Luxury hotel room-rates plunge

THE slowdown in tourist numbers is leading to cut-price rates for Irish holiday makers in some of the country’s swankiest hotels.

A tightening overseas visitor market means guests are enjoying discounted rates in most of the country’s hotels, according to a new study of the sector on both sides of the border.

With heavy borrowings on many new and refurbished hotels, the profitability for their owners is falling rapidly.

Profits for Dublin hotels for 2007 were down more than 8% on the previous year, mainly due to discounted room-rates

There is also greater competition among hotels with 8,000 of the country’s 59,000 new hotel rooms opened in the past year alone.

Although bad news for some in the industry, consumers will be glad to know that accountants Horwath Bastow Charleton predict further discounting is imminent.

“We are entering a period where room revenues may continue to fall due to lower demand or lower rates as discounting becomes the norm,” said Horwath Bastow Charleton partner Aiden Murphy.

“Any reduction in visitor numbers from the United States or the UK will lead to higher-end hotels seeking a greater share of the domestic market with special promotions,” he said.

The firm’s annual Ireland and Northern Ireland hotel industry survey also highlights the importance of reducing energy and waste costs.

Almost one-in-four hotels surveyed has an environmental policy and Mr Murphy said eco-friendly businesses can reduce running costs substantially through water re-use, energy saving and waste management.

Hotels are also seeking a freeze on staff wages until the end of the 2009 to allow the sector get through the present economic challenges.

“We have the second highest minimum wage in Europe and 42% of all turnover for hotels in the Republic goes straight back to wage costs. We have fantastic staff in the industry and we want to keep them but it’s a case of offering wages we can afford or having no jobs at all,” said Irish Hotels Federation chief executive John Power.

“There is great value out there at the moment, especially for the three-out-of-four guests in hotels outside Dublin and two-thirds nationally who are from Ireland,” he said.

The number of hotel nights booked by US visitors was down by 10% on last year for the first four months, influenced by the weak dollar, air travel costs and low consumer confidence.

However, the Central Statistics Office yesterday reported 805,800 overseas visitors to Ireland in May, up 14% on the same month last year.

The biggest rise was from European visitors, although the 105,600 North American tourists was a 5% rise.

The economic downturn here has not stunted growth in overseas holidays, with a 2% rise in May compared to last year reported by the CSO.

More than 677,000 trips were made, bringing total overseas trips for the first five months to 3.1 million, up 6% on the corresponding period in 2007. Half of the journeys were to Britain, 960,000 were to other European destinations and 335,600 to the US and Canada.