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A Study of Tourist Accommodation in Cork, Galway & Kilkenny

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A Study of Tourist Accommodation in Cork, Galway & Kilkenny Analysis of Visitor Accommodation in Cork, Galway and Kilkenny 2018-22 18.12 TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................. I 1. INTRODUCTION .................................................................................. 1 1.1 INTRODUCTION ...................................................................................... 1 1.2 METHODOLOGY ...................................................................................... 1 1.3 REPORT STRUCTURE ................................................................................ 2 2. CORK ..................................................................................................... 3 2.1 TOURISM IN CORK CITY ............................................................................ 3 2.2 ACCOMMODATION STOCK .......................................................................... 5 2.3 ADDITIONS TO ACCOMMODATION STOCK ........................................................ 7 3. GALWAY .............................................................................................. 10 3.1 TOURISM IN GALWAY CITY ....................................................................... 10 3.2 ACCOMMODATION STOCK ........................................................................ 12 3.3 ADDITIONS TO ACCOMMODATION STOCK ...................................................... 14 4. KILKENNY ............................................................................................ 17 4.1 TOURISM IN KILKENNY CITY ..................................................................... 17 4.2 ACCOMMODATION STOCK ........................................................................ 19 4.3 ADDITIONS TO ACCOMMODATION STOCK ...................................................... 20 i Executive Summary This report looks at the future supply of accommodation in three Irish cities – Cork, Galway and Kilkenny. Cork and Galway are quite similar in terms of tourism revenue and visitor numbers. There are no Fáilte Ireland estimates for tourism visitors or revenue for the cities, but the counties of Cork and Galway each earned just over €830 mn in tourist revenue in 2017, while revenues earned in Co. Kilkenny were much lower (albeit in a smaller county), at €94 mn. TABLE E.1: TOURISM IN CORK, GALWAY AND KILKENNY 2017 Cork Galway Kilkenny Visitor Numbers (000s) 2,718 2,637 613 Revenue (€mn) 833 836 94 Overseas Revenue Share 76% 71% 59% SOURCE: FÁILTE IRELAND The number of Fáilte Ireland registered bedspaces gives a better idea of the size of the tourism accommodation sector across the three cities, however. Again, Cork and Galway are similar, with 8,800 and close to 9,000 bedspaces respectively, while Kilkenny has over 3,100 bedspaces. In all three cities, hotels dominate tourist accommodation, accounting for about four out of every five bedspaces. Within the hotel sector, 4-star and 5-star properties are generally more common, although this is less the case in Galway than in Cork and Kilkenny. TABLE E.2: FÁILTE IRELAND REGISTERED BEDSPACES – JUNE 2018 Cork Galway Kilkenny Hotels 6,933 7,333 2,598 Guesthouses and B&Bs 594 434 337 Self-catering 642 103 25 Hostels 431 725 29 Other 201 371 138 TOTAL 8,801 8,966 3,127 Share of Hotels 79% 82% 83% Share of 4-star and 5-star 79% 57% 73% Hotels SOURCE: FÁILTE IRELAND Tourism in all three cities has grown steadily and strongly over the last five years. Average annual occupancy rates in Cork and Galway were at 82% and 80% i respectively in the 12 months to September 2018, and average room rates (ARRs) averaged €103 in Cork and €108 in Galway. The growth in revenue per available room (RevPAR) over the five years, meanwhile, was more or less the same for both cities, at 63%-64%. However, the seasonal nature of demand in these two cities differs significantly. In the year to September 2018, for example, average RevPAR across the four peak months (June-September) in Galway hotels was 2.4 times the average RevPAR in the November-February period. In contrast, the seasonality multiplier was just 1.6 for hotels in Cork. Data for Kilkenny hotels is not as readily available. However, discussions with hoteliers in Kilkenny and some limited data from STR (Smith Travel Research) suggest a similar pattern to Cork and Galway, with occupancy rates averaging over 90% during the peak season, very high ARRs during the summer months, but with a substantial fall-off in rates (like Galway) in the November-February period. TABLE E.3: HOTEL KPIs FOR CORK, GALWAY AND KILKENNY – YEAR TO SEPTEMBER 2018 Cork Galway Kilkenny^* Occupancy (Year to Sept 2018) 82% 80% 78%^ Average Room Rate (Year to €103 €108 €105* Sept 2018) RevPAR (Year to Sept 2018) €84 €86 €76* RevPAR Growth 2013-18 64% 63% - Seasonality Factor 1.6 2.4 - ^ Kilkenny occupancy is estimated based on discussions with local hoteliers. * Kilkenny room rate data is year-to-date up to August 2018, from STR, and is therefore not strictly comparable with the Cork and Galway data. SOURCE: TRENDING.IE, STR & FITZPATRICK ASSOCIATES Cork and Galway both receive a seasonal increase in tourist accommodation capacity during the summer months, with the addition of a significant volume of student accommodation between June and September. In addition, there is also a further substantial volume of new student accommodation coming on stream in these cities over the next 2-3 years, while both cities have a large stock of Airbnb listings. There were 14 hotel projects in Cork (seven new projects and seven extensions), 15 projects in Galway (seven new projects and eight extensions), but just one project in Kilkenny (an extension), which have come through the planning process over the last four years. The average size of project is much bigger in Cork, with close to 1,400 additional rooms in prospect if all projects came to fruition. ii Two hostels and a guesthouse have also been granted permission for additional bedspaces in the city. In addition, there are a further six projects in Cork, potentially adding another 700 rooms, that have not yet gone to planning, with four such projects in Galway (550 potential rooms) and 3 projects in Kilkenny (200 potential rooms). TABLE E.4: HOTEL ACCOMMODATION PROJECTS THROUGH PLANNING IN CORK, GALWAY AND KILKENNY Cork Galway Kilkenny No. of Hotels Gone for Planning 14 16 1 2014-18 No. of Hotel Rooms for Planning 1,381 713 6 2014-18 Bedspaces in Planning – Other 218 50 - 2014-18 No. of Speculative (Pre-planning) 6 4 3 Hotels SOURCE: FITZPATRICK ASSOCIATES Even under the most optimistic scenario, all the rooms in planning are unlikely to come on stream, while there is also an in-built disincentive to expand accommodation stock as additional rooms come on stream. This is less of a problem in a growing market, however, and the recent strength of the tourism sector underpins the recent surge in planning applications in Cork and Galway. Projects are already on-site, and some have been recently completed, with 285 new bedrooms to be added between both cities before the end of this year. However, at the same time, the prospects for ongoing growth in visitor numbers is no longer as clear, with uncertainty over Brexit a cloud on the horizon. Nevertheless, the central projection is for over 930 new bedrooms to be added in Cork city by the end of 2022. Two projects already on-site in Cork account for about 170 of these additional rooms. Of the 1,200 other rooms that are through planning in Cork, it is expected that just under two-thirds will come to fruition (furthermore, none of the six speculative projects are expected to complete within the timeframe). All the additional rooms will be in and around Cork city centre. iii TABLE E.5: PROJECTED HOTEL ROOMS IN CORK, GALWAY AND KILKENNY BY END-2022 Cork Galway Kilkenny Central Projection – Room Increase 934 490 41 Total Hotel Room Stock in 2022 – Central 3,600 3,382 1,123 Projection Low Growth Projection – Room Increase 576 251 26 High Growth Projection – Room Increase 1,170 828 56 % Increase in Hotel Rooms – Central 35% 17% 4% Projection SOURCE: FITZPATRICK ASSOCIATES iv Fitzpatrick Associate’s central projection for Galway is for a net additional room increase of 490. Out of more than 700 rooms that have come through planning, about half of them (close to 350) are expected to be in place by end-2020, with a further 200 coming on stream from one of the four speculative projects that have not yet gone for planning. Galway has lost nearly 60 rooms, however, with the closure of the Westwood Hotel in September 2018. Most of the new rooms are also in or close to Galway city centre. In Kilkenny, the prospects for additional stock are much weaker. Fitzpatrick Associates projects about 40 additional rooms by 2022, with 35 of these coming from a project that is still in the design phase. Some additional stock, meanwhile, is also expected in other accommodation across the three cities, notably over 200 hostel bedspaces in Cork, five additional guesthouse rooms in Cork, about 50 hostel bedspaces in Galway and about 20 camping pod units in Kilkenny. v 1. Introduction 1.1 Introduction This report presents an analysis of anticipated developments in the supply of tourist accommodation in the cities of Cork, Galway and Kilkenny over a five-year period. It has been prepared by Fitzpatrick Associates Economic Consultants on behalf of Fáilte Ireland. The Terms of Reference for the study outline two key objectives, which are as follows: . based on data provided by Fáilte Ireland and information from
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