Chief Executive's Review

Chief Executive IHF,
John Power

The preliminary estimates for 1999 show that 5.9 million overseas visitors came to Ireland generating £2.5bn. in overseas revenue, an increase of approximately 7% on 1998. When we add to this in excess of £800m. worth of domestic tourism, we can appreciate that the hotel and guesthouse sector is a major part of to this £3.3bn. tourist industry. Total numbers employed in the tourism is now estimated at over 135,000 with more than 57,000 in the hotels and guesthouses.

Tourism growth, in 1999, kept pace with Ireland's present phenomenal GNP growth of 7%. There are now over 850 hotels in Ireland with 38,000 bedrooms and almost 500 guesthouses with over 5,250 rooms. This represents an increase of 6% in bedroom capacity over 1998. While the additional tourist arrivals in the country, at approximately 7%, is about in line with this growth, a major concern has to be the number of holiday-makers included in these arrival figures. Preliminary figures indicate that the "promotable sector" of arrivals into Ireland in 1999 did not increase over the previous year. This would suggest that the 400,000 additional visitors were made up of business trips or those visiting friends and relatives. While all additional arrivals are helpful to our widely spread hotel and guesthouse industry, the lack of growth in the promotable holiday market has to be of concern for our members in traditional tourist areas. Many of these do not benefit from the growth in the number of business or corporate room-nights. These figures underline the case made to the Minister for Tourism and Bord Failte, throughout the year, on the need to improve the effects of the communication of the Irish tourist product in our overseas markets. The unique friendliness and spontaneity of the Irish people and those within our sector of the industry is still there. The difficulty is in having adequate market resources to communicate this fact to potential customers overseas.

Membership

The Federation has 895 full members - 619 hotels and 276 guesthouses.

Quality Employer Programme

The Federation continued to commit additional resources to the Quality Employer Programme (QEP) during 1999. The work of our Quality Employer co-ordinator, Anne O'Carroll, and her 6 facilitators, resulted in her now having over 600 applications of which 300 have already been accredited. Over 55% of all employees in hotels and guesthouses are now employed in Quality Employer accredited properties. Throughout the year, existing QEP accredited properties were visited to ensure that the accreditation standards were maintained. The updating by CERT of its list of placement establishments is based on complying with criteria for best practice in human resources management. These requirements closely match QEP criteria.

As a further development of our services to our members and of the benefits of membership of the QEP, the Federation appointed, in December 1999, a placement co-ordinator. The objectives of this appointment are to build relationships with state agencies and hotel/catering schools overseas, initially, in Sweden, Finland and the Czech Republic. The target is that 1,000 people will be placed in QEP accredited properties during 2000. Our membership has recently been made aware of this initiative and a substantial number have committed to participate in it. This initiative builds on the successful placement of approximately 80 Swedish employees in QEP. properties during the 1999 Season.

During the year, agreement was reached with CERT on the level of payments and conditions of employment for CERT placees. This avoids the need for members to indicate wage rates when they apply for placees. The agreed rates should be paid by all properties in which placements are made. The conditions of participation in the joint IHF/CERT/IHCI Trainee Management Development programmes were also reviewed and updated.

Marketing Activities

The year 2000 Be Our Guest guide was published as scheduled in mid-November and is planned to have a final print-run of approximately 400,000 copies. There are 1,063 entries including 54 from Northern Ireland. The year 2000 Be Our Guest guide has featured for the first time a Be Our Guest free-phone booking service which is operated through the Gulliver reservations system. The value of business received by hotels and guesthouses through the Gulliver Reservations System in 1999 was up 6% on 1998.

The Be Our Guest website has been updated with hyperlinks being put in place from the Be Our Guest entry to properties' own websites. Hyperlinks also exist to the 4 Overseas Tourism Marketing Initiative (OTMI) market sites and from the HOTREC site. As in previous years we participated in consumer travel shows in Dublin, Cork, Belfast, London, Manchester, Glasgow, Brussels and The Hague. I continued as a Director of the Overseas Tourism Marketing Initiative as is a former President of the Federation, Gerry O'Connor. I also continued to chair the German market committee of the OTMI, Lorna McNamara, our Marketing Executive represents the Federation on the French market committee with Eithne Scott-Lennon being our representative on the U.S. and Niall Geoghegan on the British committee. The total OTMI spend in 1999 was approximately £7m. and plans are in place to ensure that the year 2000 expenditure is approximately at the same level. Commitments have been made for the year 2000 season, to spend £2.2m. each in the U.S. and British markets with approximately £1m. each being spent on Germany and France. The Be Our Guest guide with its website address and free-phone access number is prominently featured in all OTMI brochures.

The Regional Tourism Marketing Initiative continued in 1999 and plans are now in place for a continuation through the 2000 season. The hotels and guesthouse sector continued to be the major participant supporting this campaign. Our members had been informed of the initiative programme for the early part of the year 2000 and the opportunities available to participate in this worthwhile initiative.

Environment

The Federation has been a member of the steering group which guided the launch by ITIC of the Tourism Awareness Programme - "People and Place". The Department of Tourism, Sport & Recreation through the European Regional Development Fund, under the Operational Programme for Tourism, by Overseas Tourism Marketing Initiative, Bord Failte, CERT and the Northern Ireland Tourist Board funded this programme. The Federation's branch network and membership are a major artery through which the core values of Irish tourism - people and spontaneity - and the importance of protecting these core values will be communicated to as wide as possible an audience within the tourism and related sectors.

The Federation supported and co-operated with the Institute of Technology Tralee on the development of an environment programme for hotels, the objective of which were to enable hoteliers to harness the financial benefits of operating their business in a more environmentally effective manner. The experiences and the findings of this pilot project will be the subject of a workshop at the Annual Conference. The Be Our Guest bathroom notices, to encourage more efficient use of towels, have been re-printed and are available to members. The damage to the environment which litter causes continues to be a major concern to the Federation and its branches. At local level some branches have had discussions with local authorities to investigate how co-operative action involving the members of the Federation and the local authority could contribute to overcoming this ongoing problem.

At the launch of Get a Life in Tourism 1999/2000: John Power, Chief Executive IHF: Terry McCoy, President Restaurant Association of Ireland; Shaun Quinn, Chief Executive Cert; Dr. James McDaid T.D. Minister for Tourism, Sport and Recreation and Fiona Liffey, Fitzwilliam Hotel

Unfair Competition

Wherever possible we continued to raise, with the appropriate Ministers, the need to introduce a statutory licensing system for all providers of tourist accommodation. We highlighted the major environmental damage, which the uncontrolled proliferation of bed and breakfast providers and the signage associated with them causes to the environment. We wrote to the Minister for the Environment seeking that he revoke the regulations contained in the 1994 Planning Regulations, which exempts private residences wishing to operate up to 4 bedrooms, on a B & B basis, from the obligation to obtain planning permission for change of use. We continued to lobby the Department of Finance that the proposed Valuation Bill due for circulation in the early part of 2000 should ensure that all commercial providers of tourist accommodation are within the local authority rates net.

Licensing & Copyright

1999 was a very active year in lobbying activities in the areas of liquor licensing and copyright. We had numerous meetings with the Minister for Justice Equality & Law Reform and his officials both leading up to and following the announcement, in October, of reforms to the liquor licensing laws. The main features of the Minister's proposals were; that the distinction which currently existed between summer and winter trading times is to be abolished, that the normal opening times for licensed premises on Mondays, Tuesdays and Wednesdays will be from 10.30 a.m. to 11.30 p.m. and on Thursdays, Fridays and Saturdays from 10.30 a.m. to 12.30 a.m., the following morning with no changes to the existing closing times on Sundays, except for the abolition of the necessity to close between 2.00 p.m. and 4.00 p.m., that all of these times would have the 30 minutes drinking-up time added, that licensed premises will be allowed to remain open on New Year's Eve until 12.30 a.m. irrespective of which day it falls on, that the restriction on the granting of special exemptions for any time on a Sunday be removed i.e. after mid-night on a Saturday night and after normal closing time on a Sunday evening, that the obligation to provide the meal as part of a condition for the granting of a special exemption will be removed.

A new method will be put in place to determine the entitlement for new licenses. A new licence may be granted on the extinguishing of one licence anywhere in the State and a prohibition for the granting of a licence within one mile of an existing licensed premises will the abolished. Under the proposed Bill a new licence can be issued, anywhere in the State, in substitution for one existing licence, where the Circuit Court is satisfied as to the fitness of the applicant, the fitness or convenience of the new premises, and by reference to the adequacy of the existing number of licensed premises in the vicinity of the proposed new premises. The provisions of the Bill once published will be closely examined and appropriate representation made.

The Minister also proposes to establish a commission on licensing to examine such issues as the review for the scope for a system of additional licenses and other aspects of the licensing system such as licenses for theatres and places of public entertainment and the licensing of residential accommodations other than hotels.

The legislation would strengthen the full-scale assault on the scourge of underage drinking.

While the Federation welcomed many of the changes introduced, it is concerned that the extension of the normal bar closing times on Thursdays, Fridays and Saturdays to 12.30 a.m., plus half-hour drinking-up time, will have a substantial negative impact on many of our members who operate night-clubs and discos.

To reduce this impact, we sought a commitment that special exemption orders have a minimum duration of 2 hours, after normal bar licensing times. The Federation also sought representation on the commission being suggested by the Minister to review aspects of the licensing laws.

At a meeting to discuss the Millennium Celebrations (L-R): John Power Chief Executive, Seamus Brennan T.D. Minister of State in the Department of An Taoiseach and William Power, President.

The Copyright and Related Rights Bill 1999 was published during the year and is currently going through the Dail. In conjunction with the Irish Nightclubs Industry Association and the Vintners Federation of Ireland, a detailed submission, on the impact of this Bill, was submitted to the Minister. This submission highlighted the inequities and injustices contained in this far ranging piece of proposed legislation. The Bill, as drafted, would have reversed the Supreme Court decision of 1995 which ruled that the PPI was not entitled to payment in advance to allow the playing of records in public. The Supreme Court ruled that the PPI was entitled to equitable remuneration but that there was no statutory provision as to when remuneration should be paid. The Intellectual Property of (Miscellaneous Provisions) Act 1998 gave the presumption of ownership of copyright to copyright collecting agencies unless the contrary could be proved. The 1999 Bill confirms this change. The 1999 Bill also classifies the use of television and radios in hotel bedrooms as being public performances and thereby being subject to copyright charges. In our joint submission we strongly made the case that entitlement to equitable remuneration, of record companies, should not have to be paid in advance and that the copyright applicable to sound recordings is secondary copyright to that of authors and composers. Therefore, entitlement should be to equitable remuneration and that this should be payable after the use of the recorded music. We submitted that the assumption of ownership is an unfair imposition on users of recorded music and may in fact be unconstitutional, as these users have not the means to determine whether or not the collecting agencies own the rights to collect the remuneration. The submission strongly stated that it is incredulous that private use of radios and televisions in hotel bedrooms should be deemed to be public performances. To protect our members and business in general in future from unscrupulous "rogue" collection organisations, we strongly recommended that all collecting agencies should register with a state institution before being entitled to collect royalties or equitable remuneration. These agencies do not even have to prove ownership or the right to collect such remuneration. An extensive lobbying campaign was carried out including briefing sessions for TDs. This lobbying campaign will continue as the Bill goes through the Dail.

There have been no major developments throughout the year in the long running issue of determining the level of equitable remuneration payable to the PPI.

Last September, I was part of a HOTREC delegation, which met representatives of the DGXVI of the European Commission, which are examining the whole function of copyright collecting agencies. The HOTREC submission claims that this whole system is archaic and with modern technology should be updated. To ensure that once a product, in this case a piece of recorded music is purchased for use, the payment for its purchase should be the only payment and further claims for remuneration should not be entertained.

Access Transport - Concerns

The Federation made a submission in which it called on the Government to commission an independent evaluation into the Ryanair proposal to enhance low cost access to Ireland and to improve the spread of tourism by opening up new routes to Shannon. This submission was based on an on-going concern that access costs both through airports and seaports are increasing to such an extent that access fares into the country will have to increase accordingly. The whole question of access costs and particularly their importance to an island destination will continue to be a priority of the Federation. Airports and seaports are part of our national infrastructure and it should be the priority of those operating them that they are run as efficiently as possible and at the lowest possible cost to the airlines and shipping companies.

Budget 2000

In our pre-budget submission, the Federation again called for the introduction of a special Home-makers Tax Free Allowance of £2,000, per annum, for three years for persons entering the paid work force not having worked in the preceding 5 years. We also called for the introduction of a weekly income tax allowance of between £65 and £80 per week where employees have to incur child-minding costs. To slow down the rate of expansion of the tourism accommodation facilities, we suggested the suspension, for a period of 5 years, of all accelerated capital allowances for all forms of tourism accommodation, the withdrawal of the Business Expansion Scheme and exclusion of designated area incentives from all schemes seeking to add to the tourist accommodation capacity of the country. The submission also called for an increase of the inheritance tax threshold and to ensure that such threshold is indexed and for the abolition of probate tax on family inheritances.

Following the introduction of the budget, we welcomed the exemption from capital acquisition tax on private residences, being passed on to children residing at the property, and the immediate introduction of a 12.5% corporation tax applicable to small and medium sized businesses, with an annual trading income of up to £50,000. The Federation also welcomed the individualisation of the standard rate tax bands.. On reflection a post budget submission was also submitted which called for the exemption threshold of Capital Acquisition Tax to be increased from £300,000 as signified in the budget to £950,000 and for the ceiling provided in the Capital Gains Tax Retirement Relief to be set at a gain of £1.5m

Due to confusion arising on the entitlement of guesthouses to be classified as carrying on the business of hotel keeping for the purposes of capital allowances, we have called on the Minister to make appropriate amendments in the forthcoming Finance Bill.

The budget saw the confirmation of the reduction of the corporation tax for trading income from 28% to 24% on the 1st January 2000 with 25% being the rate of corporation tax applicable to non-trading income The corporation tax rate for small and medium firms will be 12.5% where total trading income does not exceed £50,000. The Finance Bill will provide for accelerated capital allowances at the rate of 100% in the first year on all child-care facilities, which meet the required standards. This relief will be available whether the facilities are provided for employees or as a commercially operated child care facility. The capital acquisition tax rate is being halved from 40% to 20%

At the Fas Opportunities 2000 Recruitment Fair (L-R): Valerie Asple, CERT; Caroline Clancy, CERT; Anne O'Carroll, IHF; Blathnaid Ring, IHF; Josephine O'Driscoll, CERT

Employment Issues

Throughout the year and particularly in recent weeks we had many meetings and discussions with the various social partners through our involvement in the National Partnership discussions. We continued to emphasise the necessity to maintain a competitive environment and that internationally traded and services, such as tourism, are particularly vulnerable to lack in competitiveness.

The hotel JLC Committee met on two occasions during which it agreed that the final two phases of Partnership 2000 Agreement is implemented with a 5% increase applicable from the 21st September 1999 and a further 1% from the 1st May 2000. Amendments were made to the JLC to bring it into line with the Organisation of Working Time Act 1997. During the year we made a further submission to the Government Interdepartmental Group on the implementation of a national minimum wage which is scheduled for introduction by the 1st April 2000.

The recently completed national agreement states that minimum statutory hourly rate be set at £4.40 on introduction on 1 April 2000, rising to £4.70 on 1 July 2001 and £5.00 on 1 October 2002.

We submitted that the wage rates applicable should include the benefits of service charge. In our submissions, we highlighted the need to take cognisance of the costs associated with training new job entrants and the cost of benefits, which we provide for our staff.

The recently circulated National Minimum Wage Bill includes the following provisions regarding reduced hourly wage rates; - a person under 18,70% of the hourly rate; first-time job entrants in year 1 - 80%; in year 2, 90%. Where recognised training schemes are in existence, the rate should be 75% in year 1 - 80% year 2 and 90% in year 3. The Minister will by order place a value on such items as board and lodgings and that these can be deducted from the statutory minimum wage applicable. The Bill also provides that service charge, tips paid into a central fund, and distributed through the payroll, and shift premiums are reckonable earnings for the purpose of calculating the minimum wage rate.

The onus of record keeping on employers has grown substantially over the years. While the public statements by Government indicate a simplification of record keeping, this is not the case when it comes to employment records. A statutory instrument is presently in the process of being prepared to determine that minimum records should be kept to ensure compliance with the Organisation of Working Time Act. The Federation has made its views on this matter known to the Department of Enterprise and Employment with the thrust of the submission being that record-keeping should be practical with obligations also been placed on employees. It was suggested that employees should give timely notification to employers should they feel they are not receiving their entitlements.

National Partnership Agreement

The National Partnership Agreement (Advanced Draft) contains the following references to tourism; "Regarding Tourism, the focus will be on skills development, on marketing Ireland overseas, on improving the quality of tourism products across the country, on achieving a better regional balance of tourism growth, on ensuring that tourism development respects the quality and absorption capacity of local communities and landscape, and on reducing seasonality. The Tourism industry's Quality Employer Programme will be supported and implemented with full involvement of employees and their representatives. The Tourism industry, while receiving State support for marketing Ireland overseas, will develop ways of obtaining adequate voluntary contributions from individual businesses in the sector."

The recognition of the Quality Employer Programme within this document, to which all the social partners commit, indicates its widespread recognition.

European Affairs

Within HOTREC (Confederation of National Association of Hotels, Restaurants, Cafes and similar establishments in the European Economic Area), we actively participated in lobbying on such issues as reduced rate of Value Added Tax for hotels and restaurants, post the introduction of a uniform system of EU Value Added Tax. HOTREC has also called for the full allowance of expenses in hotels and restaurants, as inputs to VAT registered businesses.

HOTREC has recently issued a lobbying document on copyright matters. Copyright and neighbouring rights are major problems in all national associations and lobbying at European level is aimed at reducing the onus obligations placed on hotels and restaurants and similar establishments under copyright requirements. I was part of a HOTREC delegation, which met a firm of consultants, acting on behalf of DGXVI of the E.U. Commission, seeking our views on copyright collecting agencies. It is HOTREC's view that these collecting agencies are carrying out an archaic function and the whole question of copyright collection should be incorporated in the original purchase or acquisition cost of the recorded music.

General Assemblies of HOTREC took place in Helsinki and Quinta do Lago during 1999 and I participated in working groups on such issues as social affairs, food regulations, unfair competition and consumer affairs, travel trade issues, standard information and quality systems, taxation, copyright and the environment.

Northern Ireland

Northern Ireland Hotels Federation has now been incorporated and assumes the role as previously carried out by Hospitality Association of Northern Ireland. We have, with the support of Council, been giving whatever assistance we can, to this new organisation, to help it become established. Both through our association with Northern Ireland Hotels Federation and through ITIC with the newly formed Northern Ireland Tourist Industry Confederation we had meetings with the principal spokespersons of the Northern Ireland Assembly on tourism issues. We met with representatives of the Official Unionists, SDLP, Sinn Fein, Alliance and the Women's Coalition parties.

Branch Activities

Throughout the year I and the staff at Northbrook Road attended branch meetings in each branch of the Federation. These meetings updated the members on current issues being addressed by the Federation and will continue throughout the year ahead.

Associate Membership

We continue to promote Associate Members and we presently have 66 members. These businesses see their association with the Federation as being of benefit to them. I urge our members to support them when appropriate.

Appreciation

On a personal note I now wish to thank our President, Bill Power, for the guidance, assistance and support which I and my staff at Northbrook Road received throughout his two years as President.

I also appreciate the guidance and support I received from the Management Committee and Council Members and the general members of the Federation. I particularly wish to thank the many members who actively lobbied in support of the Federation's aims, when called to do so, on such issues as the licensing laws and the copyright legislation. The members' support in bringing to the notice of candidates in the European and local elections, of the issues contained in the Federation's lobbying documents gave an added impact.. As usual, all the staff in Northbrook Road displayed a dedicated contribution of patience and support and for this I am truly grateful.. My staff and I look forward to working with the new President for the overall benefit of the Federation.

At The Holiday World Exhibition (L-R): Maureen Ledwith, Dr. James McDaid T.D. Minister for Tourism, Sport and Recreation; Lorna McNaMara, Marketing Executive, Miriam Young, Marketing Administration and John Power, Chief Executive