Hotel prices: killing the ‘golden goose’

The tourism and leisure sector is, once again, flirting with disaster because of rising hotel prices and diminishing value for money. Lessons from the recent past, when excessive charges and an international recession caused a catastrophic fall in visitor numbers, do not seem to have been learned. A fall in the value of Sterling should have rung alarm bells in the industry because Britain is our largest market. In spite of that, research by Investec has shown the cost of a hotel night grew by 5.5 per cent in Dublin and by 7.7 per cent countrywide during the past year.

A successful business is rooted in consumer satisfaction and good value. During the so-called Celtic Tiger years, these basic requirements were ignored and tourist surveys reflected growing dissatisfaction with price levels and the quality of service. Attempts were made to move the industry ‘up-market’ – as if wealthier people were not equally conscious of value. Ireland, the mantra ran, was not a cheap destination and good value did not mean cheap.

The crash, when it came, caused many hotels and restaurants to close. In three years to 2011, the number of British tourists fell by 50 per cent. Visitors from other destinations dropped by 30 per cent. The industry had priced itself out of its primary markets. Recovery was slow and extremely painful. Some businesses did not survive the process.

Restructuring, hard work, better quality services and the promotion of particular attractions – such as the Wild Atlantic Way – followed. Irish hotel prices were promoted as being amongst the cheapest in Europe. VAT on restaurants was reduced. Businesses grew. Last year, Irish tourism enjoyed its best performance with some nine million visitors spending €5.5 billion. The traditional British market remained strong.

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That situation may not last, however, and marketing campaigns are focussing on the North American and European markets. A reputation for poor value amounts to the kiss-of-death within mainstream tourism. Our hoteliers should learn from past mistakes.