IHF President, Jim Murphy gives an objective assessment of the year ahead…

With current uncertainty surrounding Iraq, the spiralling costs of doing business in Ireland and the jittery state of the world economy, 2003 looks set to present major challenges for the hotel and tourism industry in Ireland.

Despite the down beat outlook, there has been some positive news on the US market front. Access looks set to be improved in the coming year with the opening up of new direct transatlantic routes by Aer Lingus to Baltimore and US Airways to Philadelphia. These announcements follow on from the recent ASTA Fodor survey which saw Ireland rank for the first time in the Top 10 destinations among winter US travellers.

Even with all of the external factors influencing the push and pull on the growth of our industry, the biggest concern for hoteliers right now is home grown. The high cost of doing business in Ireland means that the already tight margins in hotels and guesthouses look set to be eroded in 2003.

Ever increasing insurance premiums are still being demanded from Irish businesses. The imposition of an additional 1% VAT on hotel and restaurant services is an incredulous move when we now compare our 13.5% rate with Spain on 7%, France on 5.5% and Portugal 5%. Our rate of inflation, at 5%, is more than double that of our European competitors.

When the appreciation in value of the Euro by some 15% against the Dollar in the last year alone is added to the equation, the enormity of our competitive challenge is evident. Irish hotels and guesthouses have benefited from growth in excess of 25% in the Irish market over the last two years. It will prove difficult to maintain this level of activity in the face of low economic growth and increasing domestic inflation.

The possibility of a wage increase of 7% spread over eighteen months will make major inroads into further eroding margins in the hospitality business.

Additionally, with insurance premiums rising three times the rate of inflation, and energy and local authority charges well in excess of the rate of inflation, 2003 looks certain to be a period of severe retrenchment in which there is limited funding available for reinvestment and upgrading.

The reduction from 15% to 4% in the annual rate of Capital Allowances for hotel development announced in the recent budget will bring to an end the level of new hotel developments and will seriously curtail expansion and upgrading of existing hotels. The elimination of the Capital Gains Tax Rollover Relief creates a major barrier to hotel and guesthouse businesses who might be rationalising their operations by selling some of their properties and reinvesting the proceeds in extending or upgrading their remaining premises. While we appreciate efforts being taken by the Government to close tax shelters, we believe that these measures have eliminated the incentive to invest in an industry that has a very low level or return on capital employed.

The outlook for 2003 is indeed challenging. As a small open economy on the periphery of Europe, international uncertainty coupled with a Government policy of ‘belt-tightening’ measures, places even more pressure on hotels and guesthouses to focus on efficiencies and cost reductions.

Targeting and securing international visitors to come to Ireland has never been more important or indeed critical for the stability not only for the hotel and guesthouse sector, but for the tourism sector as a whole. The commitment of companies like Aer Lingus and US Airways in providing new access routes to Ireland, and the procurement by our Minister Mr. John O’Donoghue of an extra €5m for front-line overseas marketing, does provide a ray of light for the industry amongst a darkening horizon.

Pictured is The Spire - Dublin’s newest focal point

Access continues to be a priority issue affecting the Irish tourism industry moving into 2003. Throughout 2002, numerous industry reports from ITIC have emphasized the need for greater access services to Ireland, particularly from high-yield markets such as the US. The IHF has consistently maintained that development in air transportation to and from Ireland plays a crucial role in the growth of Irish tourism.

The news then that US Airways has announced a schedule for new services from Dublin and Shannon to its international gateway in Philadelphia and points beyond, comes as a welcome start to the new year. This schedule is subject to government approval and is due to commence in the Spring.

Chief Executive of the IHF, John Power comments, "Air capacity from the US to Ireland was badly hit in 2002 with a reduction of 20% of direct air capacity year on year. We would hope that this show of confidence by US Airways will be a stimulus for the opening of additional capacity for the 2003 season. The decision by US Airways is an important measure in providing access and making Ireland a more attractive place to visit."

Commenting on the new schedules, Minister for Arts, Sport and Tourism John O’Donoghue, TD says that he welcomes the new visitors, which this direct service will encourage from Philadelphia to Ireland.

Flights to Dublin will begin on May 4, 2003, and return flights will depart from Dublin starting on May 5. Flights to Shannon will begin on May 5, 2003, and return flights will depart from Shannon starting on May 6. The seasonal daily nonstop service to both destinations will continue until October 25, 2003 and will be operated using the 204 seat Boeing 767 aircraft configured to accommodate 24 passengers in Envoy (business) Class and 180 passengers in the economyclass cabin.

Sheen Falls Lodge in Kenmare, Co. Kerry, renowned for its location beside the stunning Sheen waterfalls has been awarded the AA Hotel of the Year. The privately owned country house hotel has also announced an expansion programme that will increase its capacity into 2003 and beyond.

A €6 million investment will see the development of five new luxury rooms including a Presidential Suite and four exclusive private homes for short-term private rental.

The first phase of the expansion has begun and will be completed in May 2003 while the second development phase will commence in autumn 2003. The hotel currently offers guests a choice of 61 spacious and luxurious rooms including eight junior suites and nine suites.

Pictured at the AA Hotel Awards are (L-R) Aoife Colligan, Sales Manager, Catherine Bartels, John Farrell, Business Development Manager, Carmel Flynn, Sales & Marketing Manager with the AA, Adrian Bartels, General Manager & Chris Farrell, Head Chef of Sheen Falls Lodge.

comments, "Following a comprehensive review of our brand identity and existing brand values, each member hotel contributed to determining the new name and logo design, which is based on the ancient Irish form of writing known as Ogham".

The 2003 brochure features 30 Irish Country Hotels, ranging in size from 11-92 guest rooms and located in idyllic settings – everywhere from wooded glens and lakeside retreats to remote fishing villages.

The Westin Hotel, Dublin has become the first hotel in Southern Ireland to receive the ‘Excellence Through People’ accreditation, Ireland’s national standard for Human Resource Development run by FÁS, and open to all organisations regardless of size or sector.

The assessment at the Westin Hotel involved a detailed explanation of all training and development procedures in place for both on and off the job training, a look at how effective communication methods are within the Hotel, the hotel’s business strategy and also included interviews with a number of Associates to determine what training and development they had received.

Further information on the FÁS Excellence Through People Standard can be obtained by contacting FÁS on (01) 8167400.

Pictured receiving the award at Dublin Castle on December 16th are (l-r): Enda Mullin, General Manager, Tara O’Neill, Director of Human Resources, John Butler, Manager of Exellence Through People, Anna Corrie, Training Officer and Fiona Burns, Assistant Events Manager.

Thirty five properties are listed in this year's edition of Ireland's Blue Book of Country Houses and Restaurants. Belle Isle Castle, Lisbellaw, Enniskillen, Co. Fermanagh, owned by the Duke of Abercorn and managed by his Land Agent Charles Plunket, was chosen from over 20 applicants to become a new member. The castle is situated on one of the eleven islands owned by the Estate on Upper Lough Erne.

Ireland's Blue Book will be aiming to undertake more co-operative marketing with major brands such as Waterford Crystal, Irish Distillers and Rover during 2003. The Association will be actively targeting the British and home markets for 2003 as both these markets were very successful for the members in 2002. It will also continue its marketing programme in the U.S. where it has managed to hold most of its business during 2002.

The 2003 Blue Book is now available from the Association headquarters (free) or though any tourist office or major bookstores (€3.00 per copy).

Pictured are (l-r) are Douglas Jordan, Registrar, Bord Fáilte, Dublin; Kay O’Flynn, President, Ireland’s Blue Book and Owner of Rathsallagh House and Peter MacCann, General Manager, The Merrion Hotel, Dublin.

Building on recovery in all markets is the theme underpinning the 2003 marketing plans recently unveiled by Bord Fáilte, Tourism Ireland and Dublin Tourism. In 2003, Bord Fáilte will focus on the domestic market, north and south, while a full marketing programme for activity-based holidays including angling, golf, equestrian and learning English will be implemented throughout the world in conjunction with Tourism Ireland.

The domestic market has proved increasingly important in recent years, particularly in light of difficulties experienced elsewhere. The number of hotel bednights accounted for by the domestic market increased by 15% in 2002. The aim for Bord Fáilte in 2003 is to increase the frequency of short breaks taken and to promote the regionality of these visits.

With responsibility for promoting the island of Ireland on the world stage, Tourism Ireland conducted a detailed analysis of the island's best prospects, and will focus the bulk of its marketing resources and funds on eight key markets - Great Britain, North America, Germany, France, the Netherlands, Italy, Australia and Canada. Within the overall visitor growth target of 5%, Tourism Ireland expects Britain and Europe to continue to perform well in 2003, aiming for 5% growth in the UK market and 4% in Europe. Despite the difficulties experienced in the North American market this year, Tourism Ireland is targeting 10% recovery growth in this important market, the highest growth target of any market in 2003.

Academics, students and leading figures from the tourism and hospitality industry will gather in Waterford on 3 February 2003 for the 2nd annual tourism and hospitality conference at Waterford Institute of Technology.

‘Our Environment – Our Business’ will be opened by the Minister for the Environment and Local Government, Mr Martin Cullen TD, and will cover a broad range of topics with a particular focus on the need for increased environmental awareness within the tourism and hospitality sector. The conference is particularly timely with the global climate for tourism and hospitality never having been more competitive with accommodation capacity also having increased dramatically during the last decade.

In addition to Minister Cullen, confirmed speakers for the conference include television presenter and architect Mr Duncan Stewart; acclaimed chef-patron, Mr Gerry Galvin of Euro-Toques and Ms Bríd McElligott of I.T. Tralee who will examine environmental practices in the Irish hotel industry. The event will also include presentations on sustainable tourism, eco-tourism, quality practices in hospitality and a speaker from the Equality Authority will clarify the issues raised and requirements placed on our industry by recent legislative changes. The event will also include practical waste management solutions for tourism and hospitality organisations.

Bookings for ‘Our Environment – Our Business,’ the 2nd Annual Tourism and Hospitality Conference at Waterford Institute of Technology are currently being accepted on (051) 302224 or by email amlally@wit.ie. Further information may be obtained by visiting www.wit.ie.

Pictured is Waterford Institute of Technology

The Merrion Dublin, celebrating its fifth anniversary in 2003, has five reasons to celebrate – the Hotel has recently been awarded Five Red Stars by the hotel inspectorate, AA. The Merrion, a recipient of the AA’s prestigious "Hotel of the Year" award in 2000, was given this additional accolade at a ceremony in the Guinness Gravity Bar in Dublin in December. It is one of only three hotels that have been given this honour, and the only hotel in Ireland to receive both Five Red Stars and Four Rosettes for excellent food.

According to Conor Faughnan, AA Ireland, "The guest’s experience at the five star Merrion Hotel is something special. Staff combine superb professional standards with finely judged natural friendliness and attentiveness. Four grand Georgian houses have been beautifully combined and restored in a quite brilliant enterprise of architectural design and restorative effort to create a hotel of the highest international standard.

According to the American Society of Travel Agents’ (ASTA)/Fodor’s Winter Hot Spots Survey Dublin has entered the top ten international destinations for the winter season. Previously for the 2001/2002 season Dublin ranked in 19th place. London is still the number one international destination with 19.3 percent of total responses. Cancun comes in second with 16.1 percent. Paris and Rome take third and fourth place with 12.6 and 7.5 percent, respectively.

"Winter is a great time to visit these perennial favorites," said Bonnie Ammer, president and publisher of Fodor’s Travel Publications. "Americans will continue to travel. New lodging, dining and a host of new attractions, and revitalized and refreshed old favourites, guarantee that even veteran travellers will feel more like first time visitors with much to see and experience in these celebrated destinations." Survey results can be viewed online at www.astanet.com/travel/trav_hotdest.asp

Largely positive feedback has emerged from tourists who took part in CERT’s Hospitality Survey 2002, with 97% of respondants happy to recommend Ireland to friends as a holiday destination and 86% of those surveyed rating their holiday in Ireland as a 6 or 7 on a seven-point rating scale. Ireland’s key selling points continue to be the friendliness of its people, good customer service, and great scenery.

However, it wasn’t all good news.

Value for money and menu variety in restaurants were two of the biggest causes for dissatisfaction, particularly amongst European visitors. Responses varied according to the type of establishment and nationality of the respondant, but the general feedback was that visitors would like to see greater variety and better quality food at a reasonable price.

In terms of employment numbers in the industry, some areas fared better than others in dealing with the effects of an economic slowdown. While job vacancy rates were down, particularly in the restaurant sector, overall employment figures held and the numbers employed in the industry in 2002 remained stable.

The Irish Tourist Industry Confederation’s (ITIC) year end assessment estimates that the number of overseas visitors to Ireland increased by 2% in 2002. While the numbers visiting from the US decreased by 10%, visitor numbers from Britain increased by 6% to 3.6 million in the last 12 months.

The assessment also shows that while the industry is making a slow recovery, further challenges lie ahead. Encouragingly, the report shows that demand for hotels appears to have increased marginally, though it has not kept pace with the growth in accommodation capacity.

ITIC estimate that at least another year will pass before the tourism industry fully recovers from the substantial losses in 2001 and 2002 caused by the combination of Foot and Mouth disease, the global economic downturn and the aftermath of September 11th. Crucial to this recovery ITIC says is increased investment in international marketing, a stabilising of Ireland’s competitive position and more access services particularly from high-yield markets such as the US.

In the longer term ITIC is confident that the work of the Policy Review Group will have a major impact on tourism development by assessing the industry’s potential and setting out new policies to address factors, such as marketing, access and competitiveness, which will ultimately determine Ireland’s ability to continue to be successful in the international marketplace.

A Cork resort hotel & spa has scooped a top accolade in motoring organisation RAC's annual awards to the UK and Ireland hospitality industry. The Lodge & Spa at Inchydoney Island a four star rated hotel famed for it's unique Thalassotherapy Spa and stunning white beaches, has been awarded an RAC Blue Ribbon in recognition of it's superior standards in comfort, service hospitality and cuisine.

RAC Head of Hotels and Travel, Richard Daly added: "The Lodge & Spa at Inchydoney Island has won a well deserved reputation as one of the most successful properties of it's type".