2015 was another busy year in the Irish hotel industry. New legislation introduced will have an indirect impact on the next phase of the hotel industry.
Key topics in 2015 included:
2015 has shown the ever improving growth of the Irish hotel industry following on from the resurgence in 2014. The year-end occupancy rate in Dublin of approximately 85% coupled with Average Daily Rate ("ADR") and Revenue Per Available Room ("RevPAR") matching that of pre-recession early 2008 illustrates this.
In terms of operating performance in Dublin:
- RevPAR growth by the end of 2015 reflected that of early 2008 pre-recession figures;
- ADR hit €135 in the last quarter of 2015 which was a 17% increase over the previous 12 months; and
- The occupancy rate by year end was 85%, which exceeds that of the boom times with a clear need for new supply.
Some interesting legislative changes were introduced in the Oireachtas during 2015 which could have an indirect impact on the hotel industry.
The purpose of this new law is to streamline and regulate decisions made by the planning authorities. This Bill, once enacted, will provide for the establishment of an independent Planning Regulator ("PR"). Its functions will include:
- carrying out independent appraisals of all relevant statutory plans including local area plans, development plans and regional planning guidelines;
- give directions to planning authorities on the content of the plans and advise, where appropriate, that all or part of a plan should be amended or rejected; and
- investigate any systematic problems in the planning system and the performance of the functions of the planning authorities, on foot of a complaint, its own initiative or on the direction of the Minister and issue a report to the Minister and the Joint Oireachtas Committee of the Environment.
The advice of the Planning Regulator is to be published.
Delays in the construction and extension of new and existing hotels due to the current planning system will hopefully be reduced by this enactment.
This Bill has been reframed and is now progressing through the Houses of the Oireachtas as the Planning and Development (Amendment) Bill 2016.
- introduces minimum unit pricing of €0.10 per gram of alcohol;
- allows the Minister introduce regulations restricting “happy hour” type promotions or the sale of alcohol products at a reduced price or for free; and
- creates restrictions on the advertising of alcohol products.
If a person is guilty of an offence under the proposed legislation, he or she will be liable for the following fines/jail time:
- selling below the legal minimum price = fine up to €250,000 and/or up to 3 years in prison;
- sale of an alcohol product which does not comply with labelling requirements = fine up to €100,000 and/or up to 2 years in prison; or
- if the contravention is continued after being convicted, the person shall be liable for a fine of €2,000 per day.
Hoteliers should be mindful of the proposed change in the law and in particular, the penalties. We will send a further update once the Bill is enacted.
Commercial Rates are set by multiplying the Net Annual Value ("NAV") – determined by the Valuation Office as the annual rent which a business property could command less rates, taxes, repairs and insurance; by the Annual Rate on Valuation ("ARV") – being the multiplying factor determined by each rating authority, usually county council, as part of its budget process.
This legislation, which commenced in June 2015, amended the appeals procedure by allowing the rateable occupier to appeal a decision of the Valuation Office to the Valuation Tribunal with regard to the NAV of a commercial property. The appeal must be brought within 28 days of the NAV being set by the Valuation Office. Section 20 of the 2015 Act states the Tribunal must make a decision on an appeal within 6 months of receiving it. The previous system of appealing to the Commissioner of Valuation first is now gone. This new law is designed to simplify and fast-track the appeals process.
The Irish hotel industry is contributing to the resurgent economy and it is hoped that the legislature can maintain and continue its reform of out-of-date legislation so as to improve and streamline processes in the various government agencies to facilitate domestic growth and encourage investment.