Hotels plan to cut more staff amid credit difficulties

HOTELS around the country are planning to cut more staff this year, with many saying they can’t get bank credit and are finding it hard to survive.

This news comes as figures show NAMA has about 139 hotels under its control, including 82 in Ireland.

Hundreds of hoteliers are gathering in Cavan today for the 73rd Irish Hotels Federation (IHF) conference, at the Slieve Russell Hotel.

More than four out of five hoteliers surveyed said they are concerned about the viability of their business in 2011. The IHF survey also found that local authority rates, wage costs and utility costs are the most pressing issues impacting on their businesses.

However hoteliers are more positive than this time last year with 30% indicating a positive outlook compared with 11% in March last year.

Worringly, almost two out of three hoteliers are planning to cut more staff this year, with half expecting reductions of up to 5%.

IHF chief executive Tim Fenn said: “Tourism and the hospitality industry have a major contribution to make to our national recovery provided we have a business friendly competitive economic environment.

“Our members are struggling under exceptionally high local authority rates and charges, wage costs that are the second highest in Europe and unsustainable energy costs. We urge the incoming Government to make cost competitiveness a priority so that tourism businesses can return to viability and economic success.”

Half of the hoteliers surveyed said they had experienced difficulties accessing standard credit facilities from their banks during the last 12 months, while a quarter said their banks had reduced their normal overdraft facility.

Mr Fenn said Irish tourism remains in a state of “severe crisis”. He said total tourism revenues have fallen by 13% to €4.6 billion in 2010, on top of a 17% collapse in 2009.

“Hotels and guesthouses are struggling to deal with decimated revenues caused by plummeting visitor numbers, low room rates and excess room capacity.

“Lack of access to credit and finance remains an issue with over 60 hotels now having gone into receivership or under bank control. The worsened business environment has made it very difficult for hotels and guesthouses to obtain required levels of working capital to cope with the recession,” Mr Fenn added.

IHF president Paul Gallagher said the new Government will need to “hit the ground running” with a pro-business can-do approach to Irish tourism.

Mr Gallagher said action is needed to address the lack of credit facilities for viable tourism businesses and the “excessive energy costs that are threatening the sector’s viability”.

He called on Government to consider the establishment of a reconstruction and development bank or special banking division within one of the banks to address the liquidity issues being faced by the sector.