Irish Hotel Profits Plunge

Hoteliers are suffering the effects of recession, with the impact being more severe in the Irish Republic than Northern Ireland.

However, after the boom times of 2007 - in Belfast in particular - business has seen a substantial fall, especially in lucrative, high-spending conference business.

Hotel business in The Republic could decline by up to 70% this year as the sector remains under severe pressure.

That is according to a survey just released by specialist accountancy firm Horwath Bastow Charleton (HBC).

It says profitability for Irish hotels dropped by a quarter last year and occupancy rates are at a 15-year low.

HBC Partner Aiden Murphy said the concern was that "reduced sales and profit levels are reflective of the slowdown for the sector that accelerated in pace as 2008 ended".

"As the Irish economy is in recession, unemployment levels are increasing and as curtailment of government agency expenditure continues, this will result in the hotel sector remaining under pressure for quite some time," he said, yesterday.

The weakness of Sterling against the Euro had also contributed to a sharp fall-off in visitors from the UK, which had accounted for almost half of all tourist visits to Ireland. Last year British tourist numbers in the South were down by 164,000.

Also, while there was a marginal increase in the number of domestic holidays, the average duration of hotel stay fell, leading to an overall decline of 9.5% in expenditure by domestic holiday makers.

Indeed, he said that hotels based in Dublin and in the luxury end of the market had been hit particularly hard, the survey noted.

Mr Murphy expects many hotels to face severe cash-flow problems in the near-term as the sector owes a combined €7 billion in development loans.

As a result he expects around 2,800 job losses in the sector due to seasonal closures.

Things are not as bad in Northern Ireland, which saw a rapidly expanding hospitality industry in 2007, and hasn't been as hard hit.

However, last year, it was a far cry from the situation a year past, which has since gone from boom time, to more moderate growth and a drop in room rates being achieved.

A year ago, Michael Williamson, Director of Hotel, Tourism and Leisure Consulting at ASM Horwath, said that demand for hotel bedrooms across NI outstripped supply in some areas like Belfast.

The survey carried out by the consultants found that 2008's increase in bed occupancy rates had been fuelled by overseas holidaymakers, short-break and business tourists.

The increase last year meant that hotels in Northern Ireland outperformed all regions in the Republic in financial terms.

Today, Mr Williamson told BBC Radio Ulster that hotels weren't achieving the same level of room rates as before, especially mid-week.

He also said that normally high-spending conference trade was well down on the same period last year.

See: NI Hotels Booming - In A Different Way

(BMcC/JM)