Mairea Doyle Balfe speaks at the IHI Hospitality Expo 2018

Mairea Doyle Balfe speaks at the IHI Hospitality Expo 2018 - Crowe Horwath Ireland

Mairea Doyle Balfe, a director from our hotel, tourism and leisure division, joined a panel of industry experts at the 2018 Irish Hospitality Industries Exhibition.

Here is a summary of the key points from the panel:

Mairea Doyle-Balfe gave an overview of the current Irish hotel sector. Key points from Mairea’s presentation were:

  • While the forecast for new hotel development and supply of hotel bedrooms looks positive under supply of available bedrooms within Dublin remains an issue. In 2017 there were 10% less hotels than in 2009 and 4% less bedrooms
  • International tourism numbers continue to record strong growth with visitors from Europe, Asia and the Americas all above the previous 2007 peak. While tourists from the UK have grown since the recession, 3.7m visitors in 2017 remains behind the peak of 4m recorded in 2007. Visitors from the UK in 2017 now make up 38% of the international market down from 58% in 1997
  • There is an expectation that visitor numbers from the UK will remain weak prompting hospitality businesses to look to other geographic markets to compensate
  • Performance of the Hotel sector has been strong for the past number of years with revenues and profitability surpassing the previous peak in 2006. In 2017 the Dublin market has almost doubled its RevPAR since 2010 to €105.57 and more than tripled its profit per room to €20,492. Dublin hotel occupancy at 83% is also one of the highest in the EU
  • This strong performance supports investment in both new hotel development and extensions and with greater availability of funding, hotels have the opportunity to further grow profits
  • The regional market also reported continued strong growth with hotel occupancy running at close to 70% and RevPar at €60.45, both above the previous peak recorded in 2006. Hotel investment outside of Dublin is supported by local demand (domestic accounts for 60% of the market) and improved profit levels, but is location-specific and reliant on a strong business case

Mark Nolan, General Manager of Dromoland Castle, spoke about this experience of working in the hotel industry and the day-to-day running of a 5-star estate. In discussing their recent €20m renovation Mark emphasised the importance of customer research and brand differentiation:

  • Prior to reinvestment in the property, management undertook customer and staff research to gather feedback on understanding what their customers wanted from an exclusive 5-star hotel. The research gave management a clear understanding of their customer needs and helped them to create an authentic castle experience
  • A room prototype was built to test room features and design. This enabled them to gain valuable customer and staff feedback
  • Mark emphasised the importance of investing in brand and customer experience within the hotel sector to differentiate from your competitors

John McGrane from the British Chamber of Commerce spoke in relation to Brexit and its potential impact. Key points from John’s presentation were:

  • Currency risk – Understanding how your business is exposed to Sterling and the importance of looking at alternative FDI options
  • Importance for British businesses of establishing in Ireland – to avoid being ‘locked out’ British companies may well build their workforce in Ireland as it is the closest gateway into the EU*
  • Importance of maintaining Irish businesses in the UK. Controlling the relationship with the UK is key for Irish business especially in the food industry. Maintaining relationships will stop Ireland getting locked out of the British market
  • Make your voice heard by working together with relevant industry and sector associations to create economies of scale
  • Don’t panic – the effects of Brexit will be gradual and at a digestible level for the Irish market

Gerardo Larios Ruiz, Head of Hospitality at Bank of Ireland spoke in relation to funding in the hospitality sector. Gerardo’s key points were:

  • The improved performance of the hospitality sector has led to increased demand for capital which has resulted in a more competitive funding market and greater supports available for investment in the Irish marketplace
  • While there are a range of facilities available to support lending to the sector, the credit guarantee scheme is available to support lending to the sector when there is insufficient security (eg: leased properties)
  • Funding applications for capex investment are analysed as to whether they are ‘revenue generating’ or ‘non-revenue generating’. Revenue generating would, for example, include adding guestrooms or building a new bar or gym in the hotel, with non-revenue relating to areas in the hotel such as back of house and things like equipment upgrades
  • Repayment capacity remains a central criterion for funding decisions. But banks will also look at a range of other criteria such as:
    • Trading reputation: Strong online profile, e.g. social media, ranking and reviews in travel advisory platforms
    • Operator experience and the General Manager or promoter’s involvement
    • Historical performance and a projected sustainable EBITDA: in line with facilities requested
    • The sales mix, the trading environment and competition

*Crowe Horwath offers a range of payroll, outsourcing and Company Secretarial support services to support our international clients establish and maintain operations in Ireland. 

Please contact Mairea Doyle-Balfe or a member of our specialist hotel, tourism and leisure team if we can assist with any hospitality or tourism-related project.