Chief Executive's Review

by John Power

The preliminary estimates for 1998 show that 5.5m foreign visitors came to Ireland generating £2.3bn.foreign exchange earnings, a 9% increase in 1997. When we add to this the estimated £800m. value of domestic tourism we see that the hotel and guesthouse sector is a major contributor to this £3.1bn industry. Total numbers employed in tourism are estimated to be 124,000 with more than 50,000 in hotels and guesthouses.

Tourism growth, exceeded the phenomenal GNP growth. While the employment in tourism matched the 4.6% national employment growth rate, the recently released CERT employment survey indicated that employment growth in hotels and guesthouses, over the last two years, of 19% was almost double the national employment growth rate.

There are now over 820 hotels in Ireland with almost 36,000 bedrooms and 440 guesthouses with 4,700 rooms. This represents an increase in bedroom capacity of 16% over 1997. With indications being that the sale of hotels rooms are likely to increase by about 11%, the net effect must be that the national occupancy rate will have reduced in 1998 over 1997. The level of additional capacity available underlines the continuing need to focus on the effective marketing of Ireland overseas. The 1998 results shows a return to growth in the promotable segments of overseas tourism market i.e. main purpose holiday, conference incentive, study of language learning, with the arrivals likely to be up 7% to 2.41m and the value to be up 9% to £932m. With the membership of the Federation now totalling 820 - 576 hotels and 244 guesthouses - and the greater participation of the Federation in national economic and tourism issues is by necessity widespread.

Quality Employer Programme

The Federation committed additional resources to the Quality Employer Programme during 1998 and this included the appointment of 6 facilitators who promoted membership of the programme throughout most of the country. This resulted in our now having over 450 applicants for membership of which over 160 have already been accredited. Throughout the year, our Quality Employer Co-ordinator, Anne O'Carroll, ensured that the standards of accredited properties met the necessary criteria.

With the continued increase in employment in Ireland, 1998 having added 65,000 people to the workforce, and the resultant fall in the national unemployment level to less than 8%, the challenges and competition facing us to recruit staff became more intense. We continued to make presentations to more schools and took stands at career exhibitions. In conjunction with CERT and the Restaurant Association of Ireland, the Federation was a major driver behind the successful Tourism Careers Roadshow. These events throughout the country attracted over 8,000 attendees and a data base is now being put in place to ensure that the industry retains contact with students who are interested in pursuing a career in the hospitality sector. CERT has taken over the administration of the Transition Year Programme, which we piloted two years ago in Limerick. A code of practice for work experience students has been developed and circulated to our members and to career guidance teachers. In conjunction with CERT we set up an initiative to interview people in London and Glasgow with a view to enticing them to take up placements in Quality Employer accredited hotels in Ireland. Having heard of the Quality Employer Programme, we were contacted by a state placement agency in Sweden and in early March we will carry out interviews with view to recruiting suitable staff to work in QEP accredited hotels. We have recently arranged the placement of Swedish students seeking work experience, on a pilot basis, and this project will be built on through 1999. Anne O'Carroll is also involved with an EU funded employment integration programme in then Dublin Adult Learning Centre, on a pilot scheme which, hopefully, will lead to full time placements within our industry.

Dr. James McDaid TD, Minister of Tourism, Sport and Recreation adds the plum sauce to a special flambe demonstration at the official launch of the National Tourism Careers Roadshow "Getting a Plum Job in Tourism and Hospitality." (l to r) Dr. James McDaid TD, Minister of Tourism, Sport and Recreation. Terry McCoy, President Restaurants Association of Ireland and Chef/Proprietor, Red Bank Restaurant, Skerries. John Power, Chief Executive, Irish Hotels Federation.

Strategy for Growth beyond 2000
A strategic framework for Irish Tourism - ITIC

I served on the Committee of ITIC which produced the "Strategy for Growth Beyond 2000 - A Strategic Framework for Irish Tourism" report which, following a review of the existing tourist industry and the major contribution which it makes to the Irish economy, recommended that the Government and Industry should negotiate a Compact committing both sides to the sustainable development of the tourist industry in the island of Ireland, to provide more jobs, to stimulate the state's overall economy and provide an adequate return on investments. The guiding principles of this Compact would be partnership and shared responsibilities in order to optimise the value of the industry to all the direct and indirect stakeholders. The Compact, similar to social partnership agreements will involve an agreed series of responsibilities and obligations on both parties. It was recommended that the locations and sub-regions where new tourism clusters and atttractors can be developed preferably in areas not traditionally visited by tourists or where the industry is significantly short of having developed t its optimal potential. The success of developing Dublin as an urban attraction for tourists should be replicated for similar strategies for Cork, Limerick and Galway.

The report also strongly supported the environment and traffic management initiatives proposed under the current Operation Programme for tourism. Greater emphasis should be placed in defining the source market priorities by geographic origin and consumer interests in order that destination-marketing resources for both the public and private sector can be most effectively allocated on a consistent basis. Bord Failte, OTMI and product providers should develop a stronger marketing alliance, with the carriers serving Ireland so as to more profitably exploit the synergies for attracting new traffic. It recommended that Government should continue to campaign against the abolition of duty-free, sales to intra-European travellers and a programme of support policies for a limited number of regional airports for the South and West should be initiated to encourage a more balanced regional spread of tourism gateways. On institutional arrangements it is suggested that the setting up of a Tourism Development Authority responsible for policy development, industry co-ordination, allocation of funding, monitoring, evaluation and implementation of research and development programmes. Bord Failte should be strengthened so that it can better market Ireland to promotable sectors as a travel destination and provide assistance for the industry in line with its core role and functions. It recommended that an international group of consultants working to a prescribed brief should be retained to follow up on the previous Arthur D Little report on the operations of Bord Failte. It recommended that the Regional Tourism Authorities and Shannon Development should be given greater responsibility and resources so that they can effectively develop regional strategies, influence national policy and co-ordinate local resources.

On human resources, it is recommended that the example given by the Irish Hotels Federation in developing the Quality Employer Programme should be extended to other sectors within the tourist industry. The report highlighted the need for an industry wide approach to deliver on Ireland's unique selling proposition "people and spontaneity" while maintaining a sustainable growth.
Industry is urged to commit itself further to develop an ongoing training culture.

It is recommended that a new Operational Programme for Tourism should succeed the present one when it expires in 1999. As part of the Compact between industry and Government a comprehensive funding programme should be agreed for a five-year period including the suggestion of the creation of a tourism marketing fund of £20m per annum and administered by a public/private partnership.

Marketing Activities

The 1999 Be Our Guest Guide was published on schedule in mid-November, it is planned to have a final print run of about 400,000 copies with 1,014 entries. As with the 1998 Guide the free phone access from all over the world to the Gulliver call centre is being highlighted. It is worth noting that the value of business received by hotels and guesthouses through the Gulliver registration system in 1998 was up 55% on the previous year. On the ongoing development of the Be Our Guest website, hyperlinks have been put in place between the entry in the Be Our Guest Guide and properties' own websites. Hyperlink links to Be Our Guest Guide from the 4 OTMI market sites and from the HOTREC sites are also in place. We increased our participation in consumer travel shows having had stands in Dublin, Cork, Belfast, London, Manchester, Glasgow, Brussels and the Hague.

I continued my membership of the Board of the Overseas Tourism Marketing Initiative throughout the year and also as Chairman of the German market committee. Our Marketing Executive, Lorna McNamara, recently replaced Brian Cronin on the OTMI French committee. Eithne Fitzpatrick represents the Federation on the American market committee and Niall Geoghegan on the British committee. Total OTMI spend in 1998 was approximately £7m. and this figure is likely to be repeated in 1999. The allocation of the marketing fund is likely to be £2.4m. to the United States; £2.3m. to Britain; and £1m each to France and Germany. As on previous years the Be Our Guest Guide is prominently featured in each of the OTMI brochures which also carry details of the Be Our Guest website and the free phone access to the Gulliver reservation system.

The Regional Tourism Marketing Initiative (formerly known as the Domestic Tourism Marketing Initiative) continued in 1998 and the Minister has given a commitment to its continuation for 1999. The hotel and guesthouse sector continued to be a major section of the industry supporting this campaign with 87% of the total participants entering the sector for the Spring 1998 campaign.
Research indicated that 75% of those surveyed stated that they would participate in a similar future advertising campaign.

Our members have now been informed of the Regional Tourism Marketing Initiative Programme for the early part of 1999 and of the opportunities available to participate in this worthwhile initiative.

Environment

Arising from the mid-term review of the Operational Programme for Tourism 1994-1999, the ERDF grant assisted approximately £2.4m. pilot initiatives for tourism and the environment in Ireland. The Federation unsuccessfully applied for funding, under this scheme, to highlight to the hospitality sector the principles and practicalities of environmental management and to provide a guide for practical implementation of environmental management and demonstrate the consequential benefits to businesses. However, a similar application from the Institute of Technology in Tralee was successful and the Federation is making arrangements to have input into this project. A tourism awareness programme under the auspices of the OTMI and ITIC which has received a substantial funding from the aforesaid Operational Programme has just commenced. The Federation has nominated a member on to the steering group controlling this project. The aim is to increase awareness among the tourist industry and the wider population of Ireland of the core brand value of Irish tourism, the importance of protecting these values, and the critical role which each individual plays in this regard. The aim is to ensure that tourists continue to enjoy the spontaneity and friendliness of the Irish people. The Federation made a submission to the Kerry Initiative for Tourism and Environment (KITE) an ERDF funded pilot scheme undertaken by Kerry County Council to devise and implement a tourism management plan for Kerry. While this plan is specifically focused on Kerry the intention of the scheme under which it is funded is, if successful it may be applied to other tourist areas in the country. An environment sub-committee of the IHF Kerry Branch has been set up to continue to input to this project.

Unfair Competition

Together with Town & Country Homes Association, the Irish Farm Holidays Association, our Federation continues to call for the introduction of statutory licensing for all providers of tourist accommodation. We continued to raise this issue in all our discussions with the Minister for Tourism, Sport & Recreation and we receive constant support from the Irish Tourist Industry Confederation and the Regional Tourism Managers. We highlighted the major environmental damage which the uncontrolled proliferation of unapproved bed and breakfast providers cause. The risk associated with the overcrowding at peak seasons and the blight on the countryside of the signage, which is subject to no regulations. We made submissions to the Minister for the Environment, to revoke the regulation within the 1994 Planning Regulations, which allows private residences with 4 bedrooms for sale on a B&B basis without obtaining planning permission. We continue to lobby for the inclusion of all commercial providers of tourist accommodation within the Local Authority rates net and were hopeful that such a provision would be included in the forthcoming Rateable Valuation Bill. However, recent statements from Government Ministers and politicians give us serious cause for concern, and at the time of going to press a meeting has been arranged with the Minister for Tourism, Sport & Recreation to specifically discuss this issue.

Hotel Room Tax

We carried out a very active and focused lobby opposing Dublin Corporation's attempt to introduce a Hotel Room Tax. This lobbying was targeted at the relevant Government Ministers, all the members of the Joint Oireachtas Committee on Tourism, Sport & Recreation and all members of Dublin Corporation. We acknowledged the opposition to such a proposal clearly expressed by the Minister for Tourism, Sport & Recreation, and the unanimous rejection of the proposal by the Joint Oireachtas Committee on Tourism, Sport & Recreation. We had a number of meetings with the Dublin City Manager and senior officials, and outlined the inequity and dangers attached to such an ill-conceived discriminatory form of taxation. The support received from the Dublin Chamber of Commerce, Bord Failte and Dublin Tourism was also most helpful in this campaign. Vigilance on this issue will continue.

Licensing & Copyright

We welcomed the commitment of the Minister for Justice, Quality & Law Reform, to that any new licensing legislation should maintain the correct balance, which reflects not only on the legitimate commercial interests of the different groups that make up the licensed trade, but also between their interests and the general public interests and his commitment to achieve this balance through significant consultative process. When the risk appeared, in the early part of the year, that due to pressure from the publican's lobby, the normal bar closing time might be extended to 12.30 a.m. or 1.00 a.m. In the interest of protecting the livelihood of our members particularly those involved in the night-clubs and the discos, we actively lobbied the politicians and had a meeting with the Minister outlining our major concerns and the importance which, in particular, the rural hotels and night-clubs play in the social fabric of Ireland. Following the report on the Licensing Laws presented by the sub-committee on Legislation and Security of the Oireachtas Joint Committee on Justice, Equality and Women's Rights, we lodged a submission with the Department outlining the Federation's view on any liquor licence reviews. In summary, we held that Sunday should be subject to the same licensing laws as weekdays, normal bar opening time should be the same all year round, the closing time for bars should be set at 12 midnight, with a half-hour drinking-up time, specific regulations should be put in place to regulate the operations of night-clubs and discos and it should be possible for registered guesthouses to apply for a licence to serve alcoholic drink to their residents.

Following the recommendation from the Competition Authority that there should be major de-regulation of the licensing laws, we wrote to the Minister for Justice pointing out that, while the Federation accepts that there may be some anomalies which could be addressed without seriously undermining the integrity and value of the Irish pub, any more widespread liberalisation of the licensing laws would be seriously detrimental to the character and uniqueness of the Irish pub This could open up the situation where financially strong and powerful entities could come into the business and grow and expand, at the expense of the smaller operator, thus arriving at a situation where the market would be dominated by a small number of corporate owners of chains of pubs and would in the intermediate to long-term bring less competition.

There has been no major development throughout the year in the question of determining the equitable remuneration payable to the Phonographic Performance Ireland Ltd (PPI). However, a draft Copyright Bill has been circulated and while an actual bill has not yet been released, there is major concern that the position of the collecting agencies could be substantially strengthened. This issue together with the proposed EU Directive of Copyright and Relating Rights in the Information Society has been monitored throughout the year both at Federation level and at European level through HOTREC.

1999 Budget

The Federation made a pre-budget submission in which it sought the establishment by the Exchequer of a new £20m. per annum tourism marketing fund. To grow the labour force we suggested the introduction of a Homemakers Revenue Job Assist Scheme under which persons, over 35 years of age and not having had a work history or work-related social welfare history in the preceding five years, would receive a special tax-free allowance of £2,000 per annum for the first three years following their return to the paid workforce.

The Federation also called for the development of a Western Tourism corridor which is a high quality road linking Cork, Galway, Donegal and Derry, with strategic road links to Dublin, and which could be funded by a public/private partnership arrangement.

We underlined the need to guarantee the funding and support of CERT's training initiatives after 1999 particularly in locations where tourism activity takes place and sought the extension of the Local Authorities rates net to all commercial providers of tourism accommodation.

On more general issues we sought that there be no increase in the tax burden for Irish business from any source, the acceleration in the reduction of Corporation Tax for smaller enterprises, and a continuing commitment that hotel accommodation and restaurant services will quality for the reduced VAT levels in any new harmonised EU VAT regime.

Following the introduction of the budget we welcomed the clarification of the schedule for the reduction of corporation tax which in 1999 will see the standard rate reducing from 32% to 28% and the existing low rate of 25% applying to the first £100,000 of profits and the threshold below which the lower 8½% employers PRSI rate applies being increased from £14,040 to £14,560 per annum. Employers who provide childcare facilities for employees will obtain capital allowances on the construction cost of these facilities and employees will not be taxed on the provision of these facilities as benefit in kind. We also see the switch to a tax credit system bringing greater benefits to the lower income groups.

Following the introduction of the budget, we wrote to the Minister for Finance, highlighting the success of the hotel and guesthouse sector in the creation of additional jobs and of the fear that pressure on the labour supply would result in wage inflation. We again asked him to consider the proposed Homemakers Revenue Job Assist Scheme which we included in our pre-budget submission as we felt that this could increase the workforce by between 30,000 and 50,000 persons.

Employment Issues

Throughout the year I participated in many meetings and discussions with the various Social Partners through our involvement in the dialogue of Partnership 2000. The continuous focus is to maintain a competitive environment within which the tourist sector can operate. This forum was also an opportunity to be informed of social and economic developments throughout the country and how the hotel sector can benefit from these developments. The Organisation of Working Time Directive 1997 is now fully in Law and members have been issued with guidelines on impact. The report of the National Minimum Wage Commission was published in the early part of 1998 and the Government is committed to the introduction of a National Minimum Wage of £4.40 per hour in April 2000. We made submissions to the Inter-Departmental Group on the implementation of National Minimum Wage, to the Economic and Social Research Institute who are completing an Impact Study of the proposal and to the Oireachtas Committee on Enterprise and Small Business. While the Federation accepts that productive and fully trained staff should be adequately remunerated, and that the £4.40 per hour does not create any problem for these categories, the rates payable to students and job entrants should be set lower than the 75% rates suggested in the recommendation. It is also suggested that full time students should be deemed as trainees and their entitlement based on the length of time they have spent working and obtaining experience in the industry.

The Hotels JLC Committee met and it was agreed that the second phase of Partnership 2000 i.e. the 2¼% of basic pay increase be implemented on18 September 1998. It was further agreed that the 2% local bargaining element of the Partnership 2000 Agreement be implemented in conjunction with the third phase on the August 1999 (making an increase of 3½%) and that the final phase (1% increase) on the 1st May 2000.

European Affairs

The Euro was officially launched on the 1st January with the value of the Irish pound been set at 0.787564 Euros. In conjunction with the Restaurant Association of Ireland, IBEC and CERT, the Federation will shortly launch a code of practice for the Euro change-over, leading up to the introduction of Euro notes and coins on 1 January 2002.

Within HOTREC (Confederation of National Association of Hotels, Restaurants Cafes and similar establishments in the European Union and in the European Economic area) we actively participated in lobbying on such issues as to the reduced rate of Value Added Tax for the hotels and restaurants post introduction, of a uniform system of EU Value Added Tax. HOTREC continues to resist efforts by various consumer groups to get the European Commission to introduce regulations for such issues as standardisation of hotel classification throughout Europe and, as mentioned earlier, particular attention now is being given to lobbying to reduce the effects of the proposed copyright directive. We lobbied all the Irish MEPs to support an amendment to allow 100% and not only 50%, as proposed by the EU Commission, as deductions in respect of expenditure in hotels and restaurants by VAT registered persons. The European Parliament voted to adopt these amendments and the efforts will now continue to push for these to be adopted in EU regulations.

General Assemblies of HOTREC took place in Vienna and Cologne during 1998 and I participate on working groups dealing with such issues as Social Affairs, Free and Fair Competition, Consumer Affairs, Travel Trade Issues, Standard Information Systems and Quality, Statistics, Taxation, Copyright and Environment.

Northern Ireland

Prior to the Assembly Elections in Northern Ireland, at the invitation of the Northern Ireland hoteliers, I made presentation on the development of the Irish hotel and tourist industry to the tourism spokespersons of the Northern Ireland political parties. A joint Council Meeting with the Northern Ireland hotel association took place in April and this will now become an annual event each April. In the development of structures arising out of the Good Friday agreement and the subsequent agreement on the 18th December, I participated in the meetings, together with Northern Ireland hoteliers, with the leading political parties in the new Assembly.

Branch Activities

Throughout the year I and members of the Northbrook Road staff attended branch meetings in each branch of the Federation. A set of standing orders has now been developed and will be implemented in all branches following the Annual General Meeting.

Following the recommendations of the Review Committee procedures are being developed to focus both on the lobbying and the marketing activities of individual branches and to provide support structures where necessary. Arrangements have been made to have presentations made annually to each branch by such bodies as CERT, the Convention Bureau of Ireland and Gulliver.

Associate Membership

We continue to promote Associate Memberships and we presently have
such members. These businesses see their association with your Federation is being of benefit to them and I urge our members to support them when appropriate.

Appreciations

On a personal note, I wish to thank our President, Bill Power, the Management Committee, Council Members, and the general membership of the Federation for the help and support which they gave me and my fellow staff members throughout the year. I particularly wish to thank the many members who actively lobbied in support of the Federation's aims in such issues as review of the Licensing Laws and the threat posed by the suggested room tax in Dublin. I also wish to thank the Federation's Secretary/Treasurer, Donal O'Meara, for the unending support and assistance throughout the year. The staff in Northbrook Road has, again, displayed a dedicated contribution, patience and support for which I am most grateful. This year I wish to pay particular tribute to Teresa Budds and Pauline Gannon who have completed 25 years service to the Federation and I wish to acknowledge their enormous dedication and commitment to the organisation and its members.

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