COVID-19 Capacity Licencing Process needed for hotel sector

Crowe Partner Aiden Murphy talks to Micheline Corr about the 2021 outlook for the hotel sector and the need for a COVID-19 Licencing Process to bring back weddings and events

In this video interview, Aiden calls for the government to implement a COVID-19 Capacity Licencing Process for 2021 to reinvigorate the ailing hotel sector.

Under such a process, in a level 2 scenario, each hotel could be allowed to provide banquet events up to a size criterion which is appropriate to their event space as determined by either the local authority or HSE. Table layout and configurations would be allowed within pre-agreed parameters, like what has worked in larger restaurants and bars. 

Implementing this process would support re-opening of ground floor activities, such as weddings and cabaret-style events, at Irish hotels so greater numbers of staff can be brought back onto the payroll. 

Hotels are controlled and managed spaces and hoteliers will want to play their part in getting society up and running as important community stakeholders in activities and employment across the country.

Hosting events will be critical for the sector to help create demand for room nights from the domestic market. Hotels will however need lead time to put arrangements in place and market these events. Putting a COVID-19 Capacity Licencing Process in place now could allow hotels to provide weddings and leisure breaks that include after dinner entertainment from easter onwards. This in turn will support the arts community as it helps get work flowing again to the many performers and artists who have been left without the opportunity to work for a long time now.

Also in this wide-ranging interview, Aiden discussed the importance of government subsidies to support the sector. With hospitality businesses in 2021 not expected to operate above 40-50% of 2019 levels, many will need to draw on the government supports like the COVID Restrictions Support Scheme (CRSS) and the Employment Wage Subsidy Scheme (EWSS) to help cover costs and bolster cash flow.

Aiden feels that these supports available to the sector will enable it to weather the storm better than they did in the financial crisis a decade ago. However, while the sector may recover quickly in terms of occupancy, he predicts that it could take up to four years for the sector to rebound to the 2019 room rate levels.

Aiden predicts that Brexit will continue to have a weakening impact on the value of Sterling. Any impact of Brexit on Irish tourism will be strongly related to the future value of sterling against the euro and other currencies. Further weakening of Sterling will make stay at home vacations relatively cheaper for the UK market, which has long been a key source market for Irish hotel sector. Any downturn in the economy of Northern Ireland would also have a negative impact on hotels close to the border.

Crowe’s specialist hotel, tourism and leisure team comprises experienced accountants and hospitality consultants with practical industry expertise that enables us to provide a wide range of tax, liquidity & cash flow management, restructuring & insolvency and accounting services to the sector.

To find out more about the range of specialist hotel, tourism and leisure (HTL) services Crowe offers, visit our HTL sector webpage or contact a member of our HTL team.