2020: The year the hospitality sector was brought to its knees

It would be difficult to overstate how bad 2020 was for the hospitality sector. Coronavirus has caused misery all across Irish society, with tens of thousands struck down ill and, so far, almost 2,200 dead. But it has also ravaged the economy and few businesses have suffered as much as hotels, bars and restaurants. For more than nine months they have stepped in and out of lockdowns like Lanigan’s Ball.

In Dublin, more than 200 so-called “wet” pubs that don’t serve food have been shut for more than nine months and are unlikely to be allowed to reopen until deep into next spring or possibly even summer. With the exception of takeaway service, Dublin’s restaurants and gastropubs have been allowed to trade over that same nine-month period in spurts totalling only about three months.

Outside the capital, since the pandemic arrived in spring wet pubs were allowed to trade for the grand total of just three weeks between mid-September and early October. They have been shut since and are not expected to reopen for months. Takeaway aside, restaurants and gastropubs outside Dublin have managed only four months of trade since March.

Oppressive restrictions

Hotels all across the State also have had to negotiate the same commercially oppressive restrictions. The occupancy rate for the hotel sector is less than 30 per cent overall for the year. That is likely to be the lowest occupancy rate in its history.

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The year started so differently. A long tourism boom had already peaked in 2018 and 2019, and a slight decline in 2020 was on the cards. But close to 10 million foreign tourists were still expected to visit Ireland this year and the domestic market remained strong. A major hotel-building boom, especially in Dublin, was coming to the boil with up to 80 projects in planning at one stage early in 2020.

There were pressure points. At the beginning of the year, competition was really heating up in Dublin’s restaurant sector, illustrated by a few high-profile closures such as Fallon & Byrne in Rathmines, which shut early in the new year. Meanwhile, the long-standing trend of pub closures in rural areas continued. Even some pubs in urban areas, especially those with car parks, were contemplating closure as their sites’ value for alternative uses, such as much-needed housing, became apparent.

The high-profile K Club resort formally changed hands in February for about €67 million, indicating that some investors still had faith in the sector’s prospects. But within weeks, it was clear that a respiratory illness believed to have sprung from a meat market in China was set to change all, and change it utterly.

Airlines had already begun to see a major falloff in bookings throughout January and February. By the end of February, as the virus overwhelmed northern Italy and the scenes from there began to terrify the western world, it was clear that the hospitality sector was in serious trouble. The cancellation in early March of a rugby match in Dublin between Ireland and Italy – the Six Nations is normally a boon for the sector – was the first casualty. Then the St Patrick's Day festival was cancelled, and the plunge began in earnest.

Just over a fortnight into March, pubs agreed to close around the State. Restaurants and hotels were forced to follow shortly afterwards with a Government-mandated closure order. With the arrival of foreign tourists all-but-banned through onerous restrictions, there was some respite for large parts of the hospitality sector with a two-to-three month burst of domestic tourism during a summer virus lull. But that aside, there has been precious little else for the sector in 2020 but misery and disappointment.

Drink-only pubs were left out in the cold, and the wet-dry distinction was born

The curious distinction between “wet” and “dry” pubs, which had never previously existed in discourse around the sector, was spawned ahead of the summer reopening. Public health officials, who have argued since the start of the pandemic that alcohol consumption causes people to let their guard down, initially wanted all pubs to stay closed until August, even though restaurants and hotels, which also sell alcohol, could reopen from the end of June.

Howls of outrage

Predictably, this caused howls of outrage from gastropubs that effectively operate as restaurants, so they were grouped together in the interests of fairness. Drink-only pubs were left out in the cold, and the wet-dry distinction was born.

For much of the crisis, the fate of the hospitality sector has been at the centre of public debate about getting the balance right between the imposition of restrictions to fight the virus, and allowing the economy and society to function. That is unlikely to change over coming months, as the third wave of the virus bears down and hopes of an abatement loom like folly until winter ends.

Summer aside, perhaps the only other time there was any respite from the sector’s gloom was the week of Budget 2021 in October. The Government announced a range of subsidies that were devised with the hospitality sector in mind, such as compensation of 10 per cent of average weekly turnover for periods of mandated closure.

But as we head into three months of anticipated carnage for the sector, those subsidies, which cost taxpayers up to €80 million per week at Level 5, including payments to retailers, are beginning to look insufficient. The nightmare scenario for the hospitality sector is that a wave of insolvencies will hit in January.

A pall of gloom now reigns above every hospitality outlet in the State. Tourism officials, however, are sanguine. They are planning a major new promotional push abroad to attract visitors here, once restrictions ease. Their officially anticipated reopening of the sector sometime before June looks optimistic, and there may be further curve balls ahead for the sector.

And yet the rollout of coronavirus vaccines holds out some hope for 2021. The only question for the tourism and hospitality sector is: how much of it will be left standing by then to take advantage of the nascent recovery?