The 81st annual Irish Hotels Federation (IHF) kicked off on Monday 4th March, with Chief Executive Tim Fenn warning that regional hotels face serious challenges over the coming period.
Major concerns for the sector include the continued risk of a disruptive Brexit and reduced competitiveness due to the hike in tourism VAT, increases in the cost of doing business especially from rising insurance premiums, and growing economic uncertainty internationally.
In 2018, the average national room occupancy rate for hotels dropped to 72%, compared to 74% the previous year. While Dublin performed strongly with an average occupancy of 84% (up 1%), the rest of the country lags with an average occupancy rate of 66% (down 2%). This is according to the latest IHF industry survey, the details of which were released in advance the conference.
Business sentiment amongst hoteliers is also at a low, a stark change compared to 2018, according to the survey results. Only 40% of hoteliers now have a positive outlook for their business over the next 12 months. This compares with 79% who reported a positive outlook at the start of 2018.
With the vast majority of hoteliers (91%) concerned about the impact Brexit will have on their business over the next 12 months, Michael Lennon, President of the Irish Hotels Federation, said growth in recent years cannot be taken for granted. “With the prospect of a disruptive Brexit looming, the sharp fall in business sentiment amongst hoteliers is not surprising. Our fear is that regional tourism businesses risk being hardest hit, especially those operating in areas that are heavily reliant on seasonal and UK markets. Many of these regions have only begun to feel the benefits of the economic recovery in recent years.”
Tellingly, 65% of hoteliers surveyed have reported a decrease in visitor numbers from Britain.
Speaking ahead of the conference in Killarney, Co Kerry, CEO Tim Fenn called for a greater Government focus on the development of rural Ireland.
“We continue to have a two-tiered tourism industry, which Government policy is failing to address. While there has been good growth overall in recent years, not every tourism business or part of the country has enjoyed the same level of success,” he said.
Mr. Fenn acknowledged progress made in recent years in new product development and market diversification, including campaigns targeting higher spending visitors. “Initiatives such as The Wild Atlantic Way, Ireland’s Ancient East and Ireland’s Hidden Heartlands offer significant potential for regional tourism growth and these initiatives must be more adequately resourced.”
Insurance premiums have soared in the hotels sector over the last 12 months, with an average increase of 15%, according to the IHF industry survey. This is in addition to substantial increases in recent years. Insurance costs have now risen to an average of €1,150 per guest bedroom annually.
With 75% of hotels saying that excessive insurance costs are having a significant negative impact on their business, Mr. Fenn said: “The time for foot dragging is long past. The Government must now deliver concrete results in relation to insurance reform. Progress has been extremely slow to date and this inaction is having serious consequences for the viability of hotels and other tourism businesses. The exorbitant levels of awards and lack of consistency is also making Ireland less attractive for insurers and we are seeing an increasing number that are no longer willing to provide cover to hospitality businesses. This in turn is reducing competition in the insurance market and driving up costs.”