‘Unsustainable’ future for some small tourism operators

Small hotels and guest houses could be the next sector of the Irish economy forced to close its doors due to severe increases in insurance costs, the Irish Hotels Federation annual conference will be told on Monday.

The Construction Industry Federation has also warned 50,000 small firms including sub contractors and professional advisors such as architects and engineering consultancies could be at risk, due to difficulties in securing affordable insurance.

Research carried out by The Irish Hotels Federation among its 1,000 members in 2019 showed almost two thirds have been hit with a succession of insurance hikes costs in the previous 12 months.

About 90 percent of the hotels and guesthouses surveyed said they were concerned about the impact of insurance costs on their business. Federation president, Michael Lennon described the increases as “unsustainable”.

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He said “exorbitant insurance costs were curtailing the ability of hotels and guesthouses to re-invest in their businesses with knock-on effects for the tourism industry.”

Mr Lennon said decisive action by Government to tackle insurance costs across all business and society, but particularly in relation to the handling of personal injury cases in Ireland “and the excessive levels of awards being made which are four to five times higher than in the UK.”

The Hotels Federation conference which taken place in Galway on Monday and Tuesday will also hear growth in overseas visitor numbers stalled in 2019, compared to an increase of 6.5 percent in 2018. Room occupancy nationally grew marginally during the year, finishing at 73 percent compared to 72 percent in 2018. However, a wide gap between the occupancy rates in Dublin and the rest of the country persisted. Federation chief executive Tim Fenn, said Ireland continues to have “a two-tier tourism industry with the regions bearing the brunt of the slowdown”.

Dublin continues to perform well with an average occupancy of 82 percent (down 2 percent on 2018) and this is on the back of an additional 1300 rooms coming on stream during the year. However, the average occupancy for hotels in the midlands is 53 percent (- 3percent), while hotels along the Wild Atlantic Way finished the year with an average occupancy level of 65 percent. Mr Fenn said this was a worry, given the significant challenges already facing the sector and the vital role that tourism plays in the rural economy, where in many cases it is the only show in town,” he said.