One hotel 'goes bust each week'
Hotels in Ireland are going bust at a rate of one every week, an industry survey has revealed.
The latest figures uncover a dramatic rise in the number of hotels going into receivership, with 20 being taken over in the first five months of this year alone.
The scale of collapses is expected to get even worse in the coming months after the busy summer season ends and taxes are due.
Aiden Murphy, of consultants Horwath Bastow Charleton, which carries out the annual Irish Hotel Survey, said as many as 50 hotels will have gone to the wall by the end of the year.
"What we have at the moment is very many hotels whose profits are only half of their bank interest costs," he said. "If we take a typical hotel, for example, in the midlands region, it might be earning a profit per room of 2,800 euro but its interest costs could be as high as 6,000 euro.
"So a 100-bedroom hotel has deficit of 300,000 per annum and that's not sustainable for any business over the medium term."
According to the yearly survey, there are 65 hotels currently in receivership: 21 in Dublin; 17 in the rest of Leinster; 14 in Munster; seven in the Republic's Ulster counties; and six in Connaught.
Only two or three which went bankrupt were shut down, with the rest being controversially kept open by banks at a loss until they can be sold on when the market rebounds.
Established hoteliers have said they cannot compete with the low prices offered by these loss-making 'zombie' hotels.
However, the annual survey claims the hotel industry's decline has "bottomed out" and is set for recovery, helped by the Government's VAT cuts from 13.5% to 9% for holiday accommodation.