North’s hospitality sector struggling, says industry group

Belfast’s food and beverage sales down 5 per cent as ‘tough’ trading environment persists

Belfast may have landed two Michelin stars this year, and enticed one of the UK's celebrity chefs to come to the city, but latest research suggests 2015 could leave a bad taste behind for some in the hospitality sector.

According to industry group, Hospitality Ulster, food and beverage sales across Belfast have been roughly 5 per cent down throughout the year compared with previous year's takings and there has been a persistently "tough" trading environment.

Not every establishment has suffered a dip and, like every other city, Belfast boasts restaurants and pubs that are thriving.

Try to book a table any weekend at either of the city's Michelin-starred restaurants, Ox on Belfast's Oxford Street or Eipic on Howard Street; or try the Marco Pierre White restaurant in the Park Avenue Hotel and you will see they are not short of fans.

But Colin Neill, chief executive of Hospitality Ulster, says the food and beverage sector in particular is struggling on a number of fronts, chiefly with issues that are very much beyond the sector's control.

Tourism

“In the greater Belfast area, especially the city centre, business is driven by tourism and let’s not forget that 50 per cent of our visitors are domestic tourists although visitors from Great Britain and visitors from the south of Ireland are also very, very important.

“If we look at discretionary spending power – which is important – the average UK household has an estimated £192 a week in discretionary income; in Northern Ireland we have £97 after all the bills are paid.”

The industry body believes the UK’s VAT rate of 20 per cent, which is almost twice the European average, is not helping especially when the Republic operates a tourism VAT rate of 9 per cent.

“In the short term, it is going to remain tough,” Neill warns. “It has been a challenging year for many of the businesses we represent, from suppliers to retailers and pubs, restaurants and hotels.

He says that many in the hospitality sector make a “third of their turnover in the Christmas period. What we find in this industry is that many people either go on holidays in January or they go bust – it’s that black and white”.

Encouraging

Hospitality Ulster says it is an encouraging sign that the sector has attracted a significant number of new investors in the past 12 months. According to commercial property firm, CBRE, the North has seen a “huge rise” in activity in the hotel sector. It says hotel transactions alone have totalled more than £67.36 million this year.

Although CBRE says some of the activity has been driven by the sale of distressed assets, there is also evidence of growing buyers’ confidence in the local market.

American buyers accounted for 44 per cent of all transactions by value – including the five-star luxury Lough Erne Resort and Jury’s Inn, which was part of a portfolio sale. Investors from the Republic represented 47 per cent and the remaining 9 per cent of sales were by investors based in Northern Ireland.

The firm says that recent new hotel developments underway in Belfast by the Hastings Group and the Beannchor group reflect the confidence of local investors in the Northern Ireland market.

According to Brian Lavery, managing director at CBRE Belfast, the city is well-serviced with budget hotels and the majority of the new hotels in the pipeline will be four-star. He believes these new hotels will be an important factor in Belfast's ambitions to become a major conference destination.

Belfast’s Waterfront is undergoing a £29.5 million extension which will create a new conference venue in the city. It is scheduled to open in spring 2016.