Hotels reopening next week 'in race against time' to make money this summer

Hotel room rates and occupancy rates fall in Dublin and Cork this year and in 2021, as hoteliers face “a race against time” to make money, the influential Crowe sentiment survey has warned.

The survey comes as hotels and guest houses start to reopen on Monday, seeking to salvage some sort of business from domestic tourism from the Covid-19 wreckage with the absence of high-spending international tourists.

However, the Crowe survey warns many accommodation businesses, among the worst-hit sectors from the economic fallout, won’t trade profitability through the summer and half of all hotels in the Republic “could run out of money in the months ahead”.

Industry group the Irish Hotels Federation, whose members participated in the Crowe survey, called on the Government to extend the wage-subsidy scheme to cover hotel temporary workers “until demand levels allow for revenue and profit recovery”.

Crowe forecasts that occupancy rates in Dublin and Cork City of 85% and 80% will slide to 32% this year and the recovery will be gradual, with occupancy rising to 54% in 2021. 

“This for Cork equates to hotels selling each room on 120 nights this year compared to 290 nights last year and so represents a decimation of their turnover,” said Crowe partner Aiden Murphy.

“The higher the average room rate for a market, the likely greater fall in average room rates and so the added competition is a double whammy as both business levels are down and the price achievable for each room sold is driven down due to greater competition in the city," Mr Murphy said.

“For Cork City the average room rate was €103 for 2019, which if it falls by 13% in 2020 will reduce to €89,” he said.

Almost all hotel owners have sought to strike new terms for their loans during the crisis so far. 

"There is an urgency for hotels to reopen and be in a position to trade at a profit," according to the survey.

"The larger concern here is whether at low levels of trade, hotels over the winter period October 2020 through March 2021 can make a profit and if cash flow is negative will the hotel be in a position to continue to trade," it found.

Hoteliers outside Dublin were the most pessimistic, saying that the recovery would take more than 18 months.