Despite another year of growth in 2018, business sentiment among hotels in Galway and across the country has dropped significantly according to the latest hotel barometer from the Irish Hotels Federation (IHF ).
Less than half of hotels (49 per cent ) nationally now report a positive outlook for the next 12 months compared with the 82 per cent who had a positive outlook this time last year.
Key concerns for the sector include the escalating risk and uncertainty around Brexit, reduced visitors numbers from Britain, and the increasing costs of doing business.
While 73 per cent of hotels have seen some increase in overall business levels this year, growth from North America and Europe has masked the poor performance of the British market with visitors still down five per cent on 2016 due to persistently weak performance following the referendum. This is having a direct impact on hotels throughout the country with 52 per cent reporting a drop in business from Great Britain this year while 40 per cent have seen a drop in business from Northern Ireland.
The vast majority of hotels (91 per cent ) now express concern about the impact of Brexit on their business over the next 12 months.
Rory Fitzpatrick, chair of the IHF’s Galway branch says hotels are increasingly concerned about the direction that Brexit is taking and the impact that heightened uncertainty is having on its sector.
“A disruptive Brexit would have enormous economic repercussions which would be felt directly by tourism businesses here in Galway and across the country given our heavy reliance on the UK market. Tourism currently supports 20,900 jobs in Galway and contributes some €731m to the local economy annually.”
Mr Fitzpatrick says even if a deal is eventually reached, any prolonged uncertainty in the coming months could result in a further erosion of consumer sentiment.
“The consistent growth achieved over the last seven years in a dynamic and competitive international market cannot be taken for granted. We are particularly concerned with the Government’s change in approach to tourism and the lack of recognition of the important role it plays as an engine of economic growth and regional balance.
“With the Brexit storm gathering, relentless increases in the cost of doing business, international trade wars, a slowdown in European growth, and the increase in tourism VAT, there is little surprise in the drop in business sentiment. Many of our members are now re-examining their future investment strategies and taking a more cautious approach to planning for next year and beyond.
“The Government must mitigate Brexit related risks to tourism and facilitate the continued growth of an industry that supports approximately 266,000 jobs, more than 70 per cent of which are outside Dublin.”