Belfast Telegraph

'Record breaking' year for hotel industry sees room prices rise 10% in Northern Ireland

The Grand Central Hotel in Belfast is among the new hotels to join the cityscape in 2018.
The Grand Central Hotel in Belfast is among the new hotels to join the cityscape in 2018.
Ryan McAleer

By Ryan McAleer

The average cost of a hotel room in Northern Ireland rose to just over £90 last year, a new survey has shown.

A study by ASM Chartered Accountants showed that guests paid 10% more for their room in 2017. It compares with £81.96 in 2016 and £74.91 in 2015. All three figures exclude VAT.

It reports that “unprecedented demand” for hotel bedrooms across Northern Ireland in 2017 led to approximately 2.26 million room nights being sold during the year – a new record.

The bedroom occupancy rate in 2017 was 76.8%, up on 75.7% in 2016, but still below the 77.5% recorded in 2015.

But the survey has revealed the surge in revenue generated by hotel rooms. The average room commanded £66,206 during 2017, £20,000 more than the £46,113 recorded in 2015.

Belfast has recorded hotel room occupancy rates of over 80% for four consecutive years. But the report found that the city “did not experience any material growth in bedroom sales because demand is now so strong for 10 months of the year that capacity is a constraint to further growth”.

Belfast is currently undergoing a major expansion in hotel rooms. Between new builds and expansion projects at existing hotels, the city is expected to increase from 8,000 to 10,000 rooms in total by the end of 2018.

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Michael Williamson, director of consulting at ASM said: “2017 turned out to be an outstanding year overall and broke many records, although for some, things remained good rather than having improved in comparison to 2016.”

But he warned that the scale of new hotel development is causing hotel owners and managers in Belfast some concern.

“Certainly with the volume of new bed stock entering the marketplace, I fully expect average occupancy rates and room rates in the city to ‘soften’ in 2018 and 2019, but it may be the case that hotels located on the periphery of Belfast are more affected than those in the city centre.

“Perhaps the bigger challenge facing the industry is not the arrival of new bedroom supply, but the availability of well trained and experienced staff to ensure that the growing number of visitors receive the quality of service that they have a right to expect”.

Hotels in rural settings and those offering leisure and spa facilities had “a very strong” 2017, with ASM reporting increases in occupancy rates and profits.

The survey also contained some positive news for the north-west. “Historically, profitability as a percentage of turnover at hotels in Derry City has trailed the national average, but in 2017 a combination of strong revenue growth and good cost management (which hoteliers in the city have always excelled at) delivered improved profitability at 19.7% of turnover. This is a material improvement on the 12.4% recorded in 2016.”

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