by Richard Buckley, Editor, Business Eye

The impact of the pandemic on the hotel industry has been laid bare by the publication of the 2020 edition of ASM Chartered Accountants’ annual hotel industry survey: The report quantifies for the first time, the scale of the damage done to the local hotel industry through the loss of visitors, periods of lock down and social distancing measures. It reveals that the commercial performance of hotels during the year was the worst on record.


The headline performance figures from the report show that:

· hotels were, on average, open for only 230 days or 62.8% of the year;

· imposed travel restrictions and periods of lock-down resulted in the lowest demand for hotel bedrooms across Northern Ireland in decades, with average bedroom occupancy reaching only 30.0%. After a watershed year in 2019 when bedroom occupancy rates averaged 79.3%, the number of rooms booked in 2020 was lower than in 2019 by 1.67 million;

· the average rate paid for a room net of VAT remained relatively strong at £96.97 as against £100.89 in 2019 when Northern Ireland hosted The Open. Overall, revenues from accommodation sales dropped by 63% year on year and total revenues excluding grants declined by 62%;

· Earnings before interest, tax, depreciation and amortisation decreased by an average of 90% compared to 2019. In some market segments, hotels recorded negative earnings; and

· while the industry acknowledges the important role that the Coronavirus Job Retention Scheme plays in protecting jobs, the number of full-time equivalent staff employed by hotels declined by 2,100, or 29%, by the end of the year. Had it not been for the scheme, hotel operators say that job losses would have been higher.

Other findings by the survey include the cost to hotels of dealing with Covid. After the first lockdown, getting “Covid ready” cost an average of £18,775 per hotel. Ongoing expenditure on PPE averages £2,200 per hotel per month while stock wastage arising from enforced periods of closure averaged £4,600 per hotel per shut-down.

Commenting on the survey results for 2020, Michael Williamson, Director of Consulting at ASM Chartered Accountants noted:

“The thoughts of everyone in the industry are for those that have lost loved ones or who have contracted COVID-19, but the devastating impact of Coronavirus on wider society means that we have all been directly affected in one way or another.

“Non-essential retail, tourism, close contact services and others have been especially hard hit and we have all been blind-sided by this global pandemic. Even in early 2020, there was confidence that tourism would set another new benchmark for Northern Ireland and that the near £0.5bn of investment in hotel stock during the preceding 6 years would prove to have been very timely. That all changed literally overnight with businesses having to close.

“Trading was seriously compromised at hotels during the year, with some areas faring worse than others. In the Derry City and Strabane District Council area, hotels were open for only 195 days on average which means that earnings were virtually wiped out. Worryingly, staff numbers declined by 54 per cent. The basic principle in business that costs reduce at a slower rate than a decline in revenues was proven in 2020. Average income including grants reduced by 56 per cent, but earnings reduced by 90 per cent compared to 2019. This was a hammer blow to the industry”.

Adrian Patton, Director at ASM, added: “Indeed, had it not been for support provided by the NI Assembly and the UK Government, matters would have been much worse. That support whether through the numerous grant programmes, the rates holiday, VAT reduction, the Coronavirus Job Retention Scheme and so on have probably helped many businesses survive the most challenging times that any of us have faced. Unfortunately, 2021 will be another difficult year for the industry. Assuming hotels can re-open on 24 May and there are no further periods of closure, then the number of trading days available in the year is less than in 2020 and with loans and other liabilities due for repayment, those businesses will be under a high level of pressure, therefore, the industry will need further support. Having made the point, re-opening gives them a chance to fight back and start making headway”.

Looking forwards Michael Williamson noted that “After the first lock-down ended in early July 2020, the demand for accommodation in rural and coastal areas was strong and driven almost exclusively by the all-island market, with Northern Ireland residents accounting for 75 per cent of bedrooms occupied and Irish visitors accounting for 20 per cent. We fully expect to see a similar pattern of demand this coming summer and our conversations with hoteliers over the past few days confirm that bookings from the all-island market are brisk. So, the short-term prospects in terms of demand bounce back are positive even though international visitors are some way off and events hosted at hotels will remain under some level of restriction for a period of time. We also expect that recruitment will ramp up over the coming weeks and I hope that most, if not all, of the jobs lost throughout 2020 can be recovered quickly.

Michael concluded: “While the industry has been devastated by COVID-19 and 2021 will be another challenging year, the fightback starts now. By pulling together and recognising that the marketplace and how we do business will have changed, the wider industry can get back on its feet. We have, much to offer the world and that hasn’t been changed, so I have every confidence that a return to our growth trajectory can take a massive step forward in 2022.”

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Adrian Patton, Director, ASM Chartered Accountants is pictured alongside Stephen Meldrum, General Manager Grand Central Hotel and President, HIHF, Michael Williamson, Director, ASM and Janice Gault, Chief Executive, Northern Ireland Hotels Federation (NIHF).

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