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Rising costs the big challenge for hoteliers, IHF warns

Rising business costs are the biggest challenge that hotels around the country face this year, new research by the industry body has found.

The Irish Hotels Federation (IHF) said the costs issue, coupled with concern about the outlook for the economy which was cited by three quarters of respondents, are together leading to worries within the sector.

Its survey of members found just 47% of hoteliers remain positive about the trading outlook for the year ahead, compared to 74% a year ago.

The worries come despite a strong performance in 2023 across the industry, which was buoyed by a recovered tourism market as well as strong demand from Government for hotel rooms to house international protection applicants and refugees from Ukraine.

The survey also found that forward bookings for hotels are down 4.5% so far this year compared to this time last year, with 53% of hotels reporting a net decrease in bookings.

“While it is too early to predict the overall performance for the year, initial indications are concerning and highlight the challenges our industry faces across key markets,” said Denyse Campbell, President of the IHF.

“This is at a time when consumer finances are under ongoing pressure and businesses are dealing with additional costs and a sharp rise in interest rates.”

“We are also seeing the impact of the Government’s decision to increase tourism VAT, making us an outlier with the third highest rate of VAT in Europe.”

Of particular concern, the IHF said, is the domestic market along with the UK and rest of Europe.

Bookings for North America are holding up though.

“It is incumbent on the Government to do more to tackle the very high cost of doing business within the Irish economy,” said Ms Campbell.

“This is a major challenge for tourism and hospitality, our largest indigenous employer.”

“Increasing costs are continuing to erode our competitiveness as a destination and jeopardise the sustainability of our wider industry – a vital part of the economy supporting some 270,000 livelihoods, 70% of which are outside of Dublin.”

78% of hoteliers indicate they are planning refurbishment projects and increased capital investment over the next year, including refurbishment of guest bedrooms, common areas and guest technology

The survey results were released ahead of the IHF’s 86th Annual Conference taking place this year in the Slieve Russell Hotel, County Cavan.

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