In the world of hotels, 2018 was the year of expansion. 2019 is proving much more difficult to call.
The sector had a period of exceptional growth with nine new hotels and a number of sizeable expansions. There are now 142 hotels in Northern Ireland providing 9,302 hotel bedrooms.
In Belfast, where the bulk of the expansion took place, the first quarter of 2019 has been challenging. However, April figures show an improvement with trade rallying in terms of both occupancy and room rate. Across the rest of Northern Ireland there has been a strong start to the year with good rates and occupancy levels. The burning question is, what lies ahead?
At the Northern Ireland Hotels Federation (NIHF) Business Outlook Seminar on Thursday 23rd May 2019, hosted by Mark Simpson, topics included the current state of the sector and future performance possibilities.
Discussing hotel expansion, Janice Gault, Chief Executive of the NIHF said:
“The sector has come to the end of a substantial expansion phase. Other accommodation provision has also grown, and this may continue, thus creating more competition for hotels. New supply has created challenges around room rate, staffing and occupancy. However, it is important to note that demand has increased by 4.3% year to date and this is well ahead of last year. This is a strong message for us all as demand drives confidence which harnesses growth and investment. Consumer sentiment has taken a bit of a dip which has affected the wider hospitality sector. Government uncertainty on a local level and the political circus of Brexit has resulted in a wariness about spending which has been evident in quarter one figures.
“The market, particularly in Belfast, has seen considerable change and is experiencing a period of readjustment. Analysis by STR, the leading benchmarking company, shows pressure in the market but predicts a levelling out in 2020. This is good news for the industry and a critical point to note is that we are selling more bedrooms this year than we sold last year.”
Janice continues: “We have produced a report outlining current hotel and accommodation provision in Northern Ireland. The number of rooms available is 21,142 across all sectors with hotel room numbers of 9,300 (44% of the total room stock). Hotel stock is likely to reach 10,000 rooms by 2020. In terms of supply, it’s amazing to see fifty other projects in varying stages of concept, planning and development. Hotel investment from 2016 to the end of 2019 will be in the region of £600M. This presents massive opportunities. A well invested hotel stock allows the region to bid for and attract large events. It also creates a good impression for visitors, helping to raise Northern Ireland’s appeal as a destination.
“There is no doubt that the massive influx of product in 2018 has presented issues but these will be tempered as the market grows. There are two major challenges for the industry. Firstly, staffing across all levels needs to be addressed. The situation has been exacerbated by Brexit and it may prevent the sector from reaching its true potential or growing to greater levels. Secondly, there is the issue of promotion. As an industry we need government to support us. An increase in marketing spend is required to improve awareness of Northern Ireland, attract more visitors and build upon the significant investments that the private sector has made.
“It is important that government at all levels recognises the considerable investment the sector has made and the growing economic benefit it continues to bring to Northern Ireland. The increase in demand for hotel rooms is good news for those who have invested and should translate into a stronger performance as 2019 progresses and the market returns to growth.”