Preliminary figures for 2003 indicate that overseas visitors increased by 4% to 6.1 million with revenue, including Irish carrier receipts, totalling €4.1 billion. Revenue from the all important home market increased by approximately 5% to €1.1 billion, bringing the total tourism contribution to the Irish economy to €5.2 billion, with the Exchequer netting approximately €2.3 billion. Tourism accounts for approximately 4.4% of GNP.

Membership
The Irish Hotels Federation has 953 members made up of 660 hotels and 293 guesthouses.

Irish Hotel and Guesthouse Industry
There are at present 858 hotels with 43,508 bedrooms and 486 guesthouses with 5,357 bedrooms on the statutory register. 57,000 people are employed in hotels and guesthouses.

Employment Issues
While further details of the activities of our Employment Services Department are set out elsewhere in this report a number of areas warrant inclusion in this review. A new social partnership agreement – Sustaining Progress was entered into early in 2003. The private sector pay element of this involved, 3% of basic pay for the first nine months of the agreement, 2% of basic pay for the next six months and 2% of basic pay for the final three months of the agreement. A new Employment Regulations Order (JLC) came into effect in February 2004 implementing the first phase of the agreement.

The increase in the national minimum wage to €7 an hour, with appropriate adjustments for job entrants and structured training programmes comes into effect on 1 February 2004. The JLC takes account of any obligations to comply with the national minimum wage. For the first time the JLC included a provision that employers include in conditions of employment procedures to deal with issues of grievance, harassment and bullying. A detailed members’ memo on compliance with these requirements has been circulated.

Due to recent pension legislation placing impractical obligations on the Federation, it was decided to formally wind up the IHF members pension scheme. Arrangements were made to transfer the contribution of members and their employees into individual pension schemes and in that way fully protect such funds.

Chief Executive’s Review
Arrangements were also set up to ensure that members fully complied with their obligations to put in place personal retirement saving account schemes (PRSAs) and members’ memos giving guidance and advice on the issue were circulated during the year. Advice was also given to members on the changes in the benefit in kind regulations brought into effect by the Finance Act 2003 and particular attention was drawn to the necessity to regularise the documentation and conditions of employment of staff to whom accommodation is provided to avoid it being subject to tax as a benefit in kind. Quality Employer Programme

The Quality Employer Programme has been in operation since 1997 and covers over 60% of all staff employed in our sector. The employment sub-committee of the council, with assistance from the Tourism Research Centre of the Dublin Institute of Technology, carried out a review of the programme. Developments in employment legislation since 1997 have made many of the requirements for membership of QEP mandatory. It has been decided by Council that modern technology will be utilised to ensure that members continue to adhere to the programme and strong support systems will be put in place to ensure that the sector maintains its status as a quality employer. The activities of the Employment Services Department will also be deployed to achieve the objectives in respect of human relationship management set out in the Tourism Policy Review Group report.

Irelandhotels.com and Be Our Guest
There were almost one million visits to the irelandhotels.com website in 2003, with the average length of visit being just under 12 minutes. A redesign of the site took place during the year as well as a review of the contract for the provision of the on-line reservations system. Submissions were sought from a number of interested parties for the provision of the service and a decision will shortly be made on whether to continue with our existing contractor or to enter into a new arrangement.

Almost 400,000 copies of the 2004 Be Our Guest guide have been printed and are in the process of being distributed throughout the world. Entry into the guide ensures automatic appearance on the irelandhotels.com website and the on-line reservations system. Further details on these activities are contained in the marketing section of this report.

Tourism Ireland
Tourism Ireland completed its second year as the overseas marketing organisation for the island. Visitors from Britain, at approximately 3.54 million showed a slight increase on 2002. The American market increased by approximately 6% to 890,000 and European arrivals at 1.47 million increased by 6%. It would appear at this stage that the national level of room occupancy in 2003 was 59% with Irish customers making up 57% of all bed nights.

Tourism Ireland draws up its marketing programmes in conjunction with the tourist boards and the industry north and south. The marketing budget for 2003 was €34 million and was augmented by an additional €5 million from the two tourist boards to internationally market product and regional activities. Marketing expenditure is divided among the main market regions as follows: Great Britain 35%, North America 27%, Europe 32% and other markets 6%. Approximately 63% of all expenditure goes on advertising, 20% on print distribution and direct marketing activities. The balance is spread over trade support, promotion and publicity. Tourism Ireland’s E-marketing objective continues to strive to be the website of choice for international visitors gathering information about holidaying in Ireland. It is provided by offering consumers a diverse mix of products from industry both north and south on a range of websites.

At the end of the year Tourism Ireland launched its marketing strategy for 2004 – 2006 and operating plan for 2004. The objective is to secure the ambitious targets set by the reports of the Tourism Policy Review Group and Northern Ireland Tourist Board Tourism Strategy Group. The target is to increase the number of visitors to the island by 4.4% in 2004, 5.4% in 2005 and 6% in 2006; this would mean increasing the number of visitors, to the island of Ireland, to 8.6 million in 2006. In meeting this target Tourism Ireland has highlighted the following challenges: competitiveness, changes in consumer behaviour in which the Internet continues to revolutionise the travel and tourism industry, and in the case of inbound air access our loss of competitive advantage as low cost air services between Great Britain and Germany and other European countries grows strongly. It reiterates the need for an additional competitive fast turnaround facility at Dublin airport and retention of the current Ireland – US Bi-lateral agreement for the expansion of air capacity on the North Atlantic.

Fáilte Ireland
Fáilte Ireland was established under the National Tourism Development Authority Act 2003 and commenced operation in May 2003. It brings together, and builds on, the functions previously carried out by Bord Fáilte and CERT. The aim of the new organisation is to provide strategic and practical support to develop and sustain Ireland as a high quality and competitive tourist destination.

The Chair of Fáilte Ireland is Gillian Bowler and among the other directors are eminent hoteliers Mary McKeon, Noel O’Callaghan, Patrick O’Donoghue and Eithne Scott-Lennon.

The Federation continues to work in strategic partnership with Fáilte Ireland and many meetings took place during the year on a number of issues.

Having been agreed with the Federation, new hotel and guesthouse regulations came into effect on 1 May 2003. In excess of €2 million was spent on the promotion of home holidays including corporate advertising initiatives through the peak summer months. In 2004 the integrated home holiday marketing programme will be aimed at further stimulating demand for short breaks in Ireland. This activity is in line with an overall objective of increasing domestic holiday trips from 3 million in 2002 to 3.6 million in 2006. The promotion will combine a strong motivational element to promote brand values building on the Discover Ireland brochure and website usage. A spring advertising campaign will run from March to May. The Federation will maintain close contact with these activities and suggest amendments as the season unfolds.

During 2003 a comprehensive review of promotions was carried out and the programme for 2004 has been refined. Fáilte Ireland continues to link the home-based trade with the overseas activities of Tourism Ireland. The Irish Travel Trade Workshop was held in Killarney in May and was attended by 330 overseas tour operators.

As part of the promotion of the Value Menu Programme a series of workshops for chefs and kitchen managers were held throughout the country to give advice on how to provide value for money without diminishing the quality or range of the produce on offer.

The Go Places in Tourism roadshow, in which many members actively co-operated, promoted tourism as a first choice career for over 10,000 school leavers. In a new initiative research was commissioned to analyse the process of recruiting school leavers to Fáilte Ireland courses and the findings will play an important part in the recruitment marketing campaigns for 2004.

A €1.4 million state of the art centre was opened in Cork to provide training and consulting services to tourism and hospitality businesses in the Cork Kerry region.

The Federation is participating in a Fáilte Ireland initiative to address the cost of insurance across the tourism sector and to examine the feasibility of developing credit insurance to protect against exposure to creditors. The need for this became most apparent during 2003 with the collapse of the Far & Wide Group, which resulted in losses of approximately €2 million among members.

Fifty companies from a range of sectors across the industry achieved an Ireland’s Best Award during 2003 and twenty companies commenced the implementation of the best practice system. Fáilte Ireland supported the Irish Hotels Federation and Gemma Publications in the publication of “Get a Life in Tourism” which had a print run of 25,000.

Convention Bureau of Ireland
The Federation has four representatives on the council of the Convention Bureau of Ireland – Niall Geoghegan, Matthew Ryan, Pat Chawke and I. During 2003 a review of the effectiveness of the marketing plans for the bureau for the years 1999 – 2002 was carried out. It identified priority markets for the next 3 years and the bureau and its Council are considering the findings and recommendations of the review. During the year the Convention’s website www.conference-ireland.ie was also updated.

A new Conference and Meeting Guide 2004 – 2005 was completed and is ready for distribution. In addition a new incentive brochure with supporting CD Rom in a number of languages was developed and is also available. With the advent of the Dublin Convention Bureau, Cork Convention Bureau and the Meet Limerick Shannon Promotion Bureau the Federation believes that it is essential that relationships are developed between the Convention Bureau of Ireland and these bureaux to ensure their efficient and effective operation and discussions are presently taking place with Failte Ireland on this issue.

Dublin Convention Bureau
The Dublin Convention Bureau, a joint initiative funded by IHF Dublin branch, the Association of Irish Professional Conference Organisers, Dublin City Council and Dublin Tourism commenced operation in March. The Federation has three representatives on the board – Niall Geoghegan, Matthew Ryan and I. The objective of the bureau is to position Dublin as one of the leading meeting, conference and event destinations in the world. It offers its services to any national or international conference organisers free of charge. It has developed an effective website www.dublinconventionbureau.com and has published and distributed a conference and meeting planner. It is estimated that the bureau procured €3 million worth of business in its first nine months of operation.

National Conference Centre
The Federation continues to lobby Government for the development of a national conference centre. Its development is a key recommendation in the report of Tourism Policy Review Group and in public statements made by Tourism Ireland and Fáilte Ireland. During the year the Government agreed in principal to its provision and a steering group was established to agree the parameters of the procurement process and to review the specification and operational requirements of the project. The Office of Public Works issued a notice inviting expressions of interest from private investors in November and four responses were received.

Budget 2004
The Federation made a submission to the Minister for Finance in advance of the 2004 Budget. It focussed on our fear of on-going taxation charges and price increases in the absence of specific measures to the contrary. We highlighted our concerns in areas of international currency movements and substantial cost increases to the sector in areas outside of our control. The Federation sought the reduction of VAT from 13.5% to 10% and its treatment as an input for registered businesses. We also called for the restoration of the pre-budget 2003 excise rate on spirits, a cap on local authority commercial rate charges and the allocation of an additional €40 million to domestic and international marketing over 3 years.

When the budget statement was issued we were relieved that there was no increase in either VAT or excise duties, additional resources were made available to local authorities to give them some flexibility in ensuring that the full impact of the benchmarking wage costs were not passed on to rate payers and that there was an increase of 6% in the allocation to tourism. In many discussions with the Department of Finance we expressed concern about the impact that the 31 December 2004 cut off date for capital expenditure on hotels qualifying for Capital Allowances would have on a large number of new properties coming on stream. Consequently we were relieved that the cut off date was extended to 31 July 2006 and a provision has been included in the Finance Bill which allows capital expenditure, for which planning permission is not required, also to qualify for the accelerated system of Capital Allowances provided definite plans and commitments are in place by 31 December 2004.

Insurance
As indicated last year tackling the issue of insurance was going to be one of the priorities for 2003. We prepared a detailed submission to the Joint Oireachtas Committee on Enterprise and Small Business in which we outlined that the average insurance premium in our sector rose by a massive 351% between 2000 and 2003, and that this level of increase if continued would force many hotels and guesthouses out of business. We stated that there is insufficient competition in the insurance market to bring down costs, that fraudulent and exaggerated claims are an endemic problem, that legal and professional fees are an unnecessarily high driver of costs. These underpin increases in claim costs in addition to Ireland having a higher compensation cost than any other European country.

Mr Donie Cassidy TD, a member of the Federation, is chairman of the committee, and ensured that a high profile was given to this issue and the publication, in August, of the interim report of the committee acknowledged many of the points made by the Federation. Among the recommendations were the speedy establishment of the Personal Injuries Assessment Board and the extension of its remit to include public liability claims within six months of its establishment, the acknowledgement of the lack of competition in the Irish insurance market, a proposed quantum group to recommend on the level of awards appropriate to Ireland, specialist training for Judges in relation to insurance issues and reference to a book of quantum in deciding the level of awards, transparency in how insurance premiums are calculated and that policy holders should see clear evidence of the benefits of being claim free.

The Joint Oireachtas Committee continues to sit and it is anticipated that the Federation will make a further submission based on the experiences of members in renewals for 2004. There have been a number of positive developments in the insurance market during 2003. The rise in insurance premiums appears to have stopped and members are reporting some reductions particularly where they seek alternative quotes. The Personal Injuries Assessment Board has been established on a statutory basis and is considering employer liability claims. The Minister for Justice, Equality and Law Reform has published a draft Civil Liabilities and Courts Bill, details of which were circulated to members, which when enacted will go a long way t