Challenging outlook for hotel industry in 2020, says IHF

Challenging outlook for hotel industry in 2020, says IHF

As the 2019 tourism season comes to a close, hotels and guesthouses in Laois and around the country are reporting a year of mixed performances, according to the results of the latest industry barometer from the Irish Hotels Federation (IHF).

Business sentiment amongst hotel and guesthouse owners across the country is continuing to fall with just over a third (35%) reporting a positive outlook for 2020, as the uncertainty over Brexit and the high cost of doing business take their toll and overseas visitor growth continues to slow down.

The latest CSO figures, released today, show only a 1.5% increase in overseas visitors to the end of November, compared to a 5.5% increase for the eleven month to end of November 2018.

While almost half of hoteliers (48%) reported an increase in business for the year, just slightly fewer (44%) reported a fall.

Business levels from the domestic and US markets remain strong, with 48% of hoteliers reporting increases in the domestic market and 44% of hoteliers reporting increases in the US market.

However, the UK market continues to decline. Seven in ten hoteliers saw a drop in business from Great Britain this year, while over half reported a fall in business levels from Northern Ireland.

The fallout from Brexit next year and the high cost of doing business remain key concerns for the sector with many highlighting the significant negative impact that escalating insurance costs and local authority rates are having on competiveness.

Commenting on the results, Dara Cruise, Chair of the Midlands branch of the IHF, said the Government must put more supports in place to assist tourism businesses.

“We continue to face high costs of doing business, which have been compounded by the Government’s decision to increase the tourism VAT in last year’s Budget.

“The threat to businesses posed by escalating insurances costs is well documented. Our members are also reporting significant pressure from rising local authority rates.

“The Government has to do more to tackle the costs that are stifling businesses.

“Tourism is a highly competitive business and these costs are making us less attractive as a destination.

“Decisive action is needed now to mitigate the impact this will have on tourism, especially the regions.

“Irish tourism has been one of the great success stories of the economy in recent years, supporting 270,000 jobs and promoting balanced regional growth across the country.

“With 70% of these jobs outside Dublin, it is a major contributor to rural economies, and regional tourism is most likely to be hardest hit by Brexit and falls in visitor numbers.

“Here in Laois it supports 2,300 jobs and contributes some €31m to the local economy annually,” he said.

Hoteliers also reported that recruitment in the sector remains challenging.

With one in five hotels planning to increase staffing levels over the next 12 months, Mr Cruise welcomed the changes to the employment permits system for workers outside the EU announced this week by Minister Heather Humphreys, T.D., Minister for Business, Enterprise and Innovation.

On a seasonal note, Christmas parties continue to be an important source of business for 60% of hotels nationally.

Of those, over a third reported an increase in business this festive season compared to 2018 with a similar number (32%) taking on additional staff for the Christmas period.

Breakdown of hotel and guesthouse business levels across key markets compared to this time last year:

- Great Britain: 10% are reporting an increase; 71% are seeing a decrease and 19% see no change.

- Northern Ireland: 11% are reporting an increase; 55% are seeing a decrease and 34% see no change.

- United States: 44% are reporting an increase; 29% are seeing a decrease and 27% see no change.

- Irish domestic market: 48% are reporting an increase; 26% are seeing a decrease and 26% see no change.

- Germany: 18% are reporting an increase; 35% are seeing a decrease and 47% see no change.

- France: 13% are reporting an increase; 29% are seeing a decrease and 58% see no change.