Business

Covid-19: Lockdown of hotels cost NI economy £450m in 2020 - industry body

The north's hotels had just 86 days of normal trading in 2020, according to a key industry body.
Ryan McAleer

THE Covid-19 pandemic set the north’s hotel industry back by around £450 million in 2020, an industry body has said.

The Northern Ireland Hotels Federation (NIHF) said while hotels have reached an all-time high of 9,580 bedrooms, occupancy rates fell to just 31 per cent in 2020, with the sector’s contribution to the north’s economy falling below £200m.

It said hotels were open for just 86 days of normal trading in 2020.

It compares to 2019, when Northern Ireland hotels were worth around £650m to the economy, with a room occupancy rate of 71 per cent.

In a report, the Hotels Federation said: “The 2020 cycle of lockdown, reopening and repeat has wreaked havoc, wasting money and resources along the way.”

The industry body said the latest extension to the lockdown means any recovery of the sector is unlikely to begin until the second quarter of 2022, adding that it will be 2024 before it can return to normal market conditions and any level of growth.

The federation said the sector is currently burning through £2m-£2.5m per week on fixed costs outside of loan, mortgage of furlough costs.

“Many do not understand that closed hotels continue to incur costs at a considerable level; heat; light and staffing. The majority require personnel in situ twenty-four hours per day over the course of lockdown,” states the report.

“A simple metric highlighting the stark reality of the situation, is that fixed costs for a hotel property equate to an outlay of £1,000 per bedroom per month,”

The NIHF said the sector had spent £7m on complying with regulations, but financial support had been limited.

It added that furlough costs equate to £250,000 per week for the sector, with limited direct financial support.

It said full business rates relief in 2021/22 and an extension of the 5 per cent VAT reduction are imperative for the sector’s recovery.

It also called for “appropriate grants” for larger hotels with a rateable value above £51,000, and a “kickstart grant” to cover reopening costs.

The Hotels Federation has also called on Stormont to continue with the Localised Restrictions Support Scheme during lockdown and to launch promotion campaigns and fiscal stimulus for the sector once a reopening date is agreed.

“Until the current health crisis is under control, it would be futile to work to a specific date,” said the trade body.

“This uncertainty only adds to the need for support. The hotel sector is a pillar of the tourism industry and plays a significant role in hospitality. Support and an extension of some measures already in place should ensure the survival of the sector and allow the industry to return to its 2019 levels of trading in a manageable way.”

Enjoy reading the Irish News?

Subscribe now to get full access

Business