PREDICTION PREDICAMENT

JANICE GAULT LOOKS AT THE LATEST HOTEL DATA.

The summer of 2022 has proved an interesting one with hotel performance holding up and good occupancy in most regions. However, the August data just released by STR shows a fall in room rate in all areas except for Belfast whose rate held due to a strong events calendar, buoyant leisure travel and the return of international tour visitors.

Reports from the sector suggest that demand was even more last minute than ever, with significant on-the-day pick up a common occurrence. Price sensitivity is impacting on bookings and with VAT now at 20% price flexing and maintaining profit have proved to be a greater challenge.

The year-to-date figures for 2022 and comparisons back to 2019 are much more telling. In 2019, occupancy up to August was 72.4%, a fall from the 2018 figure of 75.4%. Average Room Rate (ADR) was more or less on par between the two years at £79.43 and £79.66 respectively. A reduction in occupancy was not unexpected in 2019 as a large amount of new supply came into the market over the year.

While historical data has its place, it isn’t really providing solid information on which to forecast or budget. Performance indications for 2022 have been based on 2019 figures with an overlay of new market intelligence which is very fluid. Data up to August this year has occupancy sitting at 70.2%. On the face of it this is pacing well but there are concerns about the coming months which traditionally see a fall off in trade. The last quarter is usually weaker than quarters two and three. Uncertainty is impacting all sectors of the economy with hotels, hospitality and other discretionary spend likely to reduce with growing pressures on the consumer’s pay packet.

The current cost of living crisis is already starting to chip away at consumer confidence and with rising costs across the board, businesses are trying to balance offering value while remaining viable. After two difficult years, a restriction free winter may be on the cards which may prove very appealing to customers. They may decide to splurge for the rest of 2022 and scrimp in 2023.

JANICE GAULT Chief Executive

Forecasting the final year results is a predicament influenced by factors that have never been in place before. Uncertainty creates a difficult dynamic for all. However, as we look forward it’s important to remember that this time last year things were far from easy; restrictions were in place, COVID19 passports were required with dancing not permitted. The mood music may have changed but the hotel sector is still standing and adapting to a different tune.

“The time savings we’ve accrued have freed up resources to focus on value generation, idea creation and innovation, allowing our finance professionals to move away from number crunching to become value creators.

Sam Hartley, Finance Director, Dakota Hotels