Business

Belfast booked out - but border and rural hotels struggle

Last month Sir William Hastings unveiled plans for the new Belfast Grand Central Hotel, which should open by 2017
Last month Sir William Hastings unveiled plans for the new Belfast Grand Central Hotel, which should open by 2017 Last month Sir William Hastings unveiled plans for the new Belfast Grand Central Hotel, which should open by 2017

A "TWO-SPEED" hotel sector is emerging in Northern Ireland, where Belfast is enjoying improved bedroom occupancy, but rural operators and in places like Derry are struggling.

And the strengthening of sterling against the euro and the higher rate of VAT in the north compared to the Republic has started to cause problems for many hotels located close to the border

They were among the key findings in the latest annual hotel industry survey published by ASM Chartered Accountants, which benchmarks the performances of more than 100 hotels in Northern Ireland, from five-star properties through to small family-owned establishments.

The study showed that overall demand for hotel bedrooms across the north increased slightly in 2014, but that average is being influenced by the very strong performance of the Belfast market, which accounts for around 40 per cent of the total room stock.

Indeed in rural areas, the average occupancy rate in hotel bedrooms remained largely unchanged in 2014, but in Derry declined when compared to 2013, when it was the UK's City of Culture.

Among the key findings in the ASM report, which is seen as an invaluable benchmarking resource, were:

:: Average bedroom occupancy rate in 2014 increased to 76.0 per cent from 74.8 per cent in 2013;

:: Average rate per room sold was £70.78, a four per cent increase on the £68.17 the previous year;

:: Revenue per available room (known in the industry as REVPAR) was £53.79 last year - a 5.5 per cent improvement on 2013 and the highest on record;

:: Total revenues were static year-on-year meaning that non-bedroom related income declined;

:: Bedrooms occupied by of 'out of state' visitors was 68.4 per cent. The proportion of rooms occupied by visitors from GB rose to 37.3 per cent in 2014 from 29.8 per cent a year earlier, while hotel visitor numbers from the Republic more than halved from 20.9 per cent to 10.0 per cent.

Michael Williamson, director of consulting at ASM Chartered Accountants, said: "Our research also shows that, in general, food and beverage sales in hotels declined in 2014 and that those hotels located closer to the border with Ireland, tended to be affected more.

"This indicates that the lower rate of VAT in Ireland and the very unfavourable sterling exchange rate are having a negative impact on parts of the industry.

"Those hotels located closer to the border are finding the marketplace hugely difficult, and unfortunately there seems to be no immediate relief. The VAT and exchange rate differential is not doing those operators any favours at all.”

He added: “The downturn in visitors to hotels from the Republic of Ireland was mitigated by increased demand for bedrooms from other out of state markets.

“This is to be welcomed and is a reflection of Northern Ireland’s increasing profile as an interesting and exciting tourist destination and the more general improvement in economic conditions.

"However, we are witnessing the emergence of a two-speed hotel sector in Northern Ireland.

"The Belfast market continues to perform at a very high level and to grow, while hotels located elsewhere are finding trading conditions a little more difficult than has been the case over the past few years."

Plans for at least 10 new Belfast hotels are currently under consideration, and just last month the Hastings Hotels Group unveiled plans to invest £30m to convert Windsor House into a 200-bedroom hotel, creating 150 jobs for the city.