Hotel revenues to take €200m hit as weddings cancelled
Sixty hotels in danger due to reopening delay, warns industry expert
IRISH hotels face a €200m revenue hit between now and the end of September due to the cancellation or postponement of thousands of weddings at the peak of the season, according to a leading industry expert.
Up to 60 hotels, employing 7,000 staff, rely on weddings for at least half their turnover and are now in danger, according to Aiden Murphy, corporate recovery partner at Crowe Ireland.
The Government decision to delay the easing of Covid restrictions until August 10 had doubled the likely hit from cancelled weddings for some of the biggest and most high-profile venues, he told the Sunday Independent.
During the three-month lockdown the number of weddings taking place was down by more than 4,000 compared to the same period last year.
But 40pc of the 20,000 weddings that take place in Ireland each year are traditionally held between July and September. The limit of 50 attendees at social gatherings had already wiped out the wedding market for July before the Government announced the delay, said Murphy.
“The outlook for August and September was already bleak with at least 60pc of weddings planned for the period, or about 3,000 events, already being deferred until 2021,” he said. The future for many of these hotels now depends on being able to trade at a profit next year, with many weddings deferred.
“The challenge now is whether they run out of cash and can they cover their costs between now and April or May 2021? That is nine months of no trading or very weak trading and we are seeing hotels are finding it very hard to access overdrafts or working capital from banks.”
Some may decide to close their doors and focus on sparing resources to allow for reopening for the new season next Easter, said Murphy, who produces an annual survey of trading and profit in Ireland’s hotel industry.
“Not continuing to trade now instead of ramping up ongoing losses could be the difference between being able to open next year or not.”
At least €12m in liquidity support — about €300,000 for the average 100-bedroom hotel — is needed to keep these businesses afloat until they can potentially begin trading profitably again next spring, said Murphy.
“That is just for those 50 or 60 wedding hotels but multiples of that will be needed across the wider hotel sector.”
Murphy had calculated that revenue loss for hotels would be over €100m but has since doubled the forecast hit following last week’s announcement.
The Government last week delayed phase 4 of easing coronavirus restrictions until at least August 10. This, said Murphy, would lead to a whole new raft of cancellations and force those weddings that do go ahead to cut their guest lists.
“The impact of this is to put weddings for all of September and maybe even early October into jeopardy,” he said.
Financing and certain Covid supports were usually only available to businesses that could show a sustainable business into the future and this was becoming more difficult for many hotels, said Murphy. Temporary wage support had provided “a crutch” to many hotels but this was currently due to run out at the end of August.
“All of these things have got to be seen in terms of the greater good, but equally how do you balance up the cost for the most impacted sectors? It probably requires further extension of the temporary wage support scheme and the further deferral or perhaps forgiveness of VAT to boost the cash flows to give the hotels a chance.”