Belfast Telegraph

Hotels suffer slump as business tourism dips

By Lindsay Fergus

Northern Ireland's hotel industry suffered a 16% decline in sales last year, according to new figures out today.

The annual assessment of hotel performance also reveals that total sales, occupancy rates and room rates all slumped.

Occupancy rates spiralled by 5.2 percentage points over the year to an average of 64.1%, while the average room rate fell by 10.1% to £63.43.

Total sales also decreased by 16%, while pre-tax profits also collapsed by 24% year-on-year.

The grim findings were laid bare in chartered accountants ASM Horwath's hotel industry survey, which portrays the challenges facing the industry.

Commenting on the survey, Michael Williamson, director of hotel, tourism, and leisure consulting at ASM Horwath, said: "As expected, the business trends that emerged in the second half of 2008 continued into 2009.

"Demand from business-related tourism weakened considerably during the year, while leisure-driven trade increased.

"The location and profile of individual hotels determined how they were affected by these changes in demand."

Belfast-based hotels which rely heavily on business-related tourism, and which enjoyed high-demand levels and room rates until the latter half of 2008, experienced a reduction in room occupancy of 10 percentage points to an overall average of 69.6% in 2009.

The average achieved room rate for the year reduced by 8% to £67.41, while total income reduced by an average of 30%.

However, hotels based in Londonderry and the border region performed better thanks to demand in leisure-related markets.

In Derry, bedroom occupancy rates increased marginally year-on-year to 64% in 2009, and the average room rate increased by 10% to £53.14.

Total income in 2009 increased by 9% on average.

Mr Williamson said: "Food and beverage sales at hotels have weakened considerably throughout Northern Ireland when compared to 2008.

"Factors include lower numbers of guests, lower levels of meetings, smaller-scale functions and wedding receptions, and a general cutback on spending on these services.

"Hotel managers clearly need to focus on offering value for money to guests, and driving out operating inefficiencies, rather than resorting to heavy price discounting.

"This tactic has been adopted by some operators, and I believe it will be damaging to the industry in the medium term."

Mr Williamson believes 2010 will continue to be a challenging year for the industry, which will not see any respite until 2011.

"But thereafter I anticipate that the substantial levels of investment in tourism attractions and infrastructure will begin to reap rewards," he said.

"Derry's success in securing UK City of Culture status for 2013 will be a real turning point for the wider North West region."