IRISH HOTEL INDUSTRY STRUGGLING TO SURVIVE ECONOMIC DOWNTURN

88 % of Hoteliers Concerned about Viability of their Businesses for 2010

Sunday 28 February 2010

A worrying 88% of hoteliers are concerned about the viability of their business for 2010 according to an industry survey undertaken by the Irish Hotels Federation (IHF) with over 90% of respondents having reduced staffing levels during the last 18 months. The research was undertaken in advance of the IHF’s 72nd Annual Conference in Galway and canvassed 160 hotel owners and general managers to get a greater understanding of how the economic downturn is affecting the day to day running of their businesses.

Results reveal that 69% of hoteliers expect further reductions in staffing levels during 2010, with:

- one in four (25%) of respondents foreseeing reductions of up to 5%
- 30% foreseeing reductions of between 5–10% and
- 14% foreseeing reductions of over 10%.

When asked to assess the future trading conditions for their business for 2010, 50% of respondents provided a negative assessment with 39% indicating a neutral assessment and 11% indicating a positive outlook.

Following findings from the Bacon Report published in November last, on the hotel sector, which reported that overcapacity of hotel rooms in the industry, 67% of hoteliers surveyed stated they did not expect to see an increase in bookings this year compared to the record low levels of 2009. The findings also revealed that 81% of respondents reported a drop in overall business levels to this time last year, with:

- 24% of respondents reporting business was actually down by more than 25%;
- 39% of respondents reporting a drop of 10–25%; and
- 18% reporting a drop of up to 10%

Commenting on the findings at the annual IHF Conference in Galway today, John Power, Chief Executive of the IHF, says that the results unfortunately correlate with what members have been telling the IHF on the ground over recent months.

“Our members are struggling to deal with seriously falling revenues while their cost bases, especially in terms of local authority rates, state sector charges and insurance, are either staying the same or increasing. We are calling on the Government to intervene particularly in respect of local authority charges and facilitate an orderly restructuring of the sector in a way that is sustainable and allows our members to continue to be major employers and contributors to the Irish economy,” he states.

When questioned about the most significant issues impacting on their businesses, hotels and guesthouse members indicated the local authority rates were the most pressing issue, followed by operating costs, minimum wage/ Sunday pay and the strength of the Euro. Results reveal that the economic downturn has led to 63% of respondents putting on hold future investment plans with 30% indicating scaled back investment plans.

FOR INFORMATION:
Siobhan Molloy / Eoin Quinn Dublin office: 01 6760168
Weber Shandwick Mobile: 086 817 5066 / 087 233 2191