Bank of Ireland’s head of Hospitality Sector Gerardo Larios Rizo says that the hotel sector reported strong trade in the 12 months to December 2024, however profit margins remain a concern for operators.
“Hotels are partnering with local food producers, galleries, and/or local tour guides to provide more meaningful holiday experiences”
Insights
The past 12 months were mostly positive for the hospitality sector with many businesses reporting encouraging trends in both turnover and profits. However, this was not the case for all locations or subsectors; Revenue Per Available Room (RevPAR) took a slight tumble in Cork and Dublin due to changes in supply, and profit margins in the food and services sector were under increased pressure during 2024.
Businesses in Ireland had to deal with the challenge of the higher rate of hospitality VAT as well as an escalating cost base.
Increases to room rates and menu prices allowed many properties to protect the bottom line; the CSO’s consumer price index (CPI) shows the “Restaurants and Hotels” sector had a 3.7% price increase in the 12 months to December 2024 which is well ahead of the 1.4% recorded on average for all divisions.1 Another factor that could be affecting profits is the reduction in guest’s average length of stay which has seen a sharp decrease in recent times.
Domestic trips by Irish residents2 grew by 15% on the first 9 months of 2024 vs 2023, Fáilte Ireland reported that 32% of Irish residents went on a domestic trip during summer 20243. CSO’s stats on inbound visitor numbers to the end of December 2024 showed a 5.3% increase vs 2023; trips from the US & Canada increased by 135k/10% compared to just 69k/3% for the GB market.
Sector trends
- Integrating Technology, including AI to improve on customer service and support personalisation4. Businesses are increasingly focusing their efforts on personalising the customer experience as they look to build lasting relationships; AI enabled CRM systems can allow hotels to process guest data as well as suggest actions based on insights to support this.
- Sustainability influencing evolution of brands5. Businesses are increasingly incorporating sustainability efforts and ambitions to their brands. Updated mission statements, holistic staff training and development or even investment in green technologies can overtime associated with brand through compelling storytelling.
- Ways of working continue to affect travel demand. The normalisation of remote working has supported a rise in Bleisure (business trips that are then extended for leisure purposes) and Workations (when people work while on a trip away). Inbound business travel trips to Ireland increased by 11% in the 11 months to November as per latest CSO figures6.
- Increased focus on staff wellbeing. Companies are ever more committed to improving staff engagement and work satisfaction. Flexibility on rosters, focus on wider training development, wellness and physical health supports and investment on the automation of some repetitive manual tasks are some of the initiatives gathering momentum. The positive ongoing changes are evident in Fáilte Ireland’s latest Tourism Career Update, which states: “Recruitment and retention has become less difficult for the third year in a row”7.
- Wider destination marketing. Travellers are increasingly seeking unique local experiences that may allow them to connect with the local communities and provide them a better perspective on their culture and history. Hotels are partnering with local food producers, galleries, and/or local tour guides to provide more meaningful holiday experiences.
- Unbundling of offers. Although in place for some time, more hotels are presenting an increased number of options for guests to tailor their stay (rooms with better views, late checkouts, breakfast). Room types are also being expanded (broken into further categories) and priced accordingly.
To learn more and read about the 2025 trends to watch, download the FULL Insight & Outlook 2025 report for the Hotel sector below:
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Main image at top: Photo by Sebastian Coman Photography on Unsplash
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