• Cyril McAree

Brexit Rains On Hoteliers’ Summer Season

The majority of Irish hotels and guesthouses are reporting a continued fall in business levels from the UK this summer according to the results of the latest quarterly barometer¹ from the Irish Hotels Federation (IHF). While business levels overall were up across the summer months, with seven in ten hoteliers (71%) seeing an increase compared to this time last year, most (69%) reported a fall in business from Great Britain with over half (54%) saying Northern Ireland business levels had dropped too. The results of the industry barometer echo the latest CSO figures² which show that Brexit is already having a significant impact on Irish tourism. Visitor numbers from Britain have decreased by 7.1% for the first eight months, compared to the same period last year. The UK, Ireland’s largest source of inbound tourists, accounts for over 40% of all visitors, providing the widest regional and seasonal spread.

For now, strong performances by the US and domestic markets are helping to offset the significant fall-off in business from the UK. The majority (69%) of hoteliers reported an increase in US business this summer, while almost six in ten (57%) said domestic levels are up. Business levels from these markets look set to remain buoyant for the remainder of the year with many hoteliers (52%) saying advance bookings from the domestic market are up with promising increases from the US (43%) as well as Germany (26%) and France (19%). However, over half (56%) say future bookings from Northern Ireland are down, while nearly two thirds (65%) see a drop in advance bookings from Great Britain.

The general outlook for industry over the next 12 months remains positive, according to the survey, although hoteliers’ optimism has been dented. Most hoteliers say the weakened value of sterling is already affecting their business and Joe Dolan, President of the IHF says the uncertainty around Brexit poses a real threat to the tourism industry, with regional tourism likely to be hit hardest. “Many of the consequences of Brexit are largely outside our control, so it is imperative that we mitigate the risks and potential damage where we can. We are calling on the Government to take the necessary steps to protect Irish tourism and to avoid any changes in policy that would weaken our sector’s ability to deal with the risks it faces due to Brexit. The 9% VAT rate for tourism, in particular, continues to deliver enormous benefits to the exchequer by making us more attractive as a tourism destination.

Mr Dolan added: “The overall rate of tourism growth is also continuing to slowdown, which is worrying. The cuts to marketing funding and development in the recessionary years should also be reversed urgently so we can entice more visitors from new and existing markets and particularly to the regions. Time and time again, Irish tourism has shown itself to be an excellent investment for every euro spent in destination marketing,” he added. Many (64%) hoteliers plan to increase their own marketing spend as they increase their efforts to grow their business both at home and abroad.

The tourism industry as a whole supports approximately 230,000 jobs - equivalent to 11% of total employment in Ireland, making it the country’s largest indigenous industry with approximately 60,000 of these jobs in the hotels sector alone. More than half (55%) of ten hoteliers reported increases in their staffing levels year on year with over a third (36%) planning to expand their teams even further in the coming year. In addition, hospitality and tourism businesses around the country are looking to recruit over 6,000 entry-level employees each year across all areas of their operations.

According to the latest IHF barometer, almost all (92%) hoteliers are also planning to undertake refurbishment or capital expenditure projects over the next year. The vast majority (96%) intend to refurbish or redecorate their hotels with almost one in five intending to expand the property.

Rising insurance costs, however, continue to be a major concern for hoteliers. Over half (52%) said they were having a very significant negative impact on their business. Insurance costs for the sector have now reached €42 million this year, equivalent to approximately €730 per bedroom per year. Local authority rates (34%) and wages costs (33%) were also cited as having a serious detrimental effect on business.

Breakdown across markets (compared to the same period last year):

Domestic market: 57% of hotels and guesthouses are reporting an increase in visitor numbers from across Ireland with 38% seeing no change and 5% noting a decrease.

Britain: Only 6% are noting an increase in visitor numbers from Britain, with 25% seeing no change, and 69% seeing a decrease.

United States: 69% of premises are noting an increase, while 28% have seen no change and 3% noting a decrease.

Germany: 48% of hotels and guesthouses are reporting an increase, with 47% saying they have seen no change and 5% seeing a decrease.

France: 32% of hotels and guesthouses are noting an increase, with 60% saying they have seen no change and 8% seeing a decrease.

#Brexit #IHF

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