The Dublin area needs up to 5,000 new hotel rooms, particularly in the city centre as all available rooms are effectively filled during peak months, according to the latest annual survey of the hotel sector by accounting firm Crowe Horwath.

The survey finds that average occupancy levels in the capital reached 77.2% last year, meaning effectively almost full occupancy during busy times of the year or when key events take place.

Average occupancy levels across the rest of the country rose by nearly 2% last year to 68%.

Growth was fastest in the midlands and east region, though that is coming from a very low base during the economic crash.

The survey shows that average room rates in Dublin stood at just over €97 last year while average pre-tax profits per room, across the whole sector, amounted to €9,200 - this is close to the levels enjoyed just before the economic downturn in 2007.

Crowe Horwath partner Aiden Murphy has warned that failure to increase the demand for more hotel rooms in Dublin will make the city less attractive to tourists:

“While the focus of industry leaders has been on delivering higher tourist numbers, there needs to be a strategy to ensure that new hotel supply is introduced to the Dublin market so there is sufficient room supply to cope with the projected increase in tourism numbers through the ongoing marketing strategies that are yielding success."

He continues, “To date, the primary obstacle to new room supply in Dublin has been the lack of availability of long-term funding to support large capital investment for start-up enterprises. The second challenge is the complexity and timeframes around the planning process which has delayed new hotel developments for the city."