Hotels Facing €60 Million in Reopening Costs

Tuesday, June 01, 2021.
Indoor Dining Equality

Hotels Facing €60 Million in Reopening Costs

  • IHF industry survey suggests a cost of €964 per room, equivalent to €70,000+ for an average 75-bedroomed hotel
  • Hoteliers call for increase in reopening grants to reflect true costs
  • Reopening costs represent a huge cashflow challenge for many hotels and underpin the requirement for continued government supports

Ireland’s hotel and guesthouse sector is facing reopening costs of almost €60 million as businesses across the country prepare to reopen to guests from Wednesday, 2nd June. A recent Irish Hotels Federation (IHF) industry survey suggests that it will cost businesses approximately €964 per bedroom to reopen – equivalent to over €72,000 for an average 75-bedroom hotel. The IHF is calling for an increase in reopening grants to reflect actual costs. Tim Fenn, IHF Chief Executive states: “Quite simply the cost of reopening is a huge cashflow challenge for most hotels and guesthouses who have already experienced nothing short of a catastrophic financial shock from this pandemic with months of prolonged closure and partial reopening.”

“Our members are delighted to be reopening and are really looking forward to welcoming back team members and guests. However, the cost of reopening a hotel after months of prolonged closure is significant given the volume of operations and facilities involved. We are asking that reopening grants are put in place that reflect the true scale of the reopening costs including considerable training and upskilling to enable the continued survival of businesses whilst laying the building blocks for recovery and the restoration of employment,” said Mr Fenn.

The IHF is seeking a doubling of last year’s reopening grants, which would involve a reactivation and an increase in the Restart Grant Plus from the previous level of up to €32,500. Currently hotels can also qualify for an extra “restart week” under CRSS to a maximum of €5,000. 

According to the IHF survey members estimate that they are spending almost €25 million on payroll, training and recruitment costs during the four weeks ahead of re-opening on Wednesday, net of EWSS supports. Meanwhile, cleaning and maintenance costs associated with the prolonged closure as well as costs related to fixtures, fittings and other safety measures linked to COVID-19 restrictions are estimated to cost a further €15 million.

“Government supports to date have been very welcome. Nonetheless hotels are facing a slow recovery, and this must be recognised. Typically, the summer season is a lifebuoy for many hotels, carrying them through the remainder of the year. However, members are currently reporting booking levels¹ of just 31% for July. While we expect bookings to increase further, after months of prolonged closure they are not expected to reach sustainable levels anytime soon.”

“Businesses want to open in a sustainable manner, and cashflow is critical to ensuring this. Many hotels depleted their own cash reserves in the past 15 months in a bid to survive until restrictions eased and businesses could reopen, making continued supports a necessity until tourism recovers in earnest and at best, 2022 is the first opportunity to do this thus necessitating the requirement for supports until March 2022 as a minimum and beyond that for VAT,” he said.

The reopening costs exclude expenditure by hotels on renovations and enhancements to their facilities and operations. “Hotels have been busy in the past few months in anticipation of reopening, thinking creatively and innovatively about how they can enhance guests’ experiences. We are seeing great examples of creativity, innovativeness and flexibility in terms of how hotels and guesthouses community are using their property’s spaces as well as rethinking services, restaurant and leisure facilities so that guests can relax and enjoy their break, secure in the knowledge that they are staying in a safe environment,” he said.

“The hotel sector was brought to its knees by the COVID-19 restrictions. Tourism will recover but, in the meantime, hotels which are an integral part of its infrastructure require continued government supports to enable survival and take those first and all-important steps into recovery,” he added.

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