grew at 5% compared to 2017 and which is twice the rate of growth that occurred in the previous 12 months.
"Indeed, at an estimated 2.36 million occupied hotel bedrooms in 2018, this is a new record for Northern Ireland and shows how much progress has been made since 2011 when we estimate that 1.78 million bedrooms were occupied."
Adrian Patton, senior manager of consulting at ASM, said the second half of the year was not kind to hotels in Belfast.
"Most of the new room stock coming to market did so in the capital city from the summer onwards and our research shows that room and occupancy rates declined as that supply entered the market," he said.
"During this period, income from bedroom sales slipped by 4.1% year-on-year and there was also a decline in food and beverage sales.
"I expect overall hotel performance in Belfast to decline further in 2019 since all of the new supply will be available for the full year and even the most optimistic growth projections of bedroom demand in the city are less than the increase on the supply side."
He said the addition of new rooms in Belfast had now "largely ended". But he said that when stock was added in the run-up to 2009, the city did return to higher occupancy and room rates.
"There is no reason to believe that the same will not occur this time," he added.