IHF President,
Jim Murphy

As my Presidency of the Federation draws to a close I have been reflecting on the many events that have occurred, it seems no length of time since I took office and I wonder where the last two years have gone. 2002 and 2003 were years dominated by great uncertainty in international affairs on the one hand, and consolidation and major challenges facing the Irish economy on the other.

The after effects of 11 September 2001, the war on terror and the threat of a SARS epidemic all impacted substantially on international tourism. Here in Ireland the economy and the business environment adjusted to reduced growth in GNP and a severe erosion of competitiveness.

While no one expected the 10% GNP growth rate of 1997 – 2000 to continue indefinitely, the more modest growth rate of approximately 2.5% in 2003 takes some getting used to. Perhaps the most sobering and frightening statistic is that when I took office in March 2002 the Euro was worth US$0.87 but as I write its value is around US$1.26, an appreciation of 44% in 2 years. In the same period the Euro has also strengthened against sterling from 61.5p to 68p, an 11% increase. Exchange rate fluctuations are a cause of concern for 2004 when you consider that almost 65% of our overseas tourism revenue comes from outside the Eurozone.

At the outset no one doubted that 2003 would be anything but challenging and eventful. The inevitability of a war in Iraq and the evolving SARS scare created uncertainty, but as the year progressed the resilience of our industry once again became evident.

The highlight of the year for me, from both a national and a tourism perspective, was the Special Olympic World Games held in Ireland during June. The manner in which the whole island came together to host a world class sporting event is evidence of what can be achieved when there is a strong vision and all available resources are utilised to implement that vision.

Early indications for 2003 are that Irish tourism achieved growth of approximately 4% while domestic activities appear to have increased by 5%. As in previous years there are substantial variances in the performances of the different regions. Overall room occupancy in 2003 was on a par with 2002 at just under 60% and there is substantial evidence that room yields are at best the same as in previous years but in many cases are reducing. The Central Statistics Office figures show that there was no inflation whatsoever in accommodation services in 2003. This result was no doubt driven by the availability of good value special offers in hotels and guesthouses. It is clear that the profitability of the hotel and guesthouse sector has been eroded during the year when substantial increases in the cost of doing business in Ireland are taken into account, most notably in the areas of insurance (+ approximately 20%), energy (+ 6%), wages (+ 5 –7%) and local authority charges (anything up to 30%).

Alfie Lydon, Managing Director, Coca Cola Bottlers (Ireland),
Minister John O'Donoghue T.D. Minister for Arts, Sport and Tourism,
Jim Murphy, President, Irish Hotels Federation
at the IHF's 65th Annual Conference in Galway

2003 saw a number of major strategic developments in the tourist industry that will impact on our development in the years ahead. Fáilte Ireland was established as the National Tourism Development Authority consolidating the functions previously carried out by Bord Fáilte and CERT. I wish the Chair of Fáilte Ireland Gillian Bowler, her Chief Executive Shaun Quinn and Board every success in the challenges that lie ahead.

The Tourism Policy Review Group, whose creation we welcomed in 2002, published its report “New Horizons for Irish Tourism – An Agenda for Action”. The report of the independent group acknowledged the importance of Irish tourism to our economy.

Contributing over 4.4% of GNP, being a major instrument of national regional development and going forward a sector of major opportunity. It stated that Irish tourism is arguably the most successful sector of Irish owned enterprise since the foundation of the State and while it enjoyed strong successes in the 1990’s recent years have seen a significant loss of competitiveness. It highlighted that the loss of competitiveness has been driven to a large extent by the high cost of doing business, which if unredressed will undermine our capacity to benefit from the strong growth envisaged in international tourism.

The report identifies 9 key strategic drivers of success for Irish tourism going forward to 2012: business environment, competitiveness and value for money, access transport, information & communication technologies, product development and innovation, marketing and promotion, people in tourism, Government sector and information, intelligence and research. It focuses attention on the actions to be implemented for each driver on a two year rolling action plan basis.

At the time of writing I have just been appointed, by the Minister for Arts, Sport and Tourism, to a high-level implementation group to drive forward, monitor and report on progress on the recommended actions. The tourism industry representative bodies, of which the Federation is a major one, are identified as having a leading roll to play in 19 of the 74 recommendations of the report. Effectively participating in the implementation of those recommendations will have a substantial impact on the resources and activities of the Federation in the years ahead.

The Finance Act 2003 brought to an end Capital Allowances in respect of hotel development. The requirement to submit a valid planning application prior to 31 May 2003 with the expenditure incurred prior to 31 December 2004 phased in the termination of the scheme. In his 2004 Budget Statement the Minister for Finance extended the completion date of the investment to 31 July 2006. However we were concerned that capital projects not requiring planning permission may not qualify for the same level of capital allowances and we are pleased that this matter has been dealt with in the Finance Bill 2004. The Federation recognises that it is vital that reinvestment is maintained in the capital stock of Irish tourism and we will continue to lobby for the retention of tax relief for capital expenditure.

The cost of insurance continues to the scourge of our industry. During 2003 we closely aligned ourselves with the Alliance for Insurance Reform, made a submission to the Joint Oireachtas Committee on Enterprise and Small Business and used every possible opportunity to highlight the issue. I welcomed the commitment shown by Ms Mary Harney, the Tánaiste and Minister for Enterprise, Trade and Employment, Mr Michael McDowell, the Minister for Justice, Equality and Law Reform, Mr Donie Cassidy, the Chairman of the Joint Oireachtas Committee to reduce the cost of insurance. But must be highly critical of the reluctance of insurance companies to reduce premiums.

Much discussion and a number of meetings with the Minister for Health and Children, Mr Micheál Martin took place during the year on the proposed ban on smoking in the work place. While we publicly supported the objective of creating a safer working environment and acknowledged the damage caused by environmental tobacco smoke, we expressed the view that the ban should be phased in and alternatives to a total ban should be fully explored. We expressed serious concern at misleading statements and information issued by anti-tobacco organisations and Government bodies particularly in respect of the extent of restrictions in other jurisdictions and the economic impact of those restrictions. However we accept that the smoking of tobacco products and exposure to environmental tobacco smoke are injurious to health. Having considered the Government’s determination to introduce the ban, the existence of a ban in a number of other countries and indications that a number of European countries will also introduce a ban we concentrated our efforts on ensuring that hotel and guesthouse bedrooms would be exempt from the restrictions and in these efforts we succeeded.

Mr. Niall Reddy, Acting Chief Executive, Bord Fáilte,
Mr. John O'Donoghue TD Minister for Arts, Sport and Tourism,
Ms. Glenda Gilson, Mr. Tom Mythen, President, Restaurants
Association of Ireland, Mr. Jim Murphy, President, Irish Hotels
Federation at the launch of the Value Menu Guide

Over the course of the many meetings we had with Mr John O’Donoghue TD, the Minister for Art, Sports and Tourism we reiterated the issues impinging on the industry. I wish to acknowledge the notable achievements of the Minister and his Department in the establishment of Fáilte Ireland, ensuring that the report of the Tourism Policy Review Group was published and also publicly committing to ensuring that its recommendations will be pursued. In a year of major constraints in the public finances the Minister procured an increase of 6% in the estimates to bring the tourism allocation to _114 million. For many years the Federation has called for the development of a state of the art national conference centre.

The proactive steps taken by the Minister to place this high in his priorities and his invitation for expressions of interest in its provision encourages us.

In the wake of the tragic events of 11 September 2001 the US Ireland Alliance approached the Irish Government, Tourism Mr. Niall Reddy, Acting Chief Executive, Bord Fáilte, Mr. John O'Donoghue TD Minister for Arts, Sport and Tourism, Ms. Glenda Gilson, Mr. Tom Mythen, President, Restaurants Association of Ireland, Mr. Jim Murphy, President, Irish Hotels Federation at the launch of the Value Menu Guide Ireland, the Hotels Federations North and South, the Car Hire Council of Ireland and Aer Lingus to support a scheme to provide a holiday in Ireland for the bereaved families of members of the Fire Department of New York, New York Police Department and the Port Authority. I was proud of the willingness of Council and the general membership of the Federation to offer complimentary accommodation to such well deserving families. 543 individuals travelled and all of them experienced the enormous generosity of the Irish hospitality sector. In addition many of our Dublin branch members provided hospitality for 60 members of the New York Fire Department and their partners during 2002.

Ireland as an island is totally dependent on good access by air and sea to facilitate and encourage the growth of international tourism. It is essential that the principal carriers to this country continue to prosper and grow. The success of the restructuring and refocus at Aer Lingus, including the welcome reinstatement of the Baltimore route to Shannon and Dublin and planned additional new routes to Europe for 2004 is reassuring. Capacity on the North American routes have returned to pre 11 September levels as a result of Aer Lingus’s actions and the entry of US Airways into the market. The opening up of new routes to Europe by Irish carriers Aer Lingus, Ryanair and Aer Arann and the entry of Happaglloyd Express and Basiq Air for next year is also encouraging. However, there is more to be done. We welcome the commitment of the Minister for Transport, Mr Seamus Brennan on his appointment to procure the development of additional competitive fast turnaround terminal facilities at Dublin Airport and to review the Irish – US Bi-lateral Air Agreement. The Federation firmly believes that that the renegotiation of the agreement in advance of an EU–US aviation agreement could remove US gateway constraints and maximise the benefits to Ireland from additional air services and enhanced visitor flows. Decisive and immediate progress on those two issues would be of substantial benefit to Irish tourism and to the Irish economy as a whole.

Jim Murphy President Irish Hotels Federation,
John Gilmore Sales Director Guinness UDV
at the Be Our Guest launch

Irelandhotels.com and Be Our Guest continue to be strong brands promoting our products. The website and its on-line reservations system has been in existence for two years. During 2003 the look of the website was redesigned and a major review of its function and effectiveness is underway. I am confident that the review will result in further improvements on the site with additional facilities being introduced early in 2004. Be Our Guest is still by far the most popular and sought after guide for Irish hotels and guesthouses. Almost 400,000 copies have been printed and are currently being distributed throughout the world for the 2004 season.

The Quality Employer Programme has been in existence for 7 years and in late 2003 a review of its effectiveness and structure was completed. Plans are now being implemented to update the programme and to make its delivery cost effective through the use of technology. The programme has been a useful tool in confirming that hotels and guesthouses are good employers using modern human resource practices. To maintain the success of the programme and to ensure that employees and employers alike are made aware of its core values we must make greater use of technology and the Internet.

In 1997 we set up the Irish Hotels Federation pension scheme to facilitate members who wanted to make pension schemes available to their staff. However the Pensions (Amendment) Act 2002 placed such onerous responsibilities on the trustees of pension schemes that it was decided to terminate it and to facilitate the creation of individual schemes for participating members. The development of Personal Retirement Savings Accounts (PRSAs) is an alternative for small employers wishing to make pension arrangements for their staff and the Federation provided advice to members on the implications of PRSA schemes.

Throughout the year we continued to build alliances with other organisations to increase the impact of lobbying activities. These organisations include the Alliance for Insurance Reform, the Restaurants Association of Ireland, Feile Bia and the Chambers of Commerce of Ireland. In addition the council of the Federation endorsed the White Flag Award, a quality award for leisure facilities promoted by ILAM with the assistance of An Taisce.

The issue of local authority charges continues to be high on the Federation’s agenda. During the year, in conjunction with the Chambers of Commerce of Ireland we met the Minister for the Environment and Local Government, Mr Martin Cullen TD, and outlined our concerns on this serious issue. The Minister intends to carry out a review of the funding of local authorities in 2004 and the Federation will prepare a submission for that review. Jim Murphy President Irish Hotels Federation, John Gilmore Sales Director Guinness UDV at the Be Our Guest launch

Following discussions with Fáilte Ireland (formerly Bord Fáilte) the registration regulations for hotels and guesthouses were updated and the changes came into effect on 1 May 2003. These regulations replace those in place since 1988. The report of the Tourism Policy Review Group recommended updating the classification system and making it mandatory for all hotels and guesthouses. We have indicated that this matter should proceed with care and that the task is much greater than merely upgrading the existing classification system. The development of electronic distribution poses the threat that hotel accommodation will be viewed as a commodity in the same way that competition in airline seats is almost solely on price. An updated classification system should build brands rather than continue a generic 1 to 5 star system. This matter will be the subject of special attention in 2004.

Jim Murphy being presented with the
Hibernia College Award for Excellence in Education
by Dr. Sean Rowland, Executive Chairman of Hibernia College

Further building on the recommendations of our ‘Strategic Review – A Blueprint for the Future’ has taken place, an online Masters in Hospitality Management Programme developed by Hibernia College and accredited by HETAC is now being delivered. Executives within the industry are striving to achieve this highly valuable qualification. The programme offers participants the flexibility to pursue the course using the Internet negating the need to travel away from work and home. The course has potential for future development in Ireland and overseas.

The on-going dispute with Phonographic Performance (Ireland) Limited to arrive at a level of equitable remuneration for the public use of recorded music is scheduled for hearing in the High Court in early February. A ring-fenced fund has been established to finance the case and to ensure that we are in a position to engage the most effective legal experts to ameliorate the potentially disastrous effects of the findings of the arbitrator who, in 2002, issued a ruling on the level of equitable remuneration. We believe the outcome will have a major impact on the fees members will pay in the future for the use of copyright protected music.

Tourism Ireland Limited, in 2003, completed its second year of marketing Ireland overseas. Wherever possible we participated in promotions organised by Tourism Ireland. One of the most successful initiatives during the year was the German roadshow that toured the country for 8 days last March. A similar roadshow will take place in 2004 and it is our intention to participate again as it coincides with the introduction of additional air routes from Germany.

The Federation continues to be actively involved in the activities of HOTREC. In October Tom Mythen, President of the Restaurants Association of Ireland and I had the honour of jointly welcoming the HOTREC General Assembly to Dublin. This general assembly was held in conjunction with a HOTREC seminar on Copyright and Collecting societies. We were delighted and proud that Mr David Byrne EC Commissioner for Health & Consumer Protection addressed the General Assembly. The Chief Executive and I also attended a General Assembly in Sicily in April, which included a seminar focussed on the challenges of EU enlargement.

HOTREC General Assembly Dublin
David Byrne EU Commissioner for Health & Consumer Protection
Annette Whyte, Jim Murphy President Irish Hotels Federation

My term of office has come to an end very quickly. As I reflect on it I wish to express my appreciation to all those who assisted me. Whenever and wherever I sought support it was always forthcoming. I am honoured to have been President of the Federation. I wish to thank all those who helped and guided me, in particular my Vice Presidents, Management Committee and Council members. Thanks are also due to members in general who gave so much to ensure that the Federation had an impact when and where it mattered most. The Chief Executive and staff at Northbrook Road gave unlimited and willing support. I wish every success to our incoming President who I know, with the support of Council and members will continue to lead our hotel and guesthouse industry.