Fears of a meltdown in the Irish hotel sector have been calmed by new figures that suggest the industry is holding its own, despite the international tourism slump.
Average rooms rates and occupancy levels for 2002 declined marginally but remained broadly in line with previous years, defying predictions that the post-September 11th tourism downturn threatened hoteliers with ruin, according to a survey by consultants Horwath Bastow Charleton (HBC).
The findings indicate the hotel sector is showing "great strength and resilience" at a time when deepening international instability is playing havoc with core markets, said the authors.
Profits fell significantly, however, as overheads leaped 27 per cent, an increase blamed on rising insurance charges. Luxury hotels in particular struggled to cope with a cost surge; profitability at top-bracket hotels dipped 33 per cent last year.
The survey shows average rooms rates for 2002 of €88.35, compared to €88.64 in 2001. Occupancy levels also fell to 64.8 per cent last year from 65.9 per cent for the previous 12 months.
Insurance industry reform and renewed efforts to confront costs will contribute to a rise in profits this year, HBC predicts.
"With greater strategic direction, more emphasis on operating efficiencies and a more focused marketing strategy, hotels should be able to grow their current business and increase profitability," said Mr Daniel Roddy, of HBC's hospitality department.
The hotel lobby seized on the figures, saying shrinking margins were not sustainable over the long term. Revenues before tax are less than half the rate in Britain and the Netherlands, resulting in rates of profit return that are below interest rates, said Irish Hotel Federation chief executive Mr John Power.
While the domestic market remains robust - accounting for 56 per cent of business, compared to 47 per cent three years ago - international trade continues to decline, with the British market in particular showing alarming signs of slippage since the start of 2003, said Mr Power.
There are grounds for optimism, however, he added. The US market is expected to rally towards the end of the year while insurance costs are set to fall.
