Almost all Irish hotel and guesthouse owners are concerned about the impact that Brexit will have on their business over the next 12 months, according to the latest quarterly barometer from the Irish Hotels Federation (IHF).
The UK is Ireland’s largest source of inbound tourists, accounting for over 40% of overseas visitors into the country.
The IHF states that the economic uncertainty surrounding the UK’s relationship with the EU has fuelled concerns amongst 95% of hoteliers across the country, with some 49% 'very concerned' and 46% 'concerned', highlighting the ongoing risks to tourism from external events.
While concerns about the impact of Brexit loom, results show the tourism industry has performed strongly so far in 2016. Some nine of ten hoteliers (90%) report that business levels are up compared to the same period last year, with overseas visitor numbers up 14% year to date while British visitor numbers are up 16%. Of those hotels catering for corporate meetings and business events, 60% have seen an increase in this area of their business compared with last year.
Meanwhile, the recovery in the Irish economy and improvement in consumer sentiment is contributing to growth in the sector. Two out of three (66%) hoteliers are seeing an increase in home-grown business with an uplift in consumer confidence leading to more people taking holidays and short breaks at home. This growth is vital for tourism businesses relying on the domestic market, especially in the regions and away from the traditional tourism hotspots.
IHF President Joe Dolan cautions, however, that the continued recovery in the sector cannot be taken for granted and that the tourism industry remained vulnerable to external economic shocks beyond its control, such as the UK decision to leave the EU.
"The concerns expressed by hoteliers following the UK’s referendum result reflect the significant risks posed to the sector, with many hotels and guesthouses still in recovery mode," said Dolan.
"This comes at a time when the increasing cost of doing business in Ireland already poses a serious challenge for tourism businesses. While it is too early to predict the full effect that the decision will have on Irish tourism, there can be no room for complacency, particularly given the potential impact on visitor numbers from the UK and business levels within the domestic market.”
He added that the recovery in Irish tourism continues to be underpinned by a number of important measures such as the zero rate travel tax and the 9% tourism VAT rate, which have enabled tourism and hospitality businesses to support an additional 50,000 new jobs over the last five years. Hoteliers are continuing to invest in additional employment with 73% having increased staffing levels over the last 12 months and the vast majority planning to either take on additional staff or maintain current levels over the coming next year.
Increased confidence is also enabling hotels to invest more widely in their businesses with some 89% indicating they plan to invest in refurbishment and increased capital expenditure over the next twelve months while some 63% plan to increase their spend on marketing.
The latest hotels barometer reveals that three in ten (30%) hoteliers are still concerned about the viability of their business over the next 12 months, notwithstanding any impact from the UK’s pending departure from the EU. A particular concern for hoteliers is the cost of doing business in Ireland, with many hoteliers singling out excessive local authority rates as the most pressing issue affecting cost competitiveness. This is followed by labour costs and utility costs.
Dolan also highlighted the importance of festivals and sports related tourism to hotels and guesthouses, noting: "Nearly half (48%) of our members say festivals and sporting fixtures are a significant source of business. As festival season begins in earnest, three out of five (60%) report that this part of their business is performing better than last year with one in six (17%) reporting double digit growth, which is encouraging."
Breakdown across markets (compared to the same period last year)
Island of Ireland: 66% of hotels and guesthouses are reporting an increase in visitor numbers from across the island of Ireland with 31% seeing no change and 3% noting a decrease.
Britain: Visitor numbers from Britain are up 16% year to date with 62% of hotels and guesthouses seeing an increase in business from this market, while one third (34%) report no change with 4% are seeing a decrease.
North America: Visitor numbers from North America are up by 18% with 65% of premises noting an increase, while 33% see no change and 2% report a decrease.
Germany and France: Visitor numbers from the rest of Europe are up by 12%. Forty six percent (46%) of hotels and guesthouses are reporting an increase in visitors from Germany (53% see no change and 1% note a decrease) while 34% are benefiting from an increase in visitors from France (58% see no change and 8% note a decrease).