Horwath Bastow Charlton survey main points.

The number of Irish hotels has doubled in the past 13 years.

Current over capacity of 20%, or about 12,000 rooms for the anticipated demand levels of the next few years.

Last year occupancy levels declined by 6.2% to 63.58%, while heavy discounting saw average room rates fall by €9.44 to €88.25.  Not only were hotels selling rooms at an average 10% cheaper than in 2007, they were also selling fewer rooms.

The relatively small decline in sales however had a much greater impact on profit levels.  This was particularly so in luxury hotels where a 12% fall in sales led to a 45% fall in profits before tax.  The reliance of this sector on the domestic market also increased from 41.9% of guests to 47.7% last year.

Over the entire hotel sector the domestic market in 2008 accounted for 65% of total bednights, up from 53% in 2004.  There is obvious concern that the resilience of the domestic market will be severely tested in the next couple of years.

Falling activities resulted in payroll costs at Dublin hotels increasing again in 2008, reaching an unsustainable level of 41.6% of revenue.  This was almost 10 percentage points higher than hotel payroll costs in Northern Ireland.  Given the continued weakness in revenue, this metric is likely to see further deterioration in 2009.

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