The Northern Ireland Hotels Federation (NIHF) is calling on government to provide immediate support to the hotel sector as STR, a global data and analytics service for the hospitality industry, released figures which show the catastrophic effect that the COVID-19 pandemic has had on trade in the first quarter of the year.
In March 2020, NI hotel occupancy levels fell by a staggering 59% as the impact of COVID-19 started to materialise and people restricted travel. Overall, in quarter one trading, the sector was impacted by a fall in revenue of 25% and a fall in occupancy of 25%.
With the hospitality sector the first to close, trading in the second quarter of the year will be minimal. Recent reports on the exit from the lockdown indicate that the tourism and hospitality sector will be last to open and will operate under considerable restrictions for the foreseeable future.
On 20th March 2020, the industry acted on the Prime Minister’s directive that all hotels should close as part of the measures to control the coronavirus outbreak. Some premises were asked to remain open to key workers. Occupancy levels for the second quarter are likely to be under 10%.
NIHF CEO Janice Gault explains why the sector which has a weekly payroll of £4-5 million, depending on the season, now needs immediate government support in order to survive and to enable a viable return to business:
“Throughout this crisis, staff and customer health and well-being have remained the number one priority. The sector has stepped up and delivered on its responsibilities as well as donating supplies and providing accommodation for key workers; it also wants to be able to meet its ongoing responsibilities.
“On 1st January 2020, there were 145 hotels in Northern Ireland. Over the course of the last five years these businesses have invested £600 million to create accommodation and hospitality product that enable us to showcase Northern Ireland. Businesses borrowed money with repayment plans linked to projected income and support in the region of 15,000 staff directly, indirectly and through the supply chain.
“The restrictions required to tackle the COVID-19 pandemic mean that not only are businesses not achieving their projected earnings, but many have no income and are still responsible for meeting key payroll, loan repayments, security, utilities, insurance and services costs.”
Janice adds: “About 90% of hotel staff have been either furloughed or laid off. Furloughing, whilst a very welcome intervention, impacts on cash flow as payroll costs still have to be paid out. The mechanism to claim these costs back starts today (20th April) with grants reportedly paid out ten days later. Funding several weeks of payroll cost has a considerable impact on reserves and liquidity. The scheme has now been extended until 30th June 2020 and the Federation would like a mechanism whereby staff could be returned to their positions on a staged basis as trade returns to a normal footing.
“Similarly, grants announced by the Chancellor are welcome, though these have been slow to filter through to businesses. The threshold of a £51,000 NAV also means that the majority of hotels do not qualify for any assistance. A further fund of £40m has been announced by the Minister for the Economy but details are yet to emerge on how this will be distributed.”
NIHF President Stephen Meldrum sets out what is required to enable hotel businesses to continue to operate: “The NIHF has today asked the minister for a guaranteed minimum of £25,000 to be given to all certified accommodation businesses beyond the £51,000 NAV level. As a heavily regulated sector, it is easy to identify those who meet this simple criterion.
“The Federation has also reiterated its request for rate relief of 100% in relation to the 2020-21 rate year for all those in hospitality and tourism. This approach would mean that Northern Ireland is in line with the measures being adopted in England, where the Chancellor has recognised the burden that rates will be to the sector and has acted to mitigate this liability. To date, a rates holiday of three months has been given to all businesses in Northern Ireland, regardless of whether or not the coronavirus has impacted on their ability to trade.
“While no rates will be paid for April, May or June, hotels are likely to trade at a significantly reduced level. With concern looming over travel, occupancy levels for the remainder of 2020 are to be much lower than 2019 levels, which means hotels will simply not be able to generate the levels of cash required to meet the Reval2020 rate bills.”
Stephen concludes: “Tourism and hospitality have been a key driver of job growth in Northern Ireland over the last decade, and with the right support could play a significant role in rebuilding the Northern Ireland economy post lockdown.
“Trading will be very different and it is therefore critical that measures to mitigate the impact of COVID-19 go hand in hand with support to ensure that Northern Ireland has a viable economy to return to in the coming months.”