Dublin hotel supply to remain 'tight' despite addition of new rooms
Dublin's hotel supply will continue to remain tight this year, despite a number of new projects coming on stream that are aimed at boosting the number of hotel rooms available in the Republic's capital.
Davy Stockbrokers said that 2018 will be the first time in almost 10 years that Dublin will see a "meaningful increase" in the supply of new hotel rooms.
It's forecasting 1,300 new rooms will be added in the city this year, with more than 500 of those from extension to existing properties.
Dalata, a stock market-listed company and Ireland's largest hotel group, will deliver 551 of those new rooms - including a new Maldron Hotel in Belfast.
The firm, headed by chief executive Pat McCann, already operates Maldron hotels at Belfast International Airport and in Londonderry, as well as the Clayton Hotel in Belfast.
Davy Stockbrokers said: "At a net level, however, we believe Dublin will only see around 800 additional rooms as Dalata closes two hotels, Ballsbridge Hotel and Tara Towers, at the end of 2018 and start of 2019."
Dalata is expected to open an additional 228 hotel rooms elsewhere in Ireland this year, and around 500 between Britain and Northern Ireland.
Davy also reckons that Dalata will continue to benefit this year from growth in visitor numbers and a 5% increase in revenue per available room.
As the Dublin market continues to strengthen, aided by supply tightness, Davy Stockbrokers also expects the regions to perform better, helped by visitor number growth and the improving economy.
"For 2018, we expect regional Ireland to be a focus area for Dalata as this market significantly lags Dublin and UK given a greater proportion of food and beverage," according to Davy.
For 2018, the stockbroker is forecasting that Dalata's earnings before interest, tax, depreciation, amortisation, and rent margin will be one percentage point higher at 29%.
For Dublin and UK, the broker predicts that margins will remain unchanged at 49% and 42% respectively.
Davy has also forecast that shares in Dalata could hit €8.30 if it can deliver 8,000 promised new hotel rooms in the UK between 2020 and 2026.