Hotels deny price gouging accusations

Hoteliers have hit back at accusations of price gouging and ripping off rates, amid claims in recent weeks that some of them are using a sharp uptick in demand to raise prices.

According to an analysis by the Irish Hotels Federation (IHF), a combination of tight supply and strong demand has caused most mid-priced hotel rooms to sell out months in advance.

This leaves only the highest-priced hotel rooms for consumers to choose from closer to time, giving the false impression that all prices are being inflated to take advantage of strong demand, particularly around events, he says.

The organization says the problem is particularly acute in Dublin, where there is a significant shortfall in the number of rooms required.

In total, there are 22,492 registered rooms in the capital, of which 82% are used as hotel accommodation.

Currently, 15% is used for government business, such as housing those fleeing the war in Ukraine and asylum seekers.

The 2% balance is not available due to lack of staff, renovations or because it is being used to house staff.

About 3,000 of the 5,700 new hotel rooms due to be delivered during the pandemic were also delayed due to restrictions on construction during the two-year period.

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However, the IHF states that on the demand side in April, pent-up consumer and business demand is filling rooms.

As a result, he says, Dublin had the highest occupancy rate of any city in Europe at 83.6% in April.

According to independent consultancy STR, the average room rate that month was €154, lower than in London, Rome and Amsterdam, with indications that it was around €177 in May.

That would put it 16.5% higher than in April 2019 and 15% higher than May 2019, which the IHF says is reasonable given the inflationary environment that is driving up costs for personnel, energy, insurance and supplies.

“Actual average price increases have been much lower with overall value for money in the Dublin market remaining competitive with our European peers in relation to the very high quality of our hotel and guest house product,” said IHF Executive Director Tim Fenn.

Some hotels are also still dealing with business that was booked in 2020 and 2021 but postponed due to the impact of the pandemic, the agency says.

A large number of deferred concerts, sporting and other events are currently taking place in the capital, driving up demand for rooms, according to the IHF.

“Dublin hotels are also seeing substantial increases in activity demand within the wider economy, for example with the restart of large-scale commercial construction projects,” Fenn added.

As a result, the IHF says there are now more nights, especially weekends and nights when there are big concerts or events, where occupancy in Dublin exceeds 90%.

This leaves the only available rooms priced at rates above the average daily room rate.

In fact, the data shows that as of June, 80% of available hotel rooms for June had been pre-booked, up from 65% compared to the same point in 2019.

“The current imbalance is resulting in what we expect to be a near-term disruption to the market, which will likely resolve as pent-up demand eases and hotel room stocks rise,” Fenn said.

The IHF analysis follows weeks of claims from politicians that they were receiving complaints about the high cost of hotel rooms and low availability.

Fianna Fáil Senator Eugene Murphy spoke of how he had slept in his car twice because he was unable to find suitable hotel accommodation in Dublin for less than €200.

Minister of State Patrick O’Donovan said it was unfair that hotel prices skyrocketed every time there was a concert when the government had cut the VAT rate on hospitality.

Tánaiste Leo Varadkar warned that the future of that lower VAT rate could be at risk if hotels are found to have increased prices.

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