The hotel sector was bruised by lockdowns and restrictions and is battling rising costs but industry leader Janice Gault says there’s still plenty of optimism about the future
As spring comes to an end, hoteliers across Northern Ireland are looking to the summer ahead with a mixture of relief and trepidation.
Tourism on a global basis has been hit hard by the Covid-19 crisis with travel grinding to a halt as the world stayed at home.
Prior to the pandemic our local hotel sector was flourishing and looking forward to a record-breaking year in 2020.
Sadly, Covid-19 resulted in the sector having to close for a number of months.
After two years of constrained pandemic trading, the question for many is how will trading look in post Covid-19 times.
This year hotels had a reasonable first quarter with an occupancy level of 54.9% in Northern Ireland.
A good bounce back from the doldrums of closure, restrictions and the stringent framework imposed since March 2020, but well behind the 2018 and 2019 levels of 66.4% and 61.1% respectively.
Easter was strong and weekend leisure business, bolstered by events in Belfast and Derry-Londonderry, saw a return to strong trading.
Bedroom rates have also been competitive, buoyed up by a temporary, reduced VAT rate introduced in July 2020.
Regrettably, since April 1, 2022, all accommodation and food services are now subject to the standard 20% VAT rate, with market intelligence predicting net room revenue will fall.
Price increases are inevitable as businesses continue to experience rampant inflation, in addition to dealing with the rocketing cost of energy.
The summer holds much promise, albeit muddied by a turbulent supply chain, a labour market in crisis and a war on the edge of Europe
Predictions and forecasts have become more or less impossible, and in a world of uncertainty, the only thing certain is that interesting times lie ahead.
The hotel landscape has irrevocably changed and it’s time to look at the mood music of the hotel industry after a solid spring performance from the leisure sector.
The summer holds much promise, albeit muddied by a turbulent supply chain, a labour market in crisis and a war on the edge of Europe.
Will the summer mood be a happy one with everyone humming along to the upbeat lyrics of Cliff Richard’s iconic hit Summer Holiday or perhaps the more reflective narrative of the Van Morrison classic Days Like This?
Given the confusion and challenges of the last two years, U2’s I Still Haven’t Found What I’m Looking For might be a better choice.
As international travel opens up and restrictions ease, the choice for travellers will increase, potentially reducing the demand for staycations.
This may see local businesses lamenting as their prospective customers embrace the lyrics of the John Denver classic I’m Leaving On A Jet Plane.
Since the start of the pandemic, we’ve all adapted, pivoted and perhaps discovered that the real power often rests with the mute button resulting in no soundtrack at all.
Staycation success has been the story of the last two years and, despite increasing competition, the belief is that this trend will continue into summer 2022 and beyond.
As travel restrictions relax on a global basis, there will be more choice for those wishing to travel.
Nonetheless, the progress that has been made on attracting visitors from south of the border and Great Britain is something that hotels can continue to capitalise upon.
There is still room for growth and, with continued promotion and an attractive offering, much to play for.
Short breaks may also prove popular with those feeling the credit squeeze, reluctant to commit to big ticket or bucket list trips.
Industry data has shown that guests are willing to spend more when they go out and are looking to treat themselves.
This is evidenced in Northern Ireland by a strong performance in resort and higher end hotel products.
Many have been surprised that growth and investment in the accommodation sector has continued resulting in a record 146 hotels in Northern Ireland comprising just over 9,600 bedrooms.
The latest, Elephant Rock Hotel, opened in February on the North Coast. Further development in this area has been stimulated by the confirmation that The Open Championship will return in 2025.
The Marine Hotel in Ballycastle, also on the North Coast, will add more 10 more rooms as part of a £1.25m investment.
Interest remains high but progress has been frustrating partly due to recent uncertainty but, in the main, planning difficulties have been the major barrier.
Several projects are still in the planning process including Andras House’s plans at the former Londonderry Hotel site and the Merrow Hotel and Spa in Portstewart.
The Dunluce Lodge, a new five-star product, plans to open in 2023. The Ebrington Hotel in Derry-Londonderry is underway with this £15m project due to come on stream in summer 2023.
There are over 50 projects in the overall mix in Northern Ireland with Belfast likely to gain a further 500 bedrooms between hotel, guest accommodation and serviced apartment provision by the end of 2023.
The sale of several high-profile hotels over the last 24 months including the iconic Slieve Donard Hotel in Newcastle, Hilton Templepatrick Hotel and The Park Inn in Belfast city centre came as a surprise to many.
Interest remains high with prospective buyers seeing hotels in Northern Ireland as a good investment. The Galgorm Collection has refurbished and upgraded their recent acquisitions, The Rabbit Hotel & Retreat (formerly the Templeton Hotel) and the Old Inn Crawfordsburn.
Other local hotel groups, including Hastings Hotels Group, Irish company Dalata plc and McKeever Hotel Group, have spent considerable amounts on upgrades.
This trend has continued into 2022 with notable upgrading of bedrooms, function areas and creation of outdoor spaces.
The wedding market remains strong and 2022 is predicted to be a bumper year with over two million weddings planned in the UK.
Despite Northern Ireland operating on a risk assessed model, which allowed larger numbers to attend weddings than in other jurisdictions, the rollercoaster of restrictions has resulted in many couples choosing to delay their big day until more certain times.
Many are choosing to celebrate longer, with two-or-three day celebrations, and upgrading their original wedding package.
Hotels have shown resilience. A cocktail of stoicism, optimism and adaptability has stood the industry in good stead. However, many things are outside of their control and causing real concern.
The biggest issue remains staffing and skills with shortages seeing some businesses in the wider tourism and hospitality sector reducing services.
In the long term this is not good for a sector that is aiming for full restoration and planning for considerable growth.
Returning to the £1bn visitor spend of 2019 is the current goal but this will quickly pivot to the ambitions of the 10X Economy economic vision with ambitions for the sector to become a £2bn industry in the next decade.
Staff shortages, and an immigration system not well disposed to the hotel sector, presents a real challenge.
No-one could have predicted a war in Ukraine which has resulted in sky rocketing energy costs.
The overall cost base and inflationary rate makes it difficult to control outgoings and set pricing for the future.
The top line has held up well, and forward bookings look good, but the bottom line is where the focus has to be.
Businesses are making a concerted effort to try to cut costs, give a great experience and provide a good value proposition for guests, while maintaining enough margin to trade and invest.
This is not an easy balance to achieve but if the last two years have taught us anything, it’s that we will survive.
Janice Gault is chief executive of the NI Hotel Federation