Running on empty: hotel performance figures show sector’s dire position

Against a backdrop of empty bedrooms and depleted reserves, the turmoil around the unlocking of the hotel sector rumbles on.

Figures released from STR, the international benchmarking company that monitors hotel performance, show the dire position the sector currently finds itself in. In Northern Ireland, October’s occupancy level plummeted to 23%, down 68% on October 2019, with Belfast and Derry-Londonderry recording occupancy levels of under 20%.

In Derry City and Strabane District Council area restrictions on the hospitality sector came into effect at the beginning of October, with the rest of Northern Ireland’s hotels closing their doors to the public on 16th October 2020.

The precarious position that the industry is now in, is demonstrated by bedroom occupancy which has fallen by 50% for the year to the end of October. Average room rate also dropped by 7.7% while revenue achieved per available room fell from £57.55 in 2019 to £26.63 in 2020.

Forecasts for 2020 as a whole indicate a continuing downward spiral with bedroom revenue set to fall to £77M, some £120M less than the 2019 level, with occupancy levels nose diving to 30%.  The latest figures do not take into account the month of October.  However, they are included in the extrapolation for the 2020 forecast which indicates that the overall contribution of the sector is estimated to be under one third of the 2019 figure.

Discussing the situation Janice Gault, Chief Executive of the Northern Ireland Hotels Federation (NIHF), says:

“Everyone acknowledges the exceptionally challenging environment we are living in.  However, in order for the hotel sector to emerge from the pandemic and be in a position to continue to contribute to our society, it needs support.

“The current six-week circuit breaker has cost hotels in excess of £10M in salary furlough contributions and fixed costs. This does not take account of rent, loans, interest or mortgage payments. To date, the only support hotels have received is the Covid Restrictions Business Support Scheme which is capped at £9,600.

“Hotels are complex business operations which require forward planning to enable bookings to be made, staff engaged and orders placed with suppliers. Guests have been understanding and have coped well with the inconvenience, but the mood is changing. Complex operations have considerable running costs and require appropriate levels of support.”

Janice continues: “NIHF has put forward the case to government for the accommodation sector to be supported in an appropriate manner, based on room numbers and business levels. This has not yet been addressed and we are approaching the end of the fifth week of closure.

“There is still no clarity around re-opening, what it will look like, or indeed if additional safety measures will be required. As hotel bedrooms lie empty, hoteliers continue to count the growing cost of closure, with no agreed government strategy on the way forward.”

Accommodation Stock Forecast 2020 (1)

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