Speakers at the tenth annual 2019 Tourism Policy Workshop
Crowe partner Aiden Murphy took part in the 10th annual Tourism Policy Workshop which took place at Dromoland Castle on 22 & 23 November 2019.
The theme of this year’s workshop was “Irish Tourism—From Bust to Boom in 10 Years: Learning from the Past and Shaping the Next Decade”
Below are the summary points from Aiden’s presentation entitled “The Impact of the Stark Divergence in Profitability Levels Between City and Regional Hotels in Ireland”.
The strong performance of the domestic economy is good for the Irish hotel sector as consumers unleash spending power from higher earnings. The economy has created 38,000 net new jobs on average for the last five years bringing unemployment down to pre-recession levels.
This tight labour market is putting upward pressure on wages which will become a major challenge in terms of cost, retention, etc. Hotels are putting more staff on development and training programmes to help ensure loyalty and retention.
A focus on productivity rather than cost is critical as unit labour cost rises are inevitable. Technology and smarter ways of organising rosters are key to ensuring labour is used efficiently.
Aiden Murphy noted, that going forward regional Ireland hotels may see net profit margin decline while Dublin hotels maintain and increase net profit margin.
The mix of sales where food which has greatest labour input is heavily weighted to hotels in regional Ireland. The high level of ground floor activities is also the area of greatest claims and so cause higher insurance premiums to be charged to these regional hotels leaving them at a current and ongoing disadvantage to Dublin hotels.
The conference discussed a range of supports that could help regional hotels including long-term subsided loans to help make regional hotels more efficient through expansion of room numbers or energy and waste reduction initiatives that will reduce costs and make the hotel more sustainable.
Aiden Murphy is a partner within our Corporate Finance department and has consulted on hotel projects for over 20 years. He produces our annual Ireland Hotel Industry Survey and recently published the 24th edition.