Summer season data shows challenges facing the hotel sector
By Janice Gault, Northern Ireland Hotels Federation Chief Executive
Latest performance figures from STR present an interesting picture for the hotel sector with a number of trends emerging as a year unfolds.
Occupancy is sitting at 70.2% based on year-to-date trading, tracking just slightly below the 2019 pre-pandemic 72.4% level. Room rate is over £100 and RevPAR is hitting the £70 mark. On the face of it this is all good news.
However, the economy is uncertain and there are predictions of turbulent times ahead. Since the start of the COVID-19 pandemic, hoteliers have shown remarkable resilience and adaptability. Restoration is the aim of all, and it is important that we focus on the future.
The capital-intensive nature of hotels makes them a good long-term investment and there are several major openings predicted in 2023 which should see room numbers touch the 10,000 mark.
The tourism and hospitality economy have realigned with services being slashed due to staffing shortages. In reality, there is often little choice for the visitor at the start of the week as food outlets, attractions and experiences may not be open.
Hotels have benefited from this in the short-term, but longer-term, consumer choice and a vibrant tourism infrastructure is what destination Northern Ireland requires, if it is to return to 2019 levels of business and grow in the coming years.
Forecasting the remainder of 2022 is proving tricky. Forecasts were adjusted upwards in August for Belfast which is bucking the trend with a packed calendar of concerts over the summer and continuing leisure demand at the weekends.
Interest in investing in hotel product in the city is still strong with over 800 rooms in the pipeline and projects moving from office and retail into accommodation. In all other regions, there has been a reduction in room rates in August and the likelihood is that this trend will continue through into Quarter 4. Consumers are being more cautious with price sensitivity becoming evident. Maintaining a rate south of £100 will be a real challenge as the winter arrives and demand falls.
Cost control, budgeting and maintaining staffing levels will be the key to surviving the winter season. Factors beyond the control of the sector need to be addressed with government support and there was disappointment at the lack of business support announced in the budget.
Hotels have made big investments and while restoration may not be a short journey, we are in a much better place than last year when restrictions were still in place. Dancing has returned and with it the need to adapt to moving to a different beat!
