Hotels and guesthouses generated €6.45 billion in 2014 and are expecting a third consecutive year of strong growth – but the positive figures mask huge regional differences.
One third of hoteliers will not make a profit in 2015, according to members of the Irish Hotels Federation, who claim overhanging debt, commercial rates and lack of incentives to entice tourists beyond traditional “hotspots” are still threatening profitability.
Speaking at the opening of their annual conference at the Slieve Russell Hotel in Ballyconnell, Co Cavan, a number of hoteliers said they had deals with suppliers and staff to cut costs following the economic collapse in 2008.
While occupancy rates in Dublin rose by 3 per cent in 2014, and are set to grow by at least that much again this year, hoteliers in other areas said they had not done so well and were now facing calls for “pay back” from staff and suppliers.
But while occupancy rates in Dublin are in the order of 73 per cent, occupancy rates in the northwest have remained static at just 54 per cent.
A number of speakers at the conference said the recovery was fragile and the reduced 9 per cent VAT rate continued to be vital to the industry.
Hotels Federation chief executive Tim Fenn said regional tourism required greater Government support as the slower pace of recovery in some areas is a “major challenge for many hotels and guesthouses”.
He said hoteliers continue to face a significant skills shortage in the sector, with 83 per cent of those surveyed by the federation citing difficulties hiring trained workers to fill craft and entry-level positions.
The cost of doing business in Ireland was also identified by the survey as a major challenge, with hoteliers citing excessive local authority rates as the single most pressing issue stifling cost competitiveness within the sector.
But the survey, which was carried out earlier this month, found federation members were more optimistic about 2015 – as long as the economic recovery continues. Barring economic mishaps, some seven out of every 10 hotels said they plan to take on additional staff over the next 12 months.
Federation president Stephen McNally told delegates: “We’re seeing an upturn across most rural areas – which is very welcome. There is a long road ahead, however, particularly for regions such as the northwest, east and midlands, where occupancy levels continue to lag at only 54 per cent, compared to a national average of 64 per cent.”
Addressing the debt issue, Mr McNally said it remained “a serious challenge. This is weighing heavily on many hotels with some 34 per cent saying they remain concerned about the viability of their business – notwithstanding the upturn in Irish tourism.”
In relation to the outlook for the coming year, compared to 2014, some 73 percent of respondents said they were seeing an increase in business from the island of Ireland in the first couple of months of 2015.
This contrasts with 20 per cent who are experiencing static business levels and 7 per cent who are seeing a decrease in business from the domestic market.
Some 55 per cent of those who took the survey said they expected an increase in bednights from Britain, while 26 per cent reported an increase in bookings from Germany and just 18 per cent reporting an increase in bookings from France, so far this year.
In their own words: delegates speak up
Colin Neville, managing director, Riverside Park Hotel, Enniscorthy, Co Wexford
Colin Neville discounted prices hugely in 2008 as the recession hit, but quickly realised it was the wrong way to go. The theory that more guests would lead to more business in the bar and restaurant – which worked for a number of hoteliers – did not work out for the Riverside. “People were eating pizza in their rooms and not patronising the bar. In six months we would have had to close down.”
Neville did a deal with his staff which saw the wage bill drop by 10 per cent . It was, he says, vital to the business surviving. “I am only starting to plan repaying the staff some of the help they gave me, and I am at a significant disadvantage to surrounding venues.”
Philip Gavin, group managing director, Talbot Hotels
Talbot Hotels has operations in Wexford, Carlow, Waterford and Cork. Philip Gavin says the group rode out the recession by doing deals with suppliers and discounting on rates in a bid to get people in.
Rates dropped as low as €99 per person sharing for three nights and three dinners – an offer he says was put in place across all the hotels and which will be in effect until the end of this month.
His hotels in Wexford and Carlow are seeing growth in volume of 2.5 to 3 per cent –but not in rates per room, he says.
Elaina Fitzgerald-Kane, general manager , Woodlands House Hotel, Adare, Co Limerick
Elaina Fitzgerald-Kane is convinced the recovery in the hotel industry is a two-speed thing. Dublin, she says, is a destination in itself, but Limerick is “just another small city” for tour operators. This year the hotel rate in January was the same as in January 2014, but occupancy was up “marginally”.
“We are not seeing what Dublin saw,” she says, but adds that being 10 minutes outside Limerick is a help.
In relation to visitors from North America, she regrets there is not a more focused marketing drive to point out the recent exchange rate benefits to US travellers.
Patrick Curran, managing director, Knightsbrook Hotel, Trim, Co Meath
Knightsbrook Hotel is operating with the blessing of the National Asset Management Agency. It is owned by the Cusack family who operate four hotels between Trim and Navan. While there is obviously overhanging debt, “the hotel is a very profitable business”, says Curran.
The business model of the four-star hotel was strictly weddings, conferences and golf, but in recent years they “say no to no one”.
Concerts are now a big part of the business, with Daniel O’Donnell, Christy Moore, and old-time dancing all featuring at the weekend.
