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26/10/2021

Donegal hospitality sector in crisis, claims leading Donegal hotelier and councillor

Covid, Brexit and the exodus of staff from the industry are all contributing factors

Crisis in Donegal hospitality sector, claims leading Donegal hotelier and councillor

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The hospitality business in Donegal is on its knees, and the Covid-19 crisis is only one part of the problem, according to a leading Donegal hotelier.

The myriad impacts of Brexit and the challenges of attracting staff into the industry were among the concerns voiced by Cllr Micheál Naughton (FF).

The councillor - who is also manager of the Clanree Hotel in Letterkenny - was addressing Tuesday’s meeting of the Municipal District (MD) of Donegal.

“I have big fears for the future of hospitality in Donegal,” he said. “In my years in hospitality I have never experienced anything like it.”
The councillor welcomed the efforts of Donegal County Council in supporting the hospitality industry. But he said that the idea that the sector was recovering was very far off the mark.

The rising cost of supplies due to Brexit, and the shortage of qualified staff were making it very difficult to be competitive.

“The issue that we have at the moment is that we have a price war. It is a false economy and it is a race to the bottom.”

Staff Shortages

Cllr Naughton gave an example of a commis chef typically earning €12 to €15 per hour. Hotels forced to use agency staff were paying €30 per hour for someone in the same role.

“Anybody who thinks the hospitality sector can sustain that is living on another planet,” he said.

The councillor acknowledged that the Clanree had been able to stay open and operate at full capacity, but it was a different story for many businesses in the county.

“A lot of hotels couldn’t do that because of staff shortages,” he said. 

“I appreciate that the government is doing their best but EWSS [Employment Wage Subsidy Scheme] and PUP [Pandemic Unemployment Payment] need to stop. Some staff that were employed before Covid simply haven’t come back.

The councillor said he believed investing in reskilling and retraining would be a better investment than PUP and EWSS. 

“A lot of people left for more regular hours or more secure jobs,” he said. “Every hotel in the county has 90% new staff.

“It is young people who are holding our businesses together at the moment, young people who are now heading off to college.”

Cllr Naughton added that people within the industry also had a part to play in changing the narrative about a career in hospitality.

“It has a reputation for long hours and hard work,” he said. “But that is the case with a lot of other careers too. Gardaí and nurses work long, unsociable hours, but they are seen as better careers.

“We in the industry need to present hospitality as a good career with plenty of prospects, not something that will do if you don’t get anything else.

“Tourism is our bread and butter here in Donegal.”

Brexit

Cllr Naughton said that with so much focus on Covid-19, another significant problem was slipping under the radar.

“The big issue that is being overlooked in Brexit,” he said. “It has done more damage to Donegal business than Covid ever did.

“When you have to check every single day to see if your products are going to be there or not, it is very difficult to do business.”

Cllr Naughton gave examples of some unexpected shortages of popular items that had become difficult to source due to Brexit. These included bottled Heineken which was in short supply due to issues in getting glass bottles.

Another major concern was the cost of transporting goods, and the knock-on effect for local businesses.

“It used to cost STG£170 to bring in a palette of drink,” said Cllr Naughton. “It is now STG£700.”

The cost of importing goods such as delph has also risen sharply. 

“Before Brexit, to bring a container in from China was €2,000,” said the councillor. “Now it is €7,000. Things like delph are out of stock.”

He pointed out that electricity had risen by 20%, adding to the huge challenges faced by  hospitality businesses trying to stay afloat.

Cllr Naughton called for the 9% VAT rate to remain in place in order to give some sort of lifeline to the industry. 

“It has to stay for tourism to survive,” he said.

The councillor also called for the issue of rates to be looked at sooner rather than later. 

“You have to give businesses hope,” he said. 

Cllr Naughton said he feared that Donegal’s reputation as a quality tourist destination would suffer if something wasn’t done.

“We have the hospitality and we have the friendliness but if we don’t have the standard of service, we will lose the visitors,” he said. 

“I am sorry to be so negative but that is the reality on the ground.”

In responding to the councillor’s concerns, Barney McLaughlin from Donegal Council’s Economic Development section said that LYIT had seen a very low uptake on its Culinary Skills course. Only seven of an available 30 places have been filled this year. 

Regarding Brexit, Mr McLaughlin acknowledged: “The product supply chain is a problem and it will continue to be a problem.”

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