MARKET SNAPSHOT

Sustainability Of Strong Summer Statistics Still A Concern

A wash out of a summer did not appear to dampen hotel performance as the latest figures from STR evidence. They show occupancy for August in Northern Ireland coming in at 86.4%, the highest month to date in 2023. ADR remains healthy with a net figure of £104.94 year to date. Many hotels are reporting their best performance on record. A single month snapshot is always interesting (and in this instance good for morale). Year to date figures, annual comparisons and an examination of trends, however, give a more robust base upon which to reflect and react.

A question for the industry is how sustainable this is against a struggle for staff and soaring costs. The removal of the upper age limit on apprenticeships is good news but the sector needs to appeal to more people to maintain current levels of business. Staffing is still a major concern for those seeking to grow business.

Since May 2023, Northern Ireland hotels have performed well; the summer being the time to build reserves for the leaner months ahead. The business mix has been different with “staycations’ waning, international visitors returning and the corporate trade gaining pace.

Costs have been a real concern, fluctuating wildly and presenting a real challenge for setting realistic pricing levels for future contracts. This may impact upon growth. While occupancy is holding up and there is growth in room rates, inflation and a much higher cost base have diminished profits. Occupancy figures are still less than those achieved in 2018 (74.7% YTD 2023 vs 75.4% YTD 2018).

The domestic tourism market has become more price sensitive but the Northern Ireland offering for the international visitor is still recognised not only as great value but as an authentic experience for the discerning traveller.

Looking closer, Belfast has held its own with good business across all sectors; the regional performance has seen occupancy being sacrificed for rate. Derry/Londonderry has achieved good growth across all KPIs with the addition of new rooms in the city not adversely affecting summer performance. Southwest Ulster has grown room rate but dropped occupancy and the resortled market of regional Northern Ireland just holding occupancy while excelling at growing ADR.

The slowing of the construction pipeline offers opportunities in the medium term with only one further opening in 2023 (Room2 with 175 rooms in Belfast) and limited new bedroom stock due in 2024. After that it is more difficult to predict a credible channel forecast; there are lots of plans for aparthotels, new product for the North Coast, extensions to existing product in Derry and Belfast but with inflated construction costs, pressure from interest rates and a cost-of-living crisis, projects may not come to fruition or could proceed along an entirely different path.

It’s good to see the sector performing well, covering costs, and yielding a fluid marketplace. Using data and having the right information in a timely manner will reap benefits in the long term. To date 2023, has been all about recalibrating business, managing costs, and clever use of personnel. It’s a juggling act that is likely to continue for the foreseeable future.

Trends

Last minute bookings across all sectors with on-the-day bookings rising. This continues to present a challenge in terms of staffing, provisioning, and resisting the temptation to discount to attract business.

Reduction in wedding guests and reports of a falling off in bookings for marriages and civil partnerships for 2024 but strong interest for 2025. Many hotels are reporting a greater spend per guest, but this is still not creating the same level of turnover as previously.

Changes in the restaurant and dining landscape with hotels experiencing strong food and beverage business driven by limited options in many destinations and reduced opening hours for non-accommodation food providers.

Staffing, always a challenge, has settled in some areas with businesses utilising overseas workers and exploring new working patterns to alleviate their specific business needs.