Business sentiment amongst hotels and guesthouses in Galway and across the country has deteriorated sharply year on year, representing a start change in outlook compared with 2018, according to the Irish Hotels Federation (IHF ). An industry survey undertaken by the IHF reveals that only 40 per cent of hoteliers nationally now have a positive outlook for their business over the next 12 months. This compares with 79 per cent who reported a positive outlook at the start of 2018.
With the vast majority of hoteliers (91 per cent ) concerned about the impact Brexit will have on their business over the next 12 months, Nigel Canavan, chair of the Galway branch of the Irish Hotels Federation says growth in recent years cannot be taken for granted.
“With the prospect of a disruptive Brexit looming, the sharp fall in business sentiment amongst hoteliers is not surprising,” he said.
“Our fear is that regional tourism businesses risk being hardest hit, especially those operating in areas that are heavily reliant on seasonal and UK markets. Tourism currently supports 20,900 jobs in Galway and contributes some €731m to the local economy annually.
“Tourism plays a vitally important role as an engine of growth and regional economic balance. However, this could be put at risk if the Government does not take decisive action to mitigate the impact of Brexit and adress the other serious challenges we now face such as the high cost of doing business in Ireland.”
“Tourism is an exceptionally competitive activity. We compete daily for business at both a domestic and international level and every tourism Euro spent by overseas and domestic tourists in Ireland is hard won. Maintaining our competitiveness is absolutely vital to sustaining the growth of the industry, which supports jobs in every country and town,” concluded Mr Canavan.
Major concerns for the sector include the continued risk of a disruptive Brexit and reduced competitiveness due to the hike in tourism VAT, increases in the cost of doing business and growing economic uncertainty internationally. In particular, the higher VAT rate is putting investment in additional hotel capacity at risk, with 75 per cent of hoteliers saying they are now reassessing plans to increase capital investment as a result of the increase.
Performance so far this year has been mixed, with 39 per cent of hotelies across the country reporting a drop in overall business levels compared to this time last year while 48 per cent report an increase. This has been largely been driven by growth from North America and Europe, which is masking continued poor performance of the UK market. Almost two thirds of hoteliers (65 per cent ) say advance bookings for 2019 from Great Britain are down while almost six in ten (57 per cent ) are seeing a fall in advance bookings from Northern Ireland.