Hotels and guesthouses 'could face €60m reopening bill'

The Irish Hotels Federation has warned that reported booking levels are 31% of normal July levels, and that tourism is only likely to recover in earnest from next year. 

The hotel and guesthouse industry is facing a €60m reopening bill, as businesses prepare to resume trading for the first time this year, a representative group has said.

The sector closed in response to the Covid-19 pandemic at Christmas, and will reopen its doors from Wednesday.

However, a recent survey by the Irish Hotels Federation (IHF) suggested it will cost businesses approximately €964 per bedroom to reopen — equivalent to over €72,000 for an average 75-bedroom hotel.

According to the survey, businesses estimate they are spending almost €25m on payroll, training, and recruitment costs during the four weeks ahead of reopening.

'A huge cashflow challenge'

Meanwhile, cleaning and maintenance costs associated with the prolonged closure — as well as costs related to fixtures, fittings, and safety measures linked to Covid-19 restrictions — are estimated to cost a further €15m.

Tim Fenn, chief executive of the IHF, has called for an increase in reopening grants to reflect these costs.

“Quite simply the cost of reopening is a huge cashflow challenge for most hotels and guesthouses who have already experienced nothing short of a catastrophic financial shock from this pandemic with months of prolonged closure and partial reopening,” he said.

“Our members are delighted to be reopening and are really looking forward to welcoming back team members and guests. 

However, the cost of reopening a hotel after months of prolonged closure is significant given the volume of operations and facilities involved.  

The IHF said they are calling for grants which reflect the “true scale” of reopening, including the cost of training and upskilling staff “to enable the continued survival of businesses”.

Mr Fenn said the sector welcomes the opportunity to reopen, but warned that reported booking levels are 31% of normal July levels.

“While we expect bookings to increase further, after months of prolonged closure they are not expected to reach sustainable levels anytime soon,” he said: 

Businesses want to open in a sustainable manner, and cashflow is critical to ensuring this. 

“Many hotels depleted their own cash reserves in the past 15 months in a bid to survive until restrictions eased and businesses could reopen, making continued supports a necessity until tourism recovers in earnest and, at best, 2022 is the first opportunity to do this, thus necessitating the requirement for supports until March 2022 as a minimum, and beyond that for VAT.”