The Irish Hotel Federation presents its pre-Budget submission – reduce tourist and local authority charges and ensure a flow of credit to the sector. And NAMA shouldn’t distort the market.

I’m between two minds on the health of the hotel sector. It is undoubtedly suffering from poorer bookings and overcapacity in the sector has been an identified problem for a few years now. The industry body, the Irish Hotel Federation (IHF) is giving the impression it is fighting for the very survival of its members during the downturn, and it has come out with a predictably self-interested pre-Budget submission. As with CIF yesterday, there’s nothing in itself wrong with that, and remember the hotel sector, along with restaurants, provide 6% of all employment (8% of female employment) and the sector has been a solid contributor to the economy.

The reason I’m in two minds is that although some hotels are producing losses, others are profitable (consider a few examples here and here and here). Local authority charges, water and energy costs and the minimum wage are all pressures on the sector in light of reduced demand for rooms, greater competition and a shortage of reasonably-priced credit. Last week, a hotel marketing firm Select Hotels reported a doubling in turnover during the past year. The company represents 24 independent hotels in the State and brings together a specialised marketing service which is shared amongst the member hotels. So whilst it is accepted that some hotels are facing very difficult challenges, it does seem that some have adapted and can still turn profits, even with existing local authority charges which seem to be a particular bugbear.

The hotel sector is particularly worried about the drying up of reasonably priced credit lines. The withdrawal of Bank of Scotland (Ireland) from the market came as a major blow as that bank had established itself in the hotel sector. However the Irish Small and Medium Enterprises Association (ISME) reported a month ago that credit conditions did seem to be improving for small and medium businesses. And of course hotels have the Credit Review Office which seems to be dealing with a tiny workload which indicates also that credit conditions are improving. Lastly, the IHF use their statement to again implore government to ensure NAMA is “to be operated in a way which does not distort the operation of the hotel market either through below cost prices of NAMA operated hotels should this arise or inappropriate disposal of assets”.