THE GOVERNMENT should act to ease a “crisis” in the hotel industry that has already pushed many businesses into receivership and liquidation, the Irish Hotels Federation has said
The federation said high levels of debt among hoteliers, falling tourist numbers, lower expenditure, a considerable over-capacity of beds and close ties to the property sector have caused serious problems in the industry.
Its chief executive, John Power, said about 50 per cent of hotels were experiencing serious financial difficulties, and most hotels are operating at a loss this year.
Mr Power said the federation’s 1,000 members, which employ some 60,000 people, required urgent Government assistance to help stabilise their businesses which have been “decimated in recent months as people pull back on holiday expenditure”.
“Handling this crisis needs Government intervention, and we believe that with proper intervention that we can have a sustainable industry long-term,” he said.
Mr Power said additional capital was needed from banks to help hotels stay afloat over winter, and that this should be guaranteed by the Government.
The problems facing hotels have increased over the last 18 months with the contraction of domestic and international tourism markets, which are expected to continue to perform poorly well into next year.
In June the number of overseas visitors arriving in Ireland was 15 per cent less than in the same month last year, with visits from Britain, the State’s largest tourist market, down some 20 per cent.
The federation has scheduled a meeting for members to discuss their difficulties next week.
Mr Power said recent expansion in the industry, encouraged by tax breaks, was unsustainable, and that 61,000 beds were now available in hotels around the county, compared to 30,000 in 1996. This represented an over-capacity of some 12,000 beds or 20 per cent, which Mr Power said should be taken out of the market.
“We think they should be set aside for a five-year period and used for another purpose,” he told RTÉ radio.
“Hotels built on the basis of tax breaks now feel that they are just being supported by investors to stay in existence.”
The federation said some hotels which experienced financial problems and fell under the banks’ control were operating below cost prices and distorting the market by creating unfair competition.
It said the operations of the National Asset Management Agency (Nama) have the potential to cause further market distortions and unfair competition.
Mr Power said local authority rates, which are based on hypothetical rents, should be cut as they can take up to €2,000 per year out of a hotel room. “Hotels just don’t have the money to pay them at the moment.” -
He also said the Employment Support Scheme announced yesterday should be expanded to include hotels and guesthouses.
Tánaiste Mary Coughlan said the Government is considering an investment scheme to help those working in the tourism sector.
