Numbers employed in hospitality set to rise

Confidence in the hotel sector is rising with four out of five hoteliers expecting business to improve over the next year.

As a result almost 70 per cent of businesses which took part in an Irish Hotels Federation survey said they are planning to take on extra staff over the next 12 months.

However, the survey of more than 800 members found that while 83 per cent of hotels and guesthouses said they were trading profitably, 54 per cent were still concerned about the viability of their business because of overhanging debt.

Delegates at the Irish Hotels Federation annual conference in Co Meath yesterday attributed the upsurge in business to the Gathering 2013 – and a special VAT rate of 9.5 per cent on food and accommodation.

However, while cities such as Dublin and Galway, and tourism hotspots such as Killarney and parts of the southeast and west are doing well, the survey warned business continues to lag in the midlands, the Shannon region and the northwest.

Indications
Early indications for 2014 show that city destinations such as Dublin (within the M50), Cork and Galway will benefit from a significant increase in event and business-related tourism. Elsewhere, two out of every three of those surveyed reported a low-level increase in business bookings.

The hoteliers also warned of a two-tier recovery with one in every three reporting a static business level, and 9 per cent who are seeing an actual decrease in business from the domestic market.

Half of the respondents said they were seeing an increase in bookings for bednights from Britain this year, while 43 per cent said they saw no change and 7 per cent predicted a decrease.

Growing area
Of hotels that cater for weddings, 55 per cent said they were seeing an increase in wedding-related business while more than half, 54 per cent, say civil partnerships are a growing area of their business.

Of those premises catering for corporate meetings and events, 48 per cent said they were seeing an increase.

Overall, hoteliers were positive about the US market with 36 per cent seeing an increase in business, compared to 12 per cent who predicted a decrease.

While the trading figures are optimistic, federation chief executive Tim Fenn said the hotels sector is still a number of years away from achieving profitability due to excessive levels of overhanging debt.

Debt
As of the end of 2012, debt in the sector was estimated at €6.7 billion – over a third of which was in the process of being restructured or refinanced.

“This continues to weigh heavily on the industry with some 54 per cent of hoteliers saying they are concerned about the viability of their business over the next 12 months,” he said.

Mr Fenn said as a result of an unsustainable amount of outstanding debt across the sector many hotels will not break even in 2014.

“This is despite having survived five years of economic downturn and implementing extensive cuts in operating expenses, which are now down 24 per cent across the sector on 2008 levels,” he said.