Business

Record year for hotel industry in the north as over two million rooms sold

Pictured at the launch of the hotel industry survey are: Cian Landers, general manager of the Fitzwilliam Hotel; Michael Williamson, director at ASM; Adrian Patton, senior manager at ASM and John McGrillen, chief executive of Tourism NI.
Gareth McKeown

THE north's hotel industry has enjoyed a record year, with unprecedented demand fuelling bedroom sales of well over two million.

The annual hotel industry survey from ASM Chartered Accountants paints a rosy picture of the sector in Northern Ireland, with approximately 2.26 million room nights sold in 2017, a new record. The bedroom occupany rate in the north has also improved marginally in 12 months from 75.7 per cent to 76.8 per cent. The average room rate, which excludes VAT has increased by 10.4 per cent over the year to now stand at £90.48, which in turn has seen the average revenue per available room jump by 12 per cent to £69.53.

Looking at the figures from a regional perspective Belfast recorded an occupancy rate in excess of 80 per cent for the fourth consecutive year. That being said Belfast hotels 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. While hotel managers did push room rates upwards by 8 per cent to a record average of £91.83, overall profitability in the city remained static, mainly because of cost pressures.

Hotels in rural settings and those offering leisure and spa facilities had a very strong year recording average bedroom occupancy rates of 71.3 per cent and 76.3 per cent respectively - both considerable uplifts on 2016. Room rates also increased to the tune 6.4 per cent and 8.1 per cent respectively to an average of £98.31 at rural hotels and £106.51 at hotels with a leisure/spa offering. This resulted in increased profits of turnover at both.

Not to be outdone Derry city enjoyed a stellar year, with occupancy rates rising above 70 per cent (70.7 per cent) from 68.6 per cent in 2016 and room rates climbing by 15.7 per cent to an average of £67.15.

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 delivered improved profitability at 19.7 per cent of turnover, a 59 increase on the 12.4 per cent recorded in 2016.

Michael Williamson, director of consulting at ASM said 2017 was an "outstanding year" for the local hotels industry.

"While the decline in the value of sterling on the back of the EU referendum result in June 2016 boosted our competitiveness in the second half of that year, there was some modest level of recovery in sterling in 2017 and it is reassuring that despite this, the demand for hotel accommodation hit record levels. This suggests that Northern Ireland as a destination has more substance to it than simply being good value which is positive testament to all of the work that has gone into building a credible and robust tourism industry over the past decade."

In spite of the positivity Mr Williamson said there is concern in relation to the scale of new hotel development, especially in Belfast.

"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," he added

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