/sites/default/files/upload/intreo_employer_roadshow_-_accelerating_business_success_2023.pdf89% OF IRISH HOTELS AND GUESTHOUSES SEEING UPTURN IN BUSINESS IN 2015
Quarterly Barometer from IHF Shows Hoteliers Benefitting from Strong Tourism Growth
· 77% of hotels and guesthouses report an increase in domestic business compared to last year
· 55% of hoteliers plan to take on additional staff over the coming 12 months
· 81% plan to increase investment in marketing over next 12 months
Wednesday 7th October 2015: Following a strong summer season, Irish hoteliers are more optimistic about their business outlook, with the vast majority of hotels and guesthouses (some 89%) reporting increased business levels so far this year, according to the latest Hotel Barometer from the Irish Hotels Federation (IHF).
With overseas visitors up over 12% year to date, the sector is benefitting from an upturn in tourism from all key markets including North America (visitors up 14%), Britain (up 11%) and the rest of Europe (up 13%). The domestic market is also showing signs of improved performance, which is enormously important for the sector given demand from the island of Ireland accounts for the majority of all hotel bednights (69%).
The Government’s 9% tourism VAT rate continues to have a positive impact on the sector, with 64% of hotels and guesthouses saying they have increased staffing levels during the last 12 months while 55% plan to take on further staff over the next year. Overall, some 95% of hoteliers say the 9% VAT measure will assist them in hiring additional new staff and/or retaining current levels over the coming 12 months. Since its introduction in 2011, the measure has supported the creation over 33,000 jobs by tourism and hospitality businesses – accounting for more than one of every three new jobs in Ireland over this period.
Stephen McNally, President of the IHF states that confidence among hoteliers continues to improve as the recovery in tourism strengthens. He says: “Irish tourism has performed strongly since the start of the year and throughout the summer season, with overseas visitors set to reach over 7.8 million by year end – a level not seen since 2007. The improved outlook for future trading conditions is providing a significant boost to tourism businesses throughout the country, including hotels and guesthouses.”
The improved outlook for the tourism and hospitality sector means that hotel and guesthouse owners are now in a stronger position to invest in their business, with results showing that 95% of hoteliers are planning to invest in refurbishment and product development over the next 12 months while 81% are planning to increase their investment in marketing.
Mr McNally notes that the upturn in tourism is being underpinned by a number of pro-tourism measures from the Government that continues to assist in attracting overseas visitors. In particular, the 9% VAT rate is helping to level the playing field for Ireland when competing with other international destinations. Combined with increased air access and the reduction of the air travel tax to zero, this measure is delivering impressive growth across the sector.
Mr McNally states that strong cut-through on the marketing front has reinvigorated Ireland’s tourism brand and image as a holiday destination. He says: “We continue to make significant strides in developing our tourism product and in giving holidaymakers new and compelling reasons to visit. Examples include the recently launched Ancient East trail and of course the Wild Atlantic Way, which is proving to be an enormous draw. Targeted investment in initiatives such as these is vital to the long-term success of our tourism product.”
Business tourism is another area of growth, supported by increased activity in the domestic economy and increased success in capturing a larger share of the global conference and incentive travel market. Of those hotels catering for corporate meetings and business events, 64% are seeing an increase in this area of their business compared with last year.
Notwithstanding the upturn in tourism nationally, Mr McNally notes that the benefits of the recovery are not being felt to the same extent throughout the country. He states that growth in occupancy levels continues to lag in areas outside the traditional tourism hotspots due to an over-reliance on the domestic market – which accounts for over 80% of revenues for many hotels and guesthouses outside the larger urban areas.
He cautions that many premises are operating from a low revenue base following the down turn which means the high cost of servicing overhanging debt is a serious challenge. This continues to weigh heavily on many hotels with some 34% saying they remain concerned about the viability of their business.
Other challenges highlighted by hoteliers include the high cost of doing business in Ireland, hotels and guesthouses citing excessive local authority rates as the single most pressing issue stifling cost competitiveness within the sector. This is followed by high labour costs, utility costs and subdued consumer confidence.
Breakdown across Markets (Compared to same period last year)
- Island of Ireland: Year to date, 77% of hotels and guesthouses are seeing an increase in business from the island of Ireland (16% see no change; 7% see a decrease)
- Britain: Visitor numbers from Britain are up 11% overall, with 78% of premises benefitting from an increase in business from Britain (19% see no change; 3% see a decrease)
- North America: Visitor numbers from North America are up 14% overall, with 63% of premises benefitting from an increase in business from this market (30% see no change; 7% see a decrease)
- Germany and France: Visitor numbers from the rest of Europe are up 13%. Some 50% of hotels and guesthouses benefitting from increased business from Germany (43% see no change, 7% see a decrease) and 37% of premises seeing an increase from France (56% see no change, 7% see a decrease)
Tourism’s Economic Contribution:
Tourism is one of Ireland’s largest indigenous industries and supports approximately 205,000 jobs – equivalent to 11% of total employment in the country. It accounts for almost 4% of gross national product (GNP). Last year, Ireland attracted 7.3 million overseas visitors and total tourism revenue was €6.45 billion, of which foreign exchange earnings in the economy amounted to €5 billion. Overseas visitors are expected to exceed 7.8 million this year. Based on projected rates of growth in overseas visitors, the IHF forecasts that Irish tourism as a whole is now on track to create a further 40,000 jobs by the end of the decade.
-ENDS-
NOTES TO EDITOR:
*Survey based on responses from owners and general managers of hotel and guesthouse businesses across the country and conducted at the end of September 2015.
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