Energy costs now account for up to 12% of a hotel’s revenues

November 29, 2022
|In Business, Cashflow, Featured
|By Angela O'Leary
IHF president Denyse Campbell says that for a 70-bedroom hotel this means an increase of €380,000 in annual energy costs
 
Energy costs now represent 10-12 per cent of a hotel’s revenues, roughly three times the percentage in 2019, the final full year of trading before pandemic restrictions were imposed, a survey of members by the Irish Hotels Federation (IHF) has found. IHF president Denyse Campbell said that for an average 70-bedroom hotel, this means an increase of €380,000 in annual energy costs.
She said that while the Temporary Business Energy Support Scheme introduced in Budget 2023 to support companies with rising energy bills was welcome, the qualification criteria were “far too restrictive” for hotels. “Hotels are also seeing increases across the cost of food suppliers [up 25 per cent this year], beverages [up 16 per cent], linen and laundry services [up 30 per cent] and insurance costs [up 18 per cent],” she said.
Against this backdrop some 56 per cent of survey respondents said that they were “very concerned” about the trajectory of the global economy and how it could impact their business.
Hoteliers and guesthouse owners have reported a decline in forward bookings for 2023 as the industry braces for the impact of rising costs and weaker demand.
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The survey indicated that confidence levels within the sector were declining despite a sharp uptick in tourism this year as the remaining Covid-related public health restrictions were lifted.
The IHF said that overall tourism levels were expected to be down 25 per cent this year compared with 2019, with room occupancy levels yet to recover from the shock of Covid-19 restrictions. Central Statistics Office figures published last month showed that overall passenger arrivals to Ireland in September, both by air and sea, remained 7.7 per cent lower than the same period of September 2019, a trend that has continued throughout the year.
 
The average national room occupancy rate for the 10 months to the end of October was 71 per cent, the IHF said, compared with 80 per cent over the same period in 2019, before the initial outbreak of Covid-19. Meanwhile, the average occupancy level in Dublin was 75 per cent, down from 84 per cent in 2019.
Looking ahead hoteliers and guesthouse owners also reported a decline in forward bookings for 2023 compared with 2019, with 60 per cent of survey respondents noting a decline in bookings from Britain, 47 per cent from Northern Ireland and 38 per cent indicating a decline in forward bookings by European tourists.
“We are now heading into very turbulent times economically, with growing uncertainty in our overseas markets,” said Ms Campbell, calling on the Government to maintain the reduced 9 per cent rate of VAT for tourism beyond the February 2023 deadline.