• Cyril McAree

New Industry Research Reveals Dramatic Fall in Hotel Room Occupancy

The latest industry survey* conducted by the Irish Hotels Federation (IHF) reveals the enormous challenges facing hotels and guesthouses with demand plummeting year on year as a results of the current crisis. Nationally, average room occupancy stood at 42% for July, compared with occupancy levels of over 90% for July last year. This is the largest year-on-year drop ever recorded by the Irish hotels sector for the peak summer season.

Bookings for August have also plummeted to levels broadly in line with those in July. Bookings for September show a further dramatic drop in occupancy levels to 24% nationally. This points to a very worrying outlook for the rest of the year. Meanwhile the CSO announced earlier this week that the number of overseas visitors to Ireland has by dropped by 97% year on year.

Breakdown of occupancy results for July 2020:

National room occupancy: 42%

Dublin City and County: 17%

Other Cities: 41%

Rest of Country (excluding cities): 56%

Regional breakdown

Border region: 63%

Mid-West: 37%

Midlands / Mid East: 48%

South East: 63%

South West: 53%

West: 57%

**see note below for description of regions

The survey was carried out at the start of this week (27th July) and results are based on the response from 305 properties. These account for a combined stock of 29,500 guestrooms spread throughout the entire country, making it the largest and most representative survey of its kind to date.

Commenting on the results, IHF President Elaina Fitzgerald Kane said that the stark figures highlight the requirement for additional sectoral specific measures for tourism. She said: “Even in a best case scenario we are effectively looking at occupancy levels of less than 30% for the year as a whole. This is nothing short of disastrous for our sector with serious implications for the tourism industry and wider economy.”

“Unfortunately the stimulus package recently announced by the Government just doesn’t go far enough given the scale of the crisis we are facing. The measures fail to deliver the required supports around competitiveness and liquidity, which is very disappointing and could have long-term consequences for tourism and the almost 270,000 livelihoods it supports.”

While welcoming the expansion of the Wage Support Scheme as a step in the right direction, Ms Fitzgerald Kane said it falls short in providing the level of assistance required to support employee retention, particularly for tourism businesses heavily reliant on seasonal revenues.

Commenting on Ireland’s VAT rate, she said: “The Government’s failure to reduce tourism VAT was a missed opportunity. Ireland is already a very high-cost economy by international standards, which adds to the challenges of an indigenous export industry. This is made worse by a tourism VAT that is higher than 30 European countries with which we compete. The UK, including Northern Ireland, slashed their VAT rate from 20% to 5%. Given how closely our economies are intertwined a similar cut here was vital.”

Ms Fitzgerald Kane said the industry had strong reservations about the effectiveness of the ‘Stay and Spend’ tax credit scheme. “While new and well-intentioned, the scheme is not inclusive of all guests and tourism businesses and is very convoluted and ignores the harsh reality of the challenges facing tourism. Tourism businesses, including hotels, are looking at a fall of 70% in revenues for the year as a whole due to the collapse in the overseas visitors. Irish people have shown great support for tourism and hospitality businesses over the summer months, but whatever benefits the ’Stay and Spend’ scheme brings to consumers by way of tax rebate, we fear that its impact as an activation measure seeking to create additional turnover will be limited.”

Tourism businesses also maintain that the rates waiver, which is due to lapse in September, does not go far enough. “The waiver must be extended further to coincide with business interruption for a minimum of 12 months. After that, payment of local authority rates should be based on reduced levels of activity due to the crisis. Businesses cannot be expected to pay historically set rates based on turnover figures that are no longer relevant.”

“Time and again, tourism has proven itself as a hugely successful engine for economic growth, particularly in regional Ireland. In the aftermath of the last recession, tourism created 90,000 new jobs. Last year alone it generated over €9 billion in revenue. We are committed to working closely with the Government and with Minister Catherine Martin to safeguard tourism so that it can play a key role again and be a significant lever in the country’s economic recovery. However, this requires specific sectoral supports now in relation to liquidity and competitiveness.”

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