European air routes are key to survival as hotel business falls

Last year was an extraordinarily good year for hotels in Ireland with roomnight sales growing by 22 per cent. Occupancy levels were the highest since 1997 and August had a high of 82 per cent, followed closely by September with 80 per cent.

This year, however, the story will be a different one, with all hotels reporting a very slow October and a drop in forward bookings.

The terrorist attacks in America are the most recent blow to the industry, and pressure will be on hotels to maintain business or close. Earlier this year the foot and mouth crisis and the downturn in the US economy had begun to affect the hotel business.

Concerted and joint efforts at marketing by hotels and tourism bodies had reduced the negative impact and revenue per room had increased by 1.3 per cent for the first six months. The number of hotels in Ireland has increased from 717 in 1996 to 849 in 2001 and bed capacity from 56,200 to 92,200, an increase of 64 per cent.

However with 32 percent of business coming from the North American market, the next year is going to be a difficult year for hotels to survive. In a report published last week, Stephen Furlong of Davy Stockbrokers, an analyst on transport and tourism, predicts a fall-off in US visitors of 60 per cent. John Power, chief executive of the Irish Hotels Federation (IHF) thinks it is much too early to quantify the effect of September 11th.

"Cancellations are happening, but what is more worrying is the non-booking of new business. 50 per cent of bookings are made within three months of arrival, and we are not seeing bookings for the last quarter of the year and into the New Year," said Mr. Power.

He believes that the loss to the economy could be in the region of £100 million (€127m) if the situation does not improve rapidly. "We are not an industry which goes looking for compensation but we do feel that additional funding should be made available for marketing and promotions."

The other important consideration is access to the island of Ireland. The IHF is worried about the reduction of air routes into Ireland and welcomes the proposal from Ryanair to introduce 10 European routes, as does the Hospitality Sales Marketing Association, which has 1,500 members across hotels, car hire and tourism products in Ireland. Its president, John Colclough, said "we are looking east for business, to Britain and Europe and without the infrastructure of air routes it is no good producing. There is an enormous opportunity to increase business from Europe."

New entrants to the Irish market, The Four Seasons and Westin hotels in Dublin, both see the focus on marketing being directed to Europe. Enda Mullin, general manager of the Westin Dublin said "clearly our marketing has to be different. We had expected 30 to 35 per cent of business to come from the US, but this is a challenge we have to react to. There is business out there and we have responded to the market by providing rates to encourage business."

John Brennan, general manager of The Fours Seasons, said that "90 per cent of our cancellations have rebooked for next year and North America is and will continue to be the largest market in the world. In the meantime, marketing activities will focus on the home, UK and European markets. We will continue to maintain relationships with key North American clients." In 2000, the North American market accounted for 32 per cent of all hotel occupancy and with 49 per cent staying in four and five-star hotels, US visitors were the highest spending.

Hoteliers in Ireland can console themselves that business has not been as badly affected as in the UK and US. In New York, the state is providing $40 million for a campaign with a patriotic theme to get visitors to the city. Some hotels are reporting occupancy of as little as 10 per cent.

Tom Travers, general manager of the Hotel Beacon, New York, said, "every hotel is offering special rates, some even calling them 'distress rates'. The high end of the market is taking even deeper cuts with five-star hotels going for $95 dollars a night."

In London the situation is not much better, with hoteliers cutting rates by up to two thirds. This summer the occupancy fall that had begun in March following the foot and mouth outbreak continued and since September 11, has fallen by a further 20 per cent.