Tourism development authority Fáilte Ireland recently announced its end of year review and outlook for 2004, stating that it expects the coming year to break records for Irish tourism. Gillian Bowler, Chairman, Fáilte Ireland asserted that by focusing on our key strengths – landscape, lifestyle, security – and addressing our cost base as a matter of urgency, she is confident that 2004 will prove to be a record year for Irish tourism, exceeding the performance of 2000. However, the agency warned that the urgent delivery of a new terminal at Dublin Airport, a national conference centre and a sports stadium will be crucial to the ongoing success of Irish tourism beyond 2006.

Looking back at 2003, Ms Bowler described it as a “defining year in important respects” with an increase of 4% in overseas visitors to 6.1 million, and an increase of 5% in revenue from domestic and overseas tourism to €5.2 billion. The figures also highlight the fact that Ireland outperformed its competitors. By comparison, the UK had a 2% increase in visitors and in Scotland, visitor numbers declined. Commenting on the figures Ms Bowler said, “This is the acid test of a country’s competitiveness – increasing our share of market proves the attractiveness of our offering to overseas and domestic holidaymakers.”

A visitor survey undertaken by Fáilte Ireland, found that 94% of visitors to Ireland said their expectations had been met or exceeded. “80 per cent of visitors know someone who has

been to Ireland before – previous visitors are our best sales leads for 2004”, said Ms Bowler.

The home market proved its importance in underpinning industry performance, particularly in shoulder seasons and throughout the regions, proving it is “no longer the poor relation in the eyes of operators”. Almost three in every four hotel bookings outside of Dublin were generated by the Ireland market. Total expenditure increased 12% to €1.1 billion, while the number of holiday trips increased 5% over the first eight months of the year.

The Fáilte Ireland review also revealed the top concerns of Irish accommodation providers at the close of 2003. Ranked in order they are high insurance costs (39%), high overheads (36%) and the cost of labour (27%). Recruitment and retention of skilled staff also remains a critical issue for many in the industry. Just 4% of respondents referred to regulations and bureaucracy, including the imminent smoking ban in the workplace, as a concern for them. Fáilte Ireland asserted its commitment to assist industry address these concerns and to work with the sector to maximise the opportunity offered by increasing visitor numbers to the Tourism Policy Review Group’s target of 10 million by 2012.

Mr Jim Murphy, President of the IHF, has been appointed to the Tourism Implementation Group (TIG), a new body charged with executing an initial two-year action plan to develop Irish tourism based on recommendations by the Tourism Policy Review Group and its recent report. Mr. John O’Donoghue, T.D., Minister for Arts, Sport and Tourism recently announced the membership of the Tourism Action Plan 2003 - 2005 Implementation Groupwhich will be chaired by Mr. John Travers. The other members of the group are Michael O'Donoghue, Managing Director, O'Donoghue/Ring Hotels; Philip Furlong, Secretary General, Department of Arts, Sport and Tourism; Eileen O'Mara Walsh, O'Mara Travel and former Chairperson of the Irish Tourist Industry Confederation; Raymond Rooney, Businessman and Paul Tansey, Economist.

The TIG will advise the Minister on the actions required to achieve the objectives set out in the report New Horizons for Irish Tourism - An Agenda for Action(pictured). Whilst the report is a ten plan for growth and development of the tourism industry, its aims are to double overseas visitor spend to €6 billion with a corresponding increase in the number of annual overseas visitors from six to ten million.

It will work closely with the industry, state agencies and various government departments to act upon the strategic recommendations set out in the report. Commenting on the announcement John Power, Chief Executive, IHF stated that the TIG was a high level group drawn from a cross section of Irish business and would bring practical and tangible effect to the progressive and visionary plan to grow Ireland’s tourism success over the next decade.

There is no doubt the industry was both shocked and saddened on hearing the news of Ann Westby’s sudden death after a short illness in December. Ann, who had only just taken up the position of Chief Executive of the FSAI, had given one of her first media interviews to innsight, which appeared in the last edition. In that interview she outlined her visionary plans in relation to overseeing food safety in Ireland. She intended to raise standards in food safety throughout all sectors and to place food safety top of the agenda with Government, industry and consumers.

Before joining the FSAI, Ms Westby was Technical & Corporate Affairs Manager with Nestlé Ireland. She had over 30 years experience in the food industry having held a number of technical and managerial positions in Nestlé Ireland from the start of her career. She was a member of a number of food science professional bodies including, the Institute of Food Science and Technology UK, past President and Fellow of the Institute of Food Science and Technology of Ireland, and past Chairman and Honorary Fellow of the Irish Society of Food Hygiene Technology. In addition, she was Chairman of the Regulatory and Technical Group in IBEC, and member of the Teagasc Industry Group on Training.

She was charming, bubbly and highly energetic and had an instant rapport with people. Her death is a sad loss to all who knew her and the IHF offers its condolences to Ann’s husband Alan and family.

The Lord Mayor of Dublin Royston Brady and Michelle McConalogue were married at the pro-Cathedral, Dublin on December 27th followed by a reception at the Mansion House. The couple met when they were both working at the Gresham Hotel, Dublin. Before becoming Lord Mayor, Royston Brady was General Manager of the Royal Marine Hotel, Dun Laoghaire. Michelle McConalogue is currently General Manager of Sales and Marketing at the Tower Hotel Group. The IHF would like to congratulate the couple and wish them every happiness for their future together.

IHF President Jim Murphy recently presented the Irish Hotels Federation prize to Mr Saheb Singh Banga, the graduate who received the best results in Accounting and Finance at the Shannon College of Hotel Management.

From her role as deputy chief executive of Aer Rianta, Margaret Sweeney this month takes up the position of Chief Executive, succeeding John Burke who stepped down in December. Ms Sweeney will lead Aer Rianta at a time when many changes are in the legislative pipeline which will see the organisation break up into three separate companies. Ms Sweeney who joined Aer Rianta in 1997, previously held various senior roles within the Group including company secretary and deputy chief executive.

Margaret Sweeney, Chief Executive, Aer Rianta

Tourism Ireland and Fáilte Ireland recently launched their 2004 marketing plans for both overseas and domestic markets. The Minister for Arts, Sport and Tourism, John O'Donoghue, T.D., announced details which set an ambitious target for 2004 aiming to increase all-island overseas visitor numbers by 4.4% to over 7.7 million. Such an increase would exceed the growth predicted by the WTO for Europe as a whole. Fáilte Ireland is targeting domestic figures to reach 3.6 million in 2006 representing annual average growth of some 4.7%.

For the coming year, Tourism Ireland will continue to focus the bulk of its resources on the markets of Great Britain, USA, France and Germany. When combined these markets represented 83% of Ireland’s total visitor numbers in 2002 and they performed strongly in 2003. In 2004, Tourism Ireland predicts the GB market to grow by 3.5%, Mainland Europe by 5.8% and North America by 6.6%. The next most important markets for short-term growth potential include Australia, Italy, the Netherlands and Canada. Additional emphasis will also be given to Spain and Belgium, which have been identified as offering good opportunities in the near term.

Key elements of Tourism Ireland’s Overseas Marketing 2004 Plan include:

• Developing new segments within core markets using a new approach for consumer segmentation, which incorporates the holiday needs that consumers have, that the island of Ireland offering can satisfy.

• An increased emphasis on destination marketing reflecting the expected recovery to worldwide market growth.

• A refreshing of advertising creative and media choice to further improve the effectiveness of the Ireland message.

• The use of new e-marketing platforms for trade.

• An increasingly proactive role in developing additional, direct, convenient and competitive services from North America, mainland Europe and Great Britain in cooperation with airport authorities and carriers.

Tourism Ireland’s Chief Executive Paul O’Toole stated at the launch that despite the well documented challenges experienced during the year, Irish tourism has performed well, particularly when benchmarked against WTO forecasts. “However growth in visitor numbers has not translated into an improved bottom line for some tourism sectors due to a number of factors including intense global competition, shorter visits and increased hotel capacity leading to lower margins.”

Minister John O’Donoghue, confirmed that Government investment in supporting tourism in 2004 will be over €110m, of which almost €70m will be spent in support of the marketing and promotion activities of both Tourism Ireland and Fáilte Ireland.

Copies of Tourism Ireland’s Marketing Plans are available from Tourism Ireland.

At the launch of the marketing plans are (l-r) Shaun Quinn, Chief Executive, Fáilte Ireland, Minister for Arts, Sport and Tourism John O’Donoghue TD, and Paul O'Toole, Chief Executive, Tourism Ireland.

The Irish Hotel and Catering Institute (IHCI) recently held its annual Founders Banquet at the Berkeley Court Hotel in Dublin. Over 300 hotel owners, senior hotel managers and hospitality professionals attended the event at which the Hospitality Management Awards were announced. On the night Jim Murphy, President, IHF and Managing Director of the Prem Group was honoured for his contribution to the professionalism of the hospitality industry by being invited to be one of four new fellows of the IHCI. The award winners on the night included:

• IHCI Barton & Guestier Hospitality Management Graduate of the Year – Aidan Ryan, Graduate of Galway-Mayo Institute of Technology

• IHCI Deep RiverRock Young Hospitality Manager of the Year – Leila Ryan, Reservations Manager, Hilton Dublin

• IHCI Hotel Manager of the Year – Adriaan Bartels, Sheen Falls Lodge

• IHCI UBF Foodsolutions Catering Manager of the Year – Valery Higgins, Campbell Catering, Intel

• IHCI Richmond Recruitment HR and Training Manager of the Year – Clare McLeod, Hilton Dublin

According to Aer Rianta a record number of 52 new routes and services were introduced at Cork, Shannon and Dublin airports in 2003. Shannon airport currently has 10 scheduled airlines servicing 18 destinations, while Cork airport has 12 scheduled airlines operating to 25 destinations.

Meanwhile, a number of new air routes are due to commence in the coming months. Dutch carrier Basiq Air will be the first airline to operate a service from Dublin airport to Rotterdam, Holland. The daily service route will commence from February 29th 2004.

German budget airline Hapag Lloyd Express has also announced it will open routes from Dublin to Hamburg and Stuttgart, with three flights a week to Stuttgart commencing April 20th and four flights a week to Hamburg commencing April 2nd.

In addition British Midlands is to begin a daily jet service between Knock Airport and Glasgow in March this year.

Succession planning is an issue faced by all family businesses but is particularly relevant to hoteliers in an industry which is still dominated by family managed businesses. To view succession planning as merely bequeathing the family business to offspring is simplistic and ignores the complex business and emotional issues that arise in such situations

Why is succession planning so important?

It is difficult to face our own mortality and even more so for an owner who has worked tirelessly in establishing and building a family business. Succession planning is vital in safeguarding the continuity of that business.

Unfortunately, succession planning is often precipitated by the death or ill health of the owner/manager and comes at a time when the family are least able to give the matter adequate consideration. This can have a detrimental effect on the business.

Early planning is the key to successful succession management.

What are the options available in planning succession?

The options available to a retiring owner are broadly as follows:

• Option 1: Do nothing

• Option 2: Sell the business

• Option 3: Appoint a professional manager

• Option 4: Appoint a family member

There are advantages and disadvantages attaching to all options but the owner must firstly consider the following:

• General health and size of the business

• The family’s financial needs (e.g. funding of the owner’s retirement)

• General commercial and business environment

• Personal and corporate taxation consequences of the different options

• Availability of suitable family/non-family members to manage the business.

Option 1 – Do Nothing

In many cases, owners do not address the issue of succession and this often proves to be the most costly option of all.

Each person will have their own particular reasons but the most common reasons cited for lack of succession planning are fear of retirement, loss of identity, reluctance to relinquish control and inability to choose between offspring.

Lack of succession planning jeopardises the future of a business and the harmony of the family unit.

Option 2 – Sell the business

There are numerous reasons why an owner would sell their business. Sometimes cash is needed to fund retirement or there is no one suitable/available to run the business.

The owner should not underestimate the emotional attachment to a business, which they have grown and selling that business is often a long process fraught with varying emotions of sadness, guilt and relief. It is sometimes best to consider the appointment of professional advisors who will remove the “emotion” from the sale process.

Selling as a going concern usually will recover more value from the business. Options available include the sale to a third party or sale to the management, which may or may not include family members.

However, if the business is to be sold it is best that this decision is taken two to three years prior to the proposed sale. This allows time for the business to be “groomed” for sale.

Option 3 – Appoint a professional manager

Appointment of a professional manager is often an option taken by hotel owners who wish to retain their business but yet retire from its day to day management, as family members are not willing or able to carry on the business.

Sometimes it is a temporary step until family members are in a position to take over.

The major issue arising in the decision to appoint a professional manager is one of trust – will the family’s main asset be safe in the hands of an outsider?

Sometimes the decision is taken to appoint a long serving employee as manager. This can often be a mistake as such a person may feel under pressure from the family to adopt a role of stewardship rather than leadership.

If the owner has decided to retire and appoint a professional manager to carry on the business then the retirement should be unequivocal. Where the appointment is new it should be carefully considered. The manager will have to be a “good fit” for the business and the establishment of a good relationship between the owner and the manager will be crucial. A suitable trial/handover period is strongly recommended.

Option 4 – Appoint a family member

Typically, an owner’s preferred option is to pass the business on to the next generation to provide security for future generations, to leave a legacy and to bind the family together.

The choice of a successor from amongst family members should be based on their ability to lead and manage the business and not on their contribution to the family. Sometimes the choice of successor is clear, but frequently it can be more difficult.

Where there are a number of family members employed in the business it is crucial that you are aware of their expectations of succession and that these are dealt with in a sensitive manner. Once a successor is chosen the roles of the other family members need to be clearly defined in the context of the new management structure. It is important that the appointment is seen by all family members and staff to be “deserved” and this will further enhance the professionalism of the business.

Conclusion

Succession planning is an issue facing many hotel businesses and it is the responsibility of the owner to ensure that it is dealt with in a well-structured and systematic way. Early planning is crucial and it is important to inject as much energy into preparing the business for the next generation as was done in building it.

Noel Clehane is a Partner in the Business Assurance and Advisory Services department of BDO Simpson Xavier, tel: 01-4700181, email: nclehane@bdosx.ie