Top hotel group pays price for more hotel rooms

Dalata Hotel Group has been one of the best-performing public companies in Ireland in recent years, benefitting from a boom in tourism to Ireland and a strong portfolio of hotels in key locations both here and in the UK.

But its share price fell by more than 6 per cent yesterday following the publication of a trading update that hightlighted “tougher than anticipated market conditions” in Dublin in the second half of the year.

“The Dublin market in the second half of 2019 has proved more challenging than expected with RevPAR [revenue per available room] for the market down 3.2 per cent for the 11 months to the end of November compared to a decline of 1.4 per cent for the first half of the year,” the company said. “The Dublin market continued to be impacted by the VAT increase, the additional supply of hotel rooms and a reduction in the number of events in October and November.”

About 1,000 additional hotel bedrooms have come into the Dublin market this year with another 1,500-plus slated for 2020. This put downward pressure on rates, particularly in a year when there were few major events or compression nights (when the city is more than 90 per cent occupied on a given night) as they call them in the industry.

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There will at least be a number of big events next year, including the World Irish Dancing Championships in April, the Euro 2020 football tournament in the summer, the Notre Dame-Navy American football match at the Aviva.

A longer-term issue for Dalata and other hoteliers in Ireland could be the so-called flight shaming issue, referenced this week by Tourism Ireland chief executive Niall Gibbons.

With 90 per cent of visitors arriving by air, a slew of carbon taxes and a concerted campaign by environmentalists against the aviation sector could be very bad news for the tourism industry here, particularly hotels in rural Ireland that rely heavily on American dollars.