Mr. Tim Fenn:

The IHF welcomes this opportunity to address the joint committee. Our sector is coming out of an exceptionally challenging two years, during which hotels lost more than €5 billion in revenue. Government supports, which were very much appreciated, were vital to the survival of many businesses, and we now look forward to recovery and sustainable long-term growth in the supply of important hotel infrastructure within the Irish economy. As outlined in our submission, we have seen a much faster rebound in tourism than anyone previously anticipated. However, due to a combination of factors, there is a significant imbalance at present in supply and demand for hotel rooms in Dublin.

On the demand side, in April, Dublin had the highest occupancy rate of any city in Europe at 83.6%. The average daily rate for a hotel room was €154.31, behind Amsterdam, Rome and London. The average rate was up 16.5% on April 2019 but comes at a time hotels are reporting spiralling operational costs, with year-on-year increases of 88% in energy, 18% in food and beverage supplies, over 30% in linen services and 20% in insurance costs. On the supply side, Dublin has 22,492 hotel and guest house rooms. We estimate that 82.4% of these are operating as hotel accommodation at present. The remaining 17.6% of rooms relate to Government contracted business and rooms out of service for operational reasons. These supply issues are further compounded by delays in the construction of new capacity due to the pandemic.

The combined effect of these exceptional factors is that there are now more nights where occupancy in Dublin exceeds 90% and the last available rooms are quoted at rates in excess of the average. This has given rise to significant levels of media and political commentary and misperceptions around the overall value for money in the market in Dublin, which remains competitive with our European peers. What is often lost in this commentary is that the vast majority of rooms currently sold have been contracted and previously booked well in advance at rates significantly below the last available rates. For the current month approximately 80% of the available rooms were sold in advance of 1 June, up from 65% in 2019. This dynamic illustrates what we expect to be a short-term disruption to the market, which is likely to resolve itself as pent-up demand eases and additional hotel room stock comes on stream. We look forward to discussing these issues with the committee in further detail and addressing any questions that individual members may have.