Hotels on fine line between recovery and recovered

Balancing the recovery story with ongoing special pleadings for support is always a tricky business, and it seems that hotels are struggling to frame their case amid a raft of contradictory signals.

The Irish Hotel Federation's recent annual conference made big play of the critical role of the special lower 9 per cent rate of VAT in driving recovery within the sector. Economist Alan Ahearne, no less, pulled together a report attributing 30,000 new jobs to the initiative and asserting that it was a highly cost-effective way to boost competitiveness.

Competitiveness is at the nub of the issue. By general consensus, Ireland had increasingly priced itself out of the tourism market as the boom ran to its peak. For an increasing number of potential travellers, we were simply too expensive a holiday option.

Times have changed, of course. Or have they?

A survey released on Monday from Hotels. com said that hotel prices jumped 10 per cent in Ireland last year to an average of €103 per night. In Dublin, the rise was 13 per cent year on year and the average room rate €109.

The IHF insists the national rate of growth is closer to 5.2 per cent, though, even at that, it would be worthy of comment in a period of almost zero inflation.

Another report out Monday, the PricewaterhouseCoopers European Hotel Forecast, suggested it might be next year before that €109 figure was actually reached. And the significance of that? Well, that was precisely the average room rate being charged by Irish hotels back in 2007 at the peak of the market, according to PwC.

The PwC report, on which the IHF was strangely silent, said Dublin will have the highest growth rates in revenue per hotel room this year and next. The figure will jump to €88 next year, up almost 55 per cent on the 2011 figure.

Business travel has been a significant component of the market recovery, especially in the capital. But tales of gouging around events such as the Web Summit are legion, even since the crash.

The Minister for Finance has indicated unease at some reports coming from the tourism sector. There is a fine line between recovery and recovered – and it would appear the hotel sector has crossed it.