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Hotels expect occupancy levels to fall by 40% this year - with room rates also taking a hit

Dublin hotels expect to be worse hit and nationally, many hoteliers say the hit to the sector will last for 18 months.

HOTELS ARE EXPECTING their occupancy rate will fall by around 40% this year as a consequence of the Covid-19 pandemic and subsequent three-month lockdown of the sector. 

A survey of 126 hotels, carried out by accountant and advisory firm Crowe, in partnership with the Irish Hotels Federation, has predicted an occupancy rate of 32% for the year – down from the 2019 high of 73%. 

Dublin hotels look set to be harder hit in terms of turnover compared to last year. 

The survey has forecasted a 62% drop in revenue for hotels in the capital compared to that of 2019, although regional hotels have also predicted a drop of 55% in revenue compared to 2019′s record levels. 

With a drop in demand for hotel rooms, the research indicated many hoteliers will need to drop their room rates per night in a bid to encourage more people to make bookings at their hotel over their competitors.

The average room rate of €111 in 2019 is set to fall to €94 for 2020. When broken down by regions, Dublin room rates are expected to fall by 28% – or €37 – while room rates outside of Dublin are expected to be down 13% – or €14 – on 2019 levels.

Over two-fifths – or 42% – of those surveyed predicted the economic impact of the Covid-19 pandemic will last more than 18 months and will continue to affect trade into 2022. 

There is a significant divide in outlook from those in regional hotels compared to those in Dublin hotels. Of those surveyed in the Dublin area, some 24% believe it will last more than 18 months, while that figure jumps to 46% of regional hoteliers who believe it will last more than 18 months. 

“As hotels prepare to open next week, our survey tells us that 90% of hotels have needed to approach their bank for changes to their loan repayment terms or additional working capital. 53% are operating with just three months working capital reserves highlighting the urgent need to resume trading,” Aiden Murphy of Crowe said. 

“Due to the collapse of international demand and an increase in operating costs, there is little expectation for hotels to generate a profit this summer. As a result, there is a situation whereby 50% of hotels in Ireland could run out of money in the months ahead.”

Like other businesses such as restaurants in the hospitality sector, Murphy said measures such as a reduced VAT rate on hotels, rates waivers, and grants would benefit hotels and ensure their viability into the future. 

The hotel sector, however, is not alone in facing into an uncertain future. New research from the Economic and Social Research Institute published today also highlights the negative impact of the pandemic on other sectors and suggests the “success of the economy now depends very heavily on the progress of domestic business”. 

It said: “While foreign firms account for over half of the Gross Value Added in the economy, they only account for a fifth of NNP and a quarter of the wage bill.” 

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