Deloitte survey finds increased interest from international investors in hotel sector

Despite three very challenging years for the hotel industry, these insights highlight the recovery of the sector, and that strong domestic demand has played a significant role in this. In 2024, we expect occupancy rates to remain robust and be comparable to 2023, while new supply coming back on the market might soften rates. 

Consumer demand has shifted to be experience-led, which is bringing more lifestyle brands[1] into the market. Interest from overseas visitors is expected to continue growing as climate change and extreme heat elsewhere in Europe contributes to a rise in Ireland’s popularity as a holiday destination. We are also seeing that events, concerts and sporting fixtures continue to drive demand.

Increased focus on customer personalisation is becoming critical. For example, we are seeing hotels like Citizen M entering the market with new concepts, putting technology at the centre of the customer experience. This means self-check-in, iPad control, and accessible, self-serving experiences for guests while not compromising on location. Getting the concept right (relevancy and purpose being the buzz words of the moment) will be essential, along with accurately positioning the hotel in the market.

The increased demand that has been seen in terms of domestic holiday trips has given hotels a new baseline to work from, and an opportunity to deliver and expand their service offering.

While domestic travel has played a significant role in the hotel sector’s recovery, visitors from the US remain vital in the future development of this sector, spending 79% more on their trips compared to the average overseas visitor - and specifically spending an additional 83% on accommodation, while in Ireland.

While many hotels are benefiting from government contracts with business spread over a consistent 12-month period - which significantly combats seasonal fluctuations that would otherwise be experienced - it also means there is reduced availability of hotel bedrooms for tourism and other purposes, including corporate or leisure.

Rising costs, higher interest rates, a shortage of skilled labour and increased staff costs are cited by most executives in the hospitality sector as the top risks they face in trying to grow this year. The top priorities this year are managing inflationary pressures, maintaining profitability, increasing cashflow, and hiring and retaining talent.

Owners and investors will have to assess any opportunities through a long-term lens and understand the demand dynamics that underpin the specific market they are operating in. Understanding customers has always been critical to the success of hotel operations, but now it is even more so. We’re seeing a growth in lifestyle brands entering the market that are experience-led, and tailored to specific audiences.