Economy

Hospitality warns of shutdown as energy crisis spirals

Hotels, restaurants, cafes, pubs, and shops could be forced to close for long periods over the winter or lay off staff as soaring energy and food costs become unsustainable.

That’s according to a number of industry figures, including one West Cork hotel that saw its July electricity bill exceed €18,000 compared to the €8,300 one year ago.

Manager of the Celtic Ross Hotel in Rosscarbery, Neil Grant, said he was fearful for jobs in rural regions and towns with some small businesses compelled to close for months at a time because they cannot afford to keep the lights on as business dwindles.

Mr Grant said: “A lot of hotels are food and beverage-orientated and the costs are massive at the moment. 

“If it is this costly for the likes of hotels, it is worse for local cafes and restaurants. 

My worry is that cafes and restaurants will have to close. 

“If they don’t get the volume just to keep the lights on, they’ll close for periods. Then, why would people go to the regions if places are closed? That has an effect on entire local economies.

“The costs of running a café, they are part of the industry for which I worry most. In a rural area, they may have shut for two months or lay people off. That is what we could be facing.”

Food prices

The massive spike in gas and electricity in recent months has also coincided with equally exorbitant food price rises, according to Mr Grant.

“Our insurance is up nearly €60,000 a year, electricity €18,000, linen for rooms is up to more than €10k per month from €5,000 in 2019. 

“Cooking oil is up 111%, flour is up 60%, eggs by 30%, Coca-Cola by 18%, mayonnaise by 66%, fish by 33%, and we have more gas rises to come. It’s astronomical.”

Coming into the winter with less volume of guests but more energy costs such as light and heat will hit hotels hard, he said.

“We are not unique in the Celtic Ross, this is what all of us are facing. 

“We are all facing a winter with no grant aid, no wage subsidy scheme, we’re paying full council rates, but the costs are astronomically higher and business levels are not going to bounce back to where they were in 2019 — a year in itself that had loss-making months for many rural and regional hotels around the country. This is really concerning.

“Someone said to me that this is now a bigger crisis for their business than Covid-19. 

“We had four bumper weeks of summer, that’s it.”

Industry warning

Industry group Retail Excellence Ireland said some of its small and medium business members were warning the situation was unsustainable and warned small stores and cafes may be forced to choose between energy bills and staffing.

Managing director Duncan Graham said the likes of small rural stores, coffee shops, boutiques, barbers, etc are bracing themselves for a stressful six months.

“We had two unprecedented years of a pandemic, but there was government supports and business adapted. 

“Now, it’s a whole new challenge that is becoming unsustainable. We need new measures like in Greece, where the government is subsidising 90% of energy costs for business.

This year’s budget will be crucial. 

“It is a very tough run into Christmas and having clarity for the period will be crucial,” he said.

It could mean local shops closing early in the evening rather than later at night, or even Christmas lighting in shop windows being scrapped, because of the prohibitive costs, he warned.

.

Leave a Comment