Hotel trade in crisis as room rates plunge
THE cost of staying in a budget hotel for a month is now almost the same as the short-term let of a one-bedroom apartment.
A collapse in the price of hotel rooms has led to a crisis in the trade, with rooms available in budget hotels for as little as €46 a night.
Room prices have plunged to a 10-year low amid dire predictions of "zombie hotels" emerging around the country.
A new report says profits in Irish hotels have been sliced in half over the past two years and room prices continue to drop as hoteliers try to attract business amid a glut of available accommodation.
And the Irish Hotels Federation (IHF) yesterday predicted this year was going to be even worse than 2009 with no sign of an upturn in the future.
Figures from consultants Horwath Bastow Charleton show the average for a room last year was €77.81 -- just a few cent off the average in 1999.
The average price of a room in 2007 was €97.69 -- meaning current charges are 20pc down as the recession continues.
"I can't see an upturn at all, I think market conditions remain very flat," president of the IHF Paul Gallagher said.
The dwindling profit levels at many hotels now mean they are unable to pay their bank loans, with high-end accommodation in four- and five-star hotels the hardest hit.
Last year, a room in a five-star hotel could be snapped up for €130 -- down from €168 two years previously.
The price of rooms in budget hotels has also plummeted to just €46 a night.
There has been a surge in construction in the hotel sector over the past decade during which 25,000 rooms -- 40pc of the total -- have been built.
The Horwath Bastow Charleton study estimates the average debt per room is around €135,000, leaving one-third of hotels in difficulty repaying interest on loans. Central bank figures for the end of 2009 show outstanding loans at €6.4bn.
Mr Gallagher said of the IHF's 900 members, around 36 have gone into receivership. This figure is expected to double by the end of the year.
"Clearly some of those don't have a future," he said. The IHF president said businesses that have failed should no longer be allowed to trade.
Predictions for the industry in the capital are slightly brighter. Dublin hotels pull in €16 more per room on average and have a 10pc higher occupancy.
The development of the Grand Canal theatre, the Aviva stadium and the national convention centre "will help the Dublin market rebound quicker", said the report.