IRISH HOTELS’ BUSINESS SENTIMENT SLIPS
Annual survey of members of the Irish Hotels Federation
IHF AGM and Conference 24-25th February 2020
- Just one third report a positive outlook for trading conditions over next 12 months
- Tourism industry’s mixed performance in 2019 looks set to continue
- President calls for shake-up of local authority funding as rates bills bite
Galway, Monday, 24th February 2020: The tourism industry’s mixed performance last year looks set to continue according to an industry survey* undertaken by the Irish Hotels Federation ahead of its annual conference in the Galmont Hotel, Galway. While 40% of hotel and guesthouse owners across the country report an increase in business levels compared to this time last year, a slightly higher number (45%), are reporting a drop. With the survey also highlighting continued concerns around the high cost of doing business, business sentiment, not surprisingly, has slipped for the second year in a row. Just one third are reporting a positive outlook for the year, compared to 40% this time last year.
Hoteliers’ concerns about the high costs of doing business include what Michael Lennon, President of the Irish Hotels Federation, described as ‘hidden’ costs, which he says aren’t readily considered when discussing the challenges facing sector. “Local authority rates, for example, are the single biggest cost that tourism businesses have no control over. Hotels are making a disproportionate contribution to local authority funding with many hoteliers levied rates of up to €3,000 per bedroom while the average local authority rates equate to €1,500 per room.”
“A shake-up of local government funding is long overdue. We are calling on the incoming government to ensure a fairer distribution of the rates burden right across the country. Hotels are willing to pay fair and reasonable rates but recent commercial revisions have led to excessive increases in many cases,” he said.
Higher water charges are another worry raised by members in the survey. Mr Lennon said that hoteliers have serious concerns about the approach taken by Irish Water in relation to harmonisation and increases in the overall cost burden on businesses. “These proposals will impact significantly on our sector given the relatively high usage of water by hotels, particularly by those premises with leisure facilities. The proposed increases, in many cases, amount to 30% over three years, which are completely unreasonable and a significant added pressure for a sector that is so price-sensitive.”
The threat of a disruptive Brexit remains a significant concern for the vast majority of hoteliers. The survey shows that both the British and Northern Ireland markets continue to be challenging for the hotel sector. Amongst those surveyed, over 40% report a fall in business from Northern Ireland with more than 60% seeing a drop from Great Britain. These reductions are being offset to some extent by the performances of the domestic and US markets, which remain buoyant. Home grown business is up year on year for close to half of hoteliers surveyed (46%) while over a quarter are reporting an increase in business levels from the US. Just over 40% are reporting an increase in forward, or advance, bookings for the remainder of the year, while a similar number are reporting a fall.
While business sentiment may be subdued, hoteliers are continuing to invest in their properties with over three quarters planning to undertake refurbishment or capital expenditure projects during 2020. “Irish tourism cannot afford to stand still. It supports approximately 260,000 jobs across every county, over 90,000 of which have been created since 2011. It generates over €9.2 billion in revenue, making it a major contributor to rural economies. It is also highly competitive and we compete internationally for business every day of the week. Irish hotels are renowned across the world for the quality of our properties and our high standards of service. Maintaining such a reputation requires continued investment to ensure our product remains fresh and relevant in the face of evolving consumer tastes,” said Mr Lennon.
Most hoteliers, according to the survey, are planning refurbishment projects for their existing guestrooms and common areas. One in ten are planning to upgrade or expand their leisure facilities with seven per cent planning to add new leisure facilities.
Conferences and meetings continue to be an important source of business for many hotels around the country. Of those, over a quarter reported an increase in business compared to this time last year.
Breakdown of hotel and guesthouse business levels across key markets compared to this time last year:
- Great Britain: 10% are reporting an increase; 62% are seeing a decrease and 28% see no change.
- Northern Ireland: 10% are reporting an increase; 43% are seeing a decrease and 47% see no change.
- United States: 27% are reporting an increase; 33% are seeing a decrease and 40% see no change.
- Irish domestic market: 46% are reporting an increase; 29% are seeing a decrease and 25% see no change.
- Germany: 13% are reporting an increase; 27% are seeing a decrease and 60% see no change.
- France: 7% are reporting an increase; 21% are seeing a decrease and 72% see no change.
-ENDS-
FOR INFORMATION:
Seán Lawless / Ger McCarthy Dublin office: 01 6798600
Weber Shandwick Mobile: 085 11 676 40 / 086 2333590
Notes to Editor:
* Survey based on responses from owners and general managers of hotel and guesthouses businesses across the country and was conducted during February 2020.
Please click here for infographic
Tourism sector at a glance
- 10.9 million out of state visitors
- Tourism accounts for almost 4% of GNP
- Total tourism revenue of €9.2 billion in 2019
- Tourism industry has created over 90,000 new jobs since 2011. It now supports over 260,000 jobs, equivalent to 11% of total employment in Ireland with over 60,000 of these jobs in the hotel sector alone.
- €7.25 billion in foreign exchange earnings
- €1.96 billion in domestic tourism revenue in 2019
- Total of 62,897 hotel and guesthouse bedrooms in Ireland (2019)
About the IHF
Founded in 1937, the Irish Hotels Federation is the national organisation of the hotel and guesthouse sector in Ireland. It represents almost 1,000 hotels and guesthouses nationwide, employing over 60,000 people and is a key stakeholder in the Irish tourism industry.