Hotels ‘need €2.5bn debt writedown to survive’

Irish hotels are nearly €7bn in debt and need to write off €2.5bn of this burden if the sector is to stay viable, warns a report by a former government adviser.

“There is an estimated €6.7bn of debt in the hotel sector. Assuming reasonable growth in profits over the next five years, a reduction in debt of 38% — €2.5bn — will be required to lower the debt overhang to sustainable levels,” says Alan Ahearne, in a report commissioned by the Irish Hotels Federation.

Over the past five years, the cost of a hotel room has dropped from an average €97 per room to €72 in 2011. The occupancy rate has fallen from 70% in 2007 to 61.4% in 2011.