Irish hotel turnover decreased by 8 per cent last year, as occupancy rates dropped to their lowest level in 15 years, an industry survey has found.
Turnover in Dublin hotels fell by 11.6 per cent and luxury hotel business fell by 12.3 per cent in 2008, while the spend in larger hotels, with 100 rooms or more, declined by 10.7 per cent, according to the survey by chartered accountants Horwath Bastow Charleton.
The profit levels recorded by Irish hotels last year were almost 25 per cent lower than in 2007, with expenditure on domestic holidays declining by 9.5 per cent to €429m and 164,000 fewer visitors travelling from the UK to Ireland.
Increased room supply and falling demand reduced annual occupancy levels from 69.7per cent to 63.5 per cent, the lowest level in 15 years.
The global economic downturn, the strength of the euro against both the dollar and sterling and the sharp fall in consumer, business and government agencies spending all contributed to the slowdown in both domestic and international business.
“As the Irish economy is in recession, unemployment levels are increasing and as curtailment of government agency expenditure continues, this will result in the hotel sector remaining under pressure for quite some time,” Aiden Murphy of Horwath Bastow Charleton said.
Mr Murphy said the hotel industry will experience difficulties until at least 2010, with cash flow likely to be a problem because of the need to meet loan repayments.
“As much of Ireland's hotel stock was developed in recent years, older properties were refurbished and extended to achieve the standards set by the new entrants and as hotels were acquired for high prices there are significant bank loans, estimated to be ¤7 billion extended by banks in Ireland to the hotel sector.”
The survey says 10 per cent of hotels which opened in the last five years may close, which could result in 2,800 job losses, and that many hotels have already reduced their staff by around 5 per cent as part of cost cutting measures.
It says the hotel industry in Dublin will be boosted by the redevelopment of Lansdowne Road stadium and the O2 arena, but warns of serious concerns about the sector's ability to rebuild a higher room rate if existing trends of discounting continue.
