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Gloom envelops hospitality and tourism sector at the end of 2021

Sectors plunged back into uncertainty by the restrictions caused by Omicron variant

The Irish tourism and hospitality sectors came full circle in 2021. A mid-winter and spring of despair was spawned by lockdown at the beginning of the year, followed by a renewed sense of verve throughout summer and late autumn.

But as winter returned towards the end of 2021, the rise of the vaccine-dodging Omicron virus variant has brought with it the familiar spectre of hard restrictions. Hospitality and tourism have been plunged back into uncertainty.

The hospitality sector had hoped that the vaccination of more than 93 per cent of adults, combined with the introduction in July of vaccine passes for indoor trading, would pave a sustainable path to near-normal trading. It worked until the end of November.

But the end of 2021 has seen the return of hard border restrictions to strangle the revival of travel; the closure of nightclubs, which managed just six weeks of trading after their initial virus hiatus of 585 days; and 8pm closing times on all indoor dining until, at least, the end of January 2022.


A nascent revival of trade from conferences and events has also been put on hold; just weeks ago, Irish State officials were chasing €1 billion worth of international business in that segment.

More pain in the form of a full closure of the hospitality is possible, if the Omicron wave cannot be rebuffed by the latest measures and a booster vaccination campaign that has taken on a striking sense of urgency.

Meanwhile, the wider tourism sector’s revival must withstand the buffeting made inevitable by the Government’s decision to require negative Covid tests for every passenger arriving into the State – a calculated disincentive to travel to slow virus importation.

It has, however, also wrecked the State’s recent attempts to restore this island’s aviation connectivity – in January, it was reported that Dublin Airport had lost 115 international routes due to Covid restrictions.

The entire hospitality industry survived the first five months of the year on the State’s CRSS (Covid restrictions support scheme, which paid out a maximum of €5,000 per week to each business affected by closure mandates. The scheme is being revived at the end of 2021.

Slow pace

After operators grimly accepting the need for closures to stem the virus while the vaccination campaign was ongoing, the détente between the industry and Government began to crack in the early summer at the slow pace of reopening.

Hotels were first to reopen on June 2nd, followed by outdoor dining the following week. But days before the planned reopening of indoor dining (including pubs) in the first week of July, the Government halted the process after an intervention from its medical advisers concerned about the rise of the Delta variant.

Indoor dining was permitted from July 19th, two weeks later than planned, but with customers forced to produce a European Union Covid certificate to show they are vaccinated.

In the accommodation sector, the Irish Hotels Federation estimated a €5.3 billion loss in revenue for hotels in Ireland across 2020 and 2021, a massive black hole in the sector. For the past 12 months, it has predicted total occupancy levels of 32 per cent, compared to 73 per cent in 2019.

But an even greater disparity is concealed within that decline: Dublin hotels, traditionally more profitable than their rural brethren, saw an unforeseen collapse in business and no recovery during the domestic tourism boom of summer. As Irish tourists thronged traditional hotspots through an often balmy summer, Dublin hotels were running on occupancy of about 14 per cent.

The Government promoted an “outdoors summer” for the hospitality sector with unprecedented State funding available, such as a €15 million fund to erect outdoor dining areas.

As the summer closed and occupancy rates plummeted with the reopening of schools, the sector faced into a new phase: the rebuilding of international business.

The introduction of the EU’s Covid cert in summer, albeit nearly a month late in Ireland, facilitated easy intra-European movement for the vaccinated, allowing Irish passengers travel abroad from late July.

Crucially, it also opened up a flow of foreign travellers to arrive here, just in time to pick up the slack from retreating staycationers – 810,000 people arrived in the State from overseas in September and 925,000 in October. Many of these were returning Irish travellers, but a significant minority were much-needed foreign visitors. That flow has been staunched by the latest restrictions.

A significant image problem re-emerged for investors in the hotels in Dublin in the autumn. Campaigns such as #nomorehotels have argued, with little hard evidence, that the scale of hotel development in the city is crowding out cultural and residential developments.

But when the Marron family proposed to develop a large hotel that would practically swallow the popular Cobblestone music pub in Stoneybatter, it set off street protests. The application was declined.

Initial outlay

Hotel sales were few and far between in 2021, with CBRE suggesting that about €330 million worth of Dublin properties changed hands in the first nine months. Among them, however, was the Morrison boutique hotel on Dublin's quays, which Russia's richest woman, Elena Baturina, sold for a reputed €65 million to the UK's Zetland Capital, trebling her initial outlay.

Meanwhile, an elder statesmen of the Irish hotel scene, Pat McCann, former Dalata chief executive and the company's founder, retired from the industry in late 2021, handing the reins of Ireland's largest hotel group to Cork's Dermot Crowley.

Despite the gloom that envelops the start of 2022 due to restrictions, some hoteliers remain phlegmatic. Well-known Wicklow businesswoman, Lorraine Sweeney, who with her family owns three hotels including the new Powerscourt Springs Wellness Hotel near Enniskerry, said 2021 was "not all bad".

“I actually don’t think it was as bad as was predicted at one stage for hospitality. We didn’t have a bad year,” she said.

“New markets were opened up for us. Irish people are now far more interested in going out walking and visiting local beauty spots such as Glendalough, and we have picked up business from them. Up until early December, we had a lot of bookings. There is some uncertainty again now, but it will go away.”

Sweeney says the crisis has also given her ways to control costs. Her three hotels – Summerhill House in Enniskerry, Wilton in Bray and the Powerscourt Springs, a joint enterprise with her daughter, Adrienne Sweeney – are now open to residents only for virus safety reasons, and not to outside guests for meals.

“That allows them to be more efficient on costs. We can staff it more efficiently because we don’t need to keep a chef in the kitchen all day for someone who might only order a €3 coffee. That helps with cashflow. There have been big challenges in 2021. But autumn had been very strong and we will get back there. I think we are well positioned in north Wicklow”

Still, there is clear worry in the restaurant sector. The Government has assembled a package of new supports but operators wonder how and when they will get to reopen, and how they will repay the bills they have accrued in the meantime, such as delayed tax payments.

"At the end of the first quarter of 2022 and into the second quarter – that's the danger period for liquidations," says Adrian Cummins, chief executive of the industry group, the Restaurants Association of Ireland.

“We need a long-term plan for the sector. And we also need to talk about the warehousing of debt, such as taxes. Does there need to be a writedown of this by the Government? We need to talk about it.”

The likely fortunes of the sector in 2022 are yet to become clear. It must wait.