Despite another year of growth in 2018, business sentiment among hotels has dropped significantly, according to the latest hotel barometer from the Irish Hotels Federation (IHF), which found that less than half of hotels (49%) now report a positive outlook for the next 12 months compared with the 82% who had a positive outlook this time last year. Key concerns for the sector include the escalating risk and uncertainty around Brexit, reduced visitors numbers from the UK and the increasing costs of doing business.
While 73% of hotels have seen some increase in overall business levels this year, growth from North America and Europe has masked the poor performance of the UK market, with visitors still down 5% on 2016. This is having a direct impact on hotels throughout the country, with 52% reporting a drop in business from Britain this year while 40% have seen a drop in business from Northern Ireland. The vast majority of hotels (91%) now express concern about the impact of Brexit on their business over the next 12 months.
"Increasingly Concerned"
IHF President Michael Lennon stated, "We are increasingly concerned about the direction that Brexit is taking and the impact that heightened uncertainty is having on our sector. A disruptive Brexit would have enormous economic repercussions which would be felt directly by tourism businesses given our heavy reliance on the UK market."
Lennon said that, even if a deal is eventually reached, any prolonged uncertainty in the coming months could result in a further erosion of consumer sentiment. He asserted, "The impact would be more pronounced in regions with greater exposure to the UK market, particularly those outside the main tourism hotspots. These regions have lagged behind in recent years and can least afford the economic hit."
"The Brexit Storm"
Lennon continued, "The consistent growth achieved over the last seven years in a dynamic and competitive international market cannot be taken for granted. We are particularly concerned with the government’s change in approach to tourism and the lack of recognition of the important role it plays as an engine of economic growth and regional balance. With the Brexit storm gathering, relentless increases in the cost of doing business, international trade wars, a slowdown in European growth and the increase in tourism VAT, there is little surprise in the drop in business sentiment. Many of our members are now re-examining their future investment strategies and taking a more cautious approach to planning for next year and beyond.
"The government must mitigate Brexit related risks to tourism and facilitate the continued growth of an industry that supports approximately 266,000 jobs, over 70% of which are outside Dublin. There are aspects of the economic environment and Brexit that are largely outside our control, but it is imperative that we mitigate the risks and potential damage where we do have some control over our destiny. We have to retain our competitiveness and this means taking decisive action on the issues that are affecting the cost of doing business."
Increasing Insurance Costs
According to Lennon, however, only one in five hoteliers believe that the Government is doing enough to tackle the high cost of doing business in Ireland. Some 76% of hotels have seen further increases in insurance costs this year. Of these, the average increase in premiums was 15%. This is in addition to substantial increases in recent years. Lennon stated that insurance costs have reached an unsustainable level, averaging €1,150 per room annually.
Tourism Satellite Account
Lennon called on the government to introduce a Tourism Satellite Account within the Central Statistics Office (CSO) to provide a full analysis of the economic activity in the Tourism industry and how much it contributes to each county throughout the country. "It will also provide independent verification to assist those who rely on the National Accounts, where tourism is not identified, to inform their deliberations on taxation and economic policy," he said.
On a brighter note, Christmas events and parties remain a significant part of the business for more than half of the hoteliers surveyed (52%). Of those, almost half (47%) reported an increase in business this festive season compared to last year with over a third (36%) of those surveyed taking on additional staff for the Christmas period.
© 2018 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.
