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23/07/2009
NI Hotels Still Outperforming Republics
Northern Ireland hotels are still outperforming operations in the Republic of Ireland - despite the credit crunch.
That's according to the latest industry survey published by ASM Horwath, chartered accountants and hotel, tourism and leisure consultants.
Despite a 12% dip in profits, Northern Ireland hotels continue to outperform hotels in the Republic of Ireland - including Dublin - where the average reduction in profits was 25%.
NI Tourism Minister Arlene Foster, who wrote the foreword to the survey, said: "I firmly believe that we have the potential to significantly grow the local tourism industry, in spite of current difficult global economic conditions.
"I am confident that, with the work of the Northern Ireland Tourist Board along with Tourism Ireland, Northern Ireland is well positioned to take advantage of the economic upturn, when it comes."
Michael Williamson, ASM Horwath's Director of Hotel, Tourism and Leisure, (pictured above) said the fall in profits in 2008 reflected not just reduced revenues, but higher than normal increases in food and beverage purchase costs and energy bills.
"Trade was strong in the first six months, buoyed up by demand from business users and a growing leisure market," said Mr Williamson, "but it was inevitable the local industry would feel the effect of the sudden and profound downturn in the global economy.
"As a result, demand from business users tapered off during the second half of the year - although leisure traffic, particularly from Ireland, remained strong, assisted toward the end of the year by the weakening of sterling against the euro."
He said there was a reduction in high volume/high value business and an increase in traditionally low volume/low value business, which impacted negatively on demand for bedrooms and meeting rooms, and in sales of food and beverages.
Headline performance figures from the survey include: an average bedroom occupancy rate of 69.3% - a decrease from 72.9% in 2007 but still the second highest level of occupancy since the survey began in 1995; the average daily room rate was £70.58 - an increase of 8.6% over 2007, reflecting the very strong start to 2008; rooms revenue per available room increased by 3.2% year on year; total revenue reduced by an average of 4.6%; and average profit before interest, depreciation and tax per available room decreased by 12.3%.
Mr Williamson continued: "Until last year, the Northern Ireland hotel industry enjoyed a trend of year-on-year improvements which culminated in record-breaking occupancy rates and profit levels.
"It's anyone's guess as to when overall conditions will improve, so I expect 2009 to be a challenging year with the regional variations that emerged in 2008 continuing - in other words, key hotels in key border towns and cities will continue to perform well, while Belfast-based hotels will find trading conditions more competitive.
"But I am convinced better days will return if the industry works collectively. Northern Ireland remains an emerging tourist destination and the key agencies must continue to work proactively to realise our unmet potential.
"However, we also need to ensure that Belfast regains lost ground in attracting national and international conference, meeting and convention business. This was a key growth market for the sector until 2007 when it generated an estimated 85,000 room nights for the city, as against 30,000 to 35,000 room nights in 2008."
Mr Williamson said he believed that high room rates quoted for 2007 and 2008 had eroded Belfast's competitive edge as a conference destination, as had the removal of a conference subvention scheme to attract large scale events.
In the short term, attention should focus on the closer-to-home and easy access euro zone markets, and on driving out operational inefficiencies.
"Access to timely and accurate performance information, to the benchmarking data included in our survey, and to high quality professional advice will help hotel managers make decisions which will add value to their business strategy," he added.
(BMcC/JM)
That's according to the latest industry survey published by ASM Horwath, chartered accountants and hotel, tourism and leisure consultants.
Despite a 12% dip in profits, Northern Ireland hotels continue to outperform hotels in the Republic of Ireland - including Dublin - where the average reduction in profits was 25%.
NI Tourism Minister Arlene Foster, who wrote the foreword to the survey, said: "I firmly believe that we have the potential to significantly grow the local tourism industry, in spite of current difficult global economic conditions.
"I am confident that, with the work of the Northern Ireland Tourist Board along with Tourism Ireland, Northern Ireland is well positioned to take advantage of the economic upturn, when it comes."
Michael Williamson, ASM Horwath's Director of Hotel, Tourism and Leisure, (pictured above) said the fall in profits in 2008 reflected not just reduced revenues, but higher than normal increases in food and beverage purchase costs and energy bills.
"Trade was strong in the first six months, buoyed up by demand from business users and a growing leisure market," said Mr Williamson, "but it was inevitable the local industry would feel the effect of the sudden and profound downturn in the global economy.
"As a result, demand from business users tapered off during the second half of the year - although leisure traffic, particularly from Ireland, remained strong, assisted toward the end of the year by the weakening of sterling against the euro."
He said there was a reduction in high volume/high value business and an increase in traditionally low volume/low value business, which impacted negatively on demand for bedrooms and meeting rooms, and in sales of food and beverages.
Headline performance figures from the survey include: an average bedroom occupancy rate of 69.3% - a decrease from 72.9% in 2007 but still the second highest level of occupancy since the survey began in 1995; the average daily room rate was £70.58 - an increase of 8.6% over 2007, reflecting the very strong start to 2008; rooms revenue per available room increased by 3.2% year on year; total revenue reduced by an average of 4.6%; and average profit before interest, depreciation and tax per available room decreased by 12.3%.
Mr Williamson continued: "Until last year, the Northern Ireland hotel industry enjoyed a trend of year-on-year improvements which culminated in record-breaking occupancy rates and profit levels.
"It's anyone's guess as to when overall conditions will improve, so I expect 2009 to be a challenging year with the regional variations that emerged in 2008 continuing - in other words, key hotels in key border towns and cities will continue to perform well, while Belfast-based hotels will find trading conditions more competitive.
"But I am convinced better days will return if the industry works collectively. Northern Ireland remains an emerging tourist destination and the key agencies must continue to work proactively to realise our unmet potential.
"However, we also need to ensure that Belfast regains lost ground in attracting national and international conference, meeting and convention business. This was a key growth market for the sector until 2007 when it generated an estimated 85,000 room nights for the city, as against 30,000 to 35,000 room nights in 2008."
Mr Williamson said he believed that high room rates quoted for 2007 and 2008 had eroded Belfast's competitive edge as a conference destination, as had the removal of a conference subvention scheme to attract large scale events.
In the short term, attention should focus on the closer-to-home and easy access euro zone markets, and on driving out operational inefficiencies.
"Access to timely and accurate performance information, to the benchmarking data included in our survey, and to high quality professional advice will help hotel managers make decisions which will add value to their business strategy," he added.
(BMcC/JM)
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