Hotels on the brink are in need of a Budget bailout
Government may be taking the view that many of these firms are as good as gone
How many smaller, family owned hotels would qualify for a loan right now
Tourism employed 270,000 people and the industry says it is heading for 70,000
THERE was widespread relief that the Government chose not to move the whole country onto to Level 5 restrictions this week.
For the already bruised and battered hotel and hospitality sector, the decision to opt for Level 3 still leaves operators with big dilemmas.
The heady days of 2019 are long since gone. The slight reprieve of a staycation August is well and truly finished now. In many parts of the country hotels rely on a profitable summer to carry them through a tough winter and spring.
They are entering the winter with no real profits in the bank, and Level 3 restrictions which recommend people stay in their own county.
It is decision time now as to whether they stay open at all for the winter or just shutter the place. Everything is going against them.
The TWSS wage support scheme has become the smaller EWSS subsidy. The banks are offering loans with 80pc of the money guaranteed by the state. But how many smaller, often family-owned hotels, would qualify for a loan like that right now.
What would their business plan look like? And for many of them taking on debt is the last thing they want to do.
The Government’s stay and spend scheme aimed at encouraging people to take a break in Ireland and spend money in restaurants and hotels is cumbersome, bureaucratic and not worth very much either to customers or hoteliers.
Those that stay open for in the weeks ahead will have to offer deals to people from their own county. The only way of getting people to have a hotel break in their own county is to slash the price. This may make the offering totally unprofitable for the hotel operator. Yes, there are other supports out there from the re-opening grant to help with water bills and rates. The Revenue Commissioners are also offering extensions to when certain taxes have to be paid.
The big question for the hotel sector now is whether the Budget next week can come up with some targeted measures that will help ease some of the financial pain.
The industry wants a return to the 9pc Vat rate, a return to the TWSS wage subvention and additional help with liquidity. A few of these would help but probably wouldn’t even be enough to allow some hotels to stay open anyway.
Up to 60 Irish hotels – employing close to 7,000 staff – rely on weddings for at least half of their turnover. That business is gone.
As the Government grapples with the health advice from Nphet it is hard to see a stimulus package encouraging people to stay in hotels, or go out to restaurants at a time when they are so concerned about rising Covid-19 cases, even though they have not been identified as a major source of virus spread.
Therefore, help needs to be aimed at the businesses themselves.
Hoteliers wrote off the summer of 2020 some time ago. They had limited hopes for the latter part of the year but they have now been decimated. There’s a survival game going on.
A survey by the Irish Hotels Federation found that bookings for October and November are averaging just 22pc and 11pc occupancy respectively around the country. In Dublin the situation is even worse, the survey found, with just 8pc occupancy for November.
A letter co-signed by 216 hotels, 115 pubs and 52 firms from the events sector was sent to An Taoiseach Micheál Martin on Monday. It criticised the government’s response to the crisis for being too “centred on restricting economic activity to a much greater extent than any other country in Europe”.
That letter was written before Nphet and the chief medical officer
Tony Houlihan recommended moving the whole country to Level 5 on Sunday night.
It was also written before the Government decided to move the whole country to Level 3. There is a very real question here about the intentions of the Government when it comes to the future of the economy.
Large multi-national exporters have continued to do well in a way that is saving tax revenues and supporting our GDP number. Those companies are not the big employers in small towns around the country.
Tourism and hospitality employed 270,000 people and the industry claims that figure is heading to 70,000. When this pandemic wanes we will have to try and win back international tourism business and compete for the 10 million visitors who came here in 2019.
There might not be much of a tourism infrastructure left to draw them in. If hotels go bust, yes, the buildings are still there and in theory somebody else will take it over.
That might be the case in Dublin or bigger tourism hotspots but there are lots of smaller, older, locally owned businesses that are being allowed to die.
They cannot be just turned back on like a switch when woken from their slumber come next year. Scorched by their losses, people will leave the industry.
In smaller towns the shuttered hotel might not open up at all.
The Government may be quietly taking a view that many of these firms are as good as gone anyway, and throwing money at them now, will only delay things for a little while, at a cost to the taxpayer.
The alternative is to condemn a lot of otherwise viable businesses around the country to a rapid end.
The Government needs to step up with a set of measures that will help hotels get through this bleakest of winters.