Audit, tax and business advisory firm Crowe Ireland has released its Annual Hotel Survey, which states that the Irish hotel sector experienced profit growth of 7% in 2018, which is a significant decline from the 12.5% growth achieved in 2017 and the sector's lowest level of profit growth in seven years.
Room And Food Revenue
The survey, which was compiled from an analysis of Irish hotels' 2018 accounts, reveals that revenue from rooms and food sales grew at 5.9% and 2.6%, respectively, which were the lowest levels recorded in five years. This, it says, highlights the slowdown in revenue growth as a result of increased competition for restaurant and events customers from non-hotel outlets and no increase in occupancy levels attained in 2018.
Room And Occupancy Rates
The average room rate rose to €118.27 nationally last year, which is an increase of 6.3%, or €7, from 2017, while occupancy levels of 75.1% in 2018 were found to be down slightly from the previous year's 75.4%.
The survey states that the areas of payroll, utilities and insurance are major challenges for the industry, with costs steadily growing higher than revenues. It found that utility costs grew at 8% in 2018 while total revenues grew 5% from the previous year. According to Crowe, this is the first cost-over-revenue increase in utilities since 2012.
The survey says that, on average, hotels are seeing a 10% increase in annual insurance premiums when compared to hotel revenues increasing at 5%.
For the second year in a row, payroll costs have also increased at a greater rate than total revenues, placing added pressure on hotels across the country, according to the survey. It states that increasing costs relate to salaries and benefits, higher turnover levels, and increased training and development in a highly competitive arena.
"A Turning Point For The Industry"
Commenting on the survey's findings, Crowe partner Aiden Murphy said, "2018 marked a turning point for the industry as the sector recorded the lowest level of profit growth in seven years, impacted by increased costs, especially across payroll, utilities and insurance."
© 2019 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.