Hotels will struggle to fill third ofrooms this year

ROOM rates will fall below €100 as soon-to-reopen hotels struggle to fill a third of rooms this year, according to the Irish Hotels Federation.

Its 2020 forecast, produced by consultants Crowe and reflecting the views of 126 hotels, warns that most – 53pc – have enough cash to cover only three more months of inactivity. Nine out of ten have asked their banks for more finance or loan renegotiations, with nearly half seeking full payment moratoriums.

While the Government’s extension of wage subsidies to the end of August delays hotels’ potential point of insolvency by about two months, Crowe said, it remains questionable whether many hotels could survive the low season running to March 2021.

Crowe partner Aiden Murphy said the lack of any credible path for hotels to trade profitably this summer meant that half “could run out of

‘Hotels are facing a race against time. Domestic demand will be critical’

money in the months ahead” – unless the State intervenes with more supports.

He said hotels “will be facing a cliff edge as they enter the low season with minimal levels of international demand, no large events and constrained domestic demand. Hoteliers are facing a race against time”.

The report said Dublin hotels will lower room rates by 28pc to €97 this year versus last year’s average prices. Hotels outside the capital will drop prices by 13pc to €89.

“It is inevitable that competitive pressure between hotels to attract available demand will put downward pressure on average room rates,” the report found. “All hoteliers recognise that domestic demand will be critical to underpin hotel performance for the next two years.”

But it said hoteliers had learned not to cut rates too much, because that only cuts turnover.

“The lesson from the 2008 economic crash is that discounting has a limited impact as a demand stimulus, especially when demand is weak. Hoteliers plan to protect room rates by avoiding overdiscounting in 2020, allowing the industry to create a better base for 2021,” the report said.