Hotel industry is on backfoot due to fall in overseas tourists, says industry body

The number of overseas visitors to Ireland dropped more than 25% last year compared to 2019.

Hotel room occupancy last year inched closer to returning to pre-pandemic levels, but a fall in oversea tourists to Ireland held the industry back, said the Irish Hotel Federation.

The hotel business representative body expressed concerns that Ireland will continue to experience a shortfall of visitors from abroad due to inflation and the war in Ukraine.

“Of particular concern is the bleak economic outlook for the UK with inflation having reached a four-decade high and the country facing the risk of a prolonged recession,” said the IHF.

“This is worrying for hotels and other tourism businesses given the UK has traditionally been our largest source market for overseas visitors,” it continued.

The number of overseas visitors to Ireland dropped more than 25% last year compared to 2019.

The average national room occupancy stood at 70% in 2022, compared with 78% achieved in 2019, according to the Irish Hotels Federation.

The IHF said a full recovery to pre-Covid visitor numbers is not expected until 2026, with tourism businesses facing the risk of a softening in demand as a result of a slowdown in the global economy.

The organisation said government needs to implement measures to ensure Ireland’s renowned hospitality industry can remain competitive as it recovers from pandemic restrictions while battling new economic headwinds.

The IHF suggested government retain the 9% tourism Vat rate for hospitality, which was introduced during the pandemic but is set to return to 13.5% in March.

“Consumers in Ireland and across our overseas markets are already being squeezed by exceptionally high levels of inflation and other pressures on their finances, which means there is a very real risk that many will pull back from spending on discretionary items such as holidays and breaks away,” said Denyse Campbell, president of the IHF.

Hotels are also struggling with high costs such including surging energy bills, with some hotel operators upwards of 300% in their energy bills compared with 2019 levels.

The IHF estimated that energy costs for the average hotel are now running at 10% to 12% of total revenue compared with an average of 4% in 2019.

“Now is not the time to jeopardise the recovery by increasing tourism Vat. The focus of the Government should instead be on safeguarding tourism livelihoods and securing the long-term sustainable recovery of our industry,” said Ms Campbell.

Meanwhile, the hotel real estate market is expected to continue its strong recovery this year, according to commercial property specialists CBRE.

Intense occupier demand was driven by both the return of tourism and business travel following the pandemic and increased demand for emergency accommodation, CBRE outlined in its latest Outlook Report.

However, the experts echoed Ms Campbell’s concerns about ongoing headwinds as the CBRE said rising input costs, particularly in the form of energy prices and wage inflation are continue to put pressure on the hotel sector.