A few decades ago Ireland was the known as the 'poor man of Europe' and then came the Celtic Tiger boom which turned into a bust that can be qualified as a depression during the depths of the crisis in 2008-2009.
Now the Emerald Isle is back on its feet again and the country's economy and especially its hotel sector have made a strong recovery.
GDP advanced a healthy 5.2% in 2016, although this was a slowdown from the spectacular surge of 26.3% in 2015.
Tourism & hotels lead the way
Ireland's tourism revenue grew faster than the economy in 2016, increasing by 7.1% year-on-year to reach a total of €8.25 billion, according to the Irish Hotel Federation (IHF).
Incoming tourism receipts, almost 80% of the total, grew at even faster pace, rising by 8.6% to €6.49 billion, driven by 9.6% growth in foreign arrivals which numbered 8.8 million.
North America improved on last year’s performance with visitors up by 17%, while visitors from mainland Europe were up by 8%. Visitors from Britain – Ireland’s main tourism market – were up 9% to 3.66 million.
Speaking on the eve of the Irish Hotels Federation’s annual conference in late February, IHF's CEO, Tim Fenn stated that, “2016 was a ground-breaking year for Irish tourism overall where we saw all markets increasing their visitor numbers to Ireland. It has resulted in tourism returning to its long standing position as a key driver of economic growth throughout the country".
And indeed, the average national room occupancy rate for Irish hotels and guesthouses was 72% in 2016 (up from 70% in 2015) - the highest level in over a decade, driven largely by a record year for overseas visitor numbers.
More jobs in hospitality and tourism
Over 13’000 new jobs alone were created in the tourism and hospitality sector in 2016 bringing the total number of new jobs since 2011 to almost 50’000, an increase of some 30% over the past 5 years.
The tourism industry as a whole now supports about 220’000 jobs - equivalent to 11% of the Irish workforce, with almost 60’000 of these jobs in the hotels sector alone.
Focus on Dublin
As Ireland's capital and main commercial hub, as well as being home to over a third of the country's population, Dublin has been a prime beneficiary of the revival of the hotel sector.
Average occupancy has exceeded 80% since 2015 and is predicted to reach 83% and 84% respectively in 2017 & 2018, according to PwC.
Meanwhile ADR, which advanced by 15.5% in 2016, is forecasted to continue growing in 2017 and 2018, with rises of 8% and 6.5%, respectively.
All-in-all, RevPAR should increase by 17% over the next two years to reach €123 by 2018.
The risk/reward of Brexit
It cannot be denied that the weaker pound, which has fallen by about 11% since the vote on 23 June 2016, combined with probable economic fallout still to come, poses a risk to the Irish hotel sector, as the UK remains the biggest incoming source market.
“There is no doubt that we are seeing a negative impact from Brexit and the sterling differential on 2017 bookings from our key market of Great Britain. This is before any details of what an actual split from the UK will look like and is concerning. It is our biggest tourism market and while we are seeing growth from other EU and long haul markets, that new growth needs to be faster and sustainable if it is to have any real prospect of replacing the value and numbers of our nearest neighbours”, notes Joe Dolan, president of the IHF.
However, Brexit offers a possible silver lining for Dublin and its hotel sector.
As one of Europe's few English-speaking financial centres, the city, along with Frankfurt, has been tipped as one of the most likely to attract banks and financial sector companies obliged to move out of the City of London once the UK exits the EU in order to retain access to the single market.
This eventuality could provide solid demand growth for Dublin's hotel sector for some years to come.
Dalata, Ireland's leading hotel group
The hotel group that has the most to gain from the rebound in the Irish hospitality industry is Dalata, the country's leading chain, which has a portfolio of 41 three- and four-star hotels with over 8’000 rooms.
Dalata operates Ireland’s two largest hotel brands, the Clayton and the Maldron Hotels, across Ireland and the UK, as well as managing a portfolio of partner hotels.
Most of the hotels are owned by Dalata, which has a development pipeline of over 1’200 new rooms across Ireland and the UK, which are due to open by 2018.
Strong results in 2016
Dalata finished 2016 with a 15% gain in RevPAR. Revenue grew by almost 30% to reach €291 million, as EBITDA (earnings before interest, taxes, depreciation and amortisation) soared by over a half.
Given the positive outlook for Dublin in particular, where Dalata earns over half of its revenue and more than two-thirds of profits, the chain should continue to see good growth in 2017-2018.