GROWTH IN HOTEL SECTOR OFFERS SIGNIFICANT BOOST TO LOCAL TOURIST MARKET
28 August 2018
Sales and regular transactions aside, the expansion of the Belfast hotel market continues apace. The recent opening of the lavish Grand Central has transformed a dated office building into one of Northern Ireland’s most expensive hotel developments providing over 300 bedrooms (Northern Ireland’s largest offering) over 23 floors. Other new hotel developments this year to date include The AC Marriott, a first entry into the local market, Hampton by Hilton developed by Andras House, again the first on the island, the Dalata Group’s newest outlet trading as the Maldron and finally the independently-operated, The Flint on Howard Street. All in all, this portfolio provides the city with another 1,000 bedrooms increasing the city stock by over 30%.
Clearly many will ask how sustainable this level of development is and if it is the latest fad to affect the property market? We have seen it before during the boom with the massive growth in residential housing turning into a crisis the impact of which is still felt today. In short, the thriving hotel market today is different. During the troubles, hotel development was blighted and only for the foolhardy due to the risks of running such a business in such a precarious environment. Today Northern Ireland is an attractive leisure option for many stemming from the Great Britain and Republic of Ireland markets although the vast majority of trade business is still indigenous. Growth within the North American and Asian markets, however, will be key to our local market sustaining room rates and occupancy levels.
Northern Ireland offers many attractions luring visitors to venues and locations such as the Titanic and The Giant’s Causeway. Other corporate magnets include the expanded Waterfront facilities for conferences which are geared up to attract bigger groups due to the increased hotel room availability. Furthermore, 2019 will see the return of The Open to Portrush and new hotel developments are also planned for this region as well as extensions to existing outlets.
More striking concerns for hoteliers are likely to arise from operational issues such as staffing these new facilities and the rising employment costs for the service industry. With the uncertainty surrounding Brexit, the hospitality sector is well aware that suitable recruitment locally is falling well short of demand thus leaving a huge void potentially. Northern Ireland will be competing with the Republic on the employment front which also benefits from higher wages and a VAT rate which is less than half that of Northern Ireland’s.
Realistically, it is expected that the growth of hotels locally will decrease over the years. Whilst current supply and demand balances out, it should be noted that many of the two dozen hotel proposals in the planning pipeline will be axed and only those “first past the post” will be successful. That said, it is very pleasing to note that the vast majority of new developments are being promoted by well-established hoteliers exuding confidence that these new ventures will be sustainable well into the future.