IRISH HOTEL profits fell by 25 per cent last year, with the downturn in the industry particularly sharp in Dublin, according to a new survey.
The report, released by Horwath Bastow Charleton (HBC), a chartered accountancy firm specialising in the hospitality sector, said profits and occupancy rates in the hotel industry are at a 15-year low. It warned that, as the decline accelerated in the second half of last year, profits could fall by as much as 70 per cent in 2009.
Profits in the sector have been hit especially hard because hotels have resorted to offering discounts in response to low demand.
The number of domestic holidays rose in 2008 by 3 per cent, but the length of these holidays fell, so that expenditure by domestic tourists fell by 9.5 per cent. The survey noted that Dublin hotels were hit particularly hard, with their turnover falling by more than 10 per cent.
The survey further warns that many hotels will soon have severe cash flow problems, as Irish hotels already owe an estimated €7 billion to banks. Many hotels are expected to go into “survival mode” as a result, meaning that seasonal closures and cost-cutting will be necessary to keep many hotels financially viable.
The report expects that approximately 2,800 people working within the hospitality sector will be made redundant as a result of the downturn.