WAGE RESTRAINT REQUIRED TO 
ENSURE COMPETITIVENESS

From a tourism and hospitality point of view, the current year is the most challenging in the last decade. The recent Quarterly Economic Commentary from the Economic and Social Research Institute (ESRI) predicts that the Irish economy will contract by 0.4% in 2008, with a modest GNP upturn of 1.9% to follow in 2009. This is a major turnaround from a GNP growth of 4.5% in 2007 and 6.4% in 2006. The reason for this economic recession is not primarily a global economic decline or increases in such commodities as energy and food. It is primarily a result of a very weak performance in domestic consumer demand and a large decline in construction activity. Domestic consumer demand is expected to rise by just 1% in volume in 2008, compared with 5.4% in 2007 and 6% in 2006. The 2009 consumer demand prediction is for a modest volume growth of 2%.

Pressures on Consumer Spend

As domestic customers make up over 61% of roomnights in hotels nationwide and over 70% in hotels outside of the Dublin area, this substantial slowdown in the buoyancy of domestic consumer demand creates major challenges for the hospitality sector. The strengthening of the Euro against Sterling and the US Dollar and the knockon effects of the record high oil prices set against a background of tightening of credit availability and concern about the value of pension funds, have all undermined the confidence of potential customers from the US and Britain. These factors, together with major increases in the cost of food supplies and threatened increases of up to 30% in fuel costs point toward 2008 and 2009 being very challenging years.

In recent days, there have been comparisons made with the early 1980s, when there was negative economic growth in the country. However, Ireland today is in a much stronger position to deal with the challenges than it was a quarter of a century ago. The national workforce is double what it then was. In 1985, there were 1.098 million jobs in the economy; in 2008, there are 2.116 million. In 1985, the unemployment level was 220,000; in 2008, it is 136,000. In 1985, the exchequer borrowing requirement was 12.6% of GDP; now, it is under 5%.

Ireland’s hotels and guesthouses are now of an exceptional standard and among the most modern in Western Europe;

and we now have an unprecedented level of accessibility provided by air and sea carriers throughout the island.

Measured Cost Cuts Required

Many of the issues facing us are outside of our control, such as the strength of the Euro in international markets, the high price of oil and, in the domestic economy, the slowdown in private housing construction. This year, the absence of strong domestic demand will probably result in increased pressure on hotel prices. This places an onus on our managers to reduce costs in areas over which they have some control. Care must always be taken to ensure that a reduction in costs is not at the expense of customer satisfaction - that would ultimately jeopardise the long term business proposition. Wage costs in hotels are now 41–42% of turnover. This level of wage costs is not sustainable, and every effort must be made to reduce this figure through efficiencies and increased productivity, even in the face of a difficult economic climate. In tandem, both the industry and Government will have to sustain a strong marketing effort to generate business in the tougher international market.

The IHF maintains that, due to the inability of hotels to recover through price increases or additional sales, the cost of legally binding wage increases awarded in 2007 and 2008, it is now fundamental that there is a pay pause until at least the end of the 2009 season. While discussions are presently ongoing among the social partners on national wage rates, the Irish Hotels Federation believes that labour intensive sectors, such as the hospitality sector, cannot afford any further wage increases until such time as there is a solid sustainable cost basis for the industry and a substantial increase in domestic demand. National understandings and social partnership have served the country well over the last two decades. However, the approach to national pay bargaining must take fully into account the competitive challenges in sectors of high labour intensity, such as hospitality where the net profit margins are low.

A prudent short to medium term strategy based on improving our competitiveness, curtailing all costs over which we have a control and maintaining our level of customer satisfaction will result in us emerging as a stronger, more sustainable industry.

(L-R): Ewan Plenderleith, President, Irish Hospitality Institute; Ian Mc Keever, Guest Speaker; and Natasha Kinsella, Chief Executive, Irish Hospitality Institute.

The National Hospitality Managers Conference and AGM 2008 recently took place at the Fitzpatrick Castle Hotel. The conference coincided with ‘Say No To Ageism’ week which was at the forefront of the agenda.

The Irish Hotels Federation was deeply saddened to learn of the recent death of Dermot McEvilly, proprietor of Cashel House Hotel, Connemara, Co. Galway. Dermot’s career in the hotel industry spanned many decades. Having initially decided to study dentistry, Dermot found his true calling when working in Renvyle House one summer while at university. Having realised the hospitality industry was the career for him, Dermot then attended the Shannon College of Hotel Management. After graduation, he worked in Switzerland and the Dorchester in London before returning to Ireland, where he became General Manager of the Ardilaun Hotel in Galway.

In 1968, Dermot and his wife Kay fulfilled a life dream with the opening of the Cashel House, which quickly gained an international reputation for good food and comfort and played host to General and Madame DeGaulle of France for two weeks in 1969. Dermot was an outstanding innovator in the Irish hotel industry and played a major role in the promotion of tourism in the West of Ireland. He was a founder member and President of Ireland’s Blue Book Association and a founder member of Ballyconeely Golf Club, Connemara. Dermot is survived by his wife Kay and their three children Frank, Brian and Lucy.

CIE Tours International recently added a further twenty new touring coaches to its escorted coach tours service operating from Dublin and Shannon. Brian Stack Managing Director, CIE Tours International, stated, “Each coach seats 49 people and has been built specifically for touring in the highest level of comfort. The coaches will cover fifteen different itineraries from five to fifteen day tours exploring Southern and Northern Ireland. This year, we anticipate carrying 30,000 people on our fleet; this is a combination of scheduled tours and tailor-made group itineraries.”

“Due to increased demand, we have also added a new tour called ‘Castles and Gardens’, this ten day trip takes in sights such as Carlton House, Birr Castle, Glenlo Abbey, Kylemore Abbey, Connemara, the Cliffs of Moher, Killarney, Adare and finishes up in the Japanese Gardens,” he added.

Pope Benedict XVI has announced that Dublin is to host the 50th International Eucharistic Congress in 2012, marking the 50th anniversary of the opening of the Second Vatican Council and the 80th anniversary of the 1932 Eucharistic Congress in Dublin. The international event, which is held every four years, is expected to attract some 12,000 to 15,000 pilgrims and members of the clergy from all over the world for a full week of celebrations, adoration and cultural activities.

Commenting on the announcement, Cardinal Seán Brady and the Archbishop of Dublin Rev Diarmuid Martin stated, "The hosting of the congress in Dublin will be an international event. The celebration will attract thousands of pilgrims and will enable Catholics at home and abroad to meet, pray together and discuss issues of faith. It is not only a momentous event for Dublin but for Ireland as a whole. Over the next four years, parishes are invited to suggest how best to celebrate the 2012 congress.”

Carlingford and the Cooley Peninsula have been awarded the title of “European Destinations of Excellence - Tourism & Intangible Heritage 2008” as part of a competition organised by Fáilte Ireland with support from the European Union.

The competition received entries from areas that have implemented marketing initiatives to preserve local, natural and cultural heritage while also ensuring the area’s social, cultural and environmental sustainability. The area faced top competition from the other four finalists - Youghal, Co. Cork; Ballyhoura, Co. Limerick; and Listowel and Milltown in Co. Kerry.

Sheena Doyle, Marketing Co-ordinator, Fáilte Ireland, stated, “With the area’s natural resources, a full calendar of events and a strong multidisciplinary tourism association, Carlingford and the Cooley Peninsula were worthy winners of this year’s competition.”

President Mary McAleese, Patron of Bloom.

Fáilte Ireland recently joined forces with the organisers of Bloom, Ireland’s premier garden show, to promote the 2008 gardening extravaganza. With over 300 gardens throughout Ireland opened to the public, Fáilte Ireland and other tourism partners used the opportunity to showcase the wealth and diversity of the Irish gardens product. In the Fáilte Ireland garden, representatives from all the major garden marketing groups, such as Houses, Castles and Gardens of Ireland and Heritage Island as well as the many garden trails and garden festivals around the country, were on hand to guide visitors to the many wonderful gardens and visiting opportunities available countrywide.

Shaun Quinn, Chief Executive of Fáilte Ireland, commented on the growing interest in Irish gardens. “Currently over 1 in 5 of all domestic holidaymakers visits an Irish garden, clearly highlighting the increasing importance of the gardens product to the Irish tourism industry. Over recent years a number of garden trails have been developed to spread tourism throughout the regions and in all seasons.”

Ireland appears well prepared to greet the hundreds of thousands of visitors expected over the coming weeks, according to the latest litter survey by IBAL (Irish Businesses Against Litter). According to the survey, almost 60% of our towns are now deemed ‘clean to European norms’ compared to 7% 6 years ago. Among them is Dublin City, which has enjoyed a significant improvement in its litter levels. Having languished for many years as a blackspot, Dublin City is now ranked in 16th place of the 55 areas surveyed nationwide.

Results reveal a record improvement in average litter ratings with 62% of heritage and amenity sites surveyed now found to be free of litter. In all, a record 32 towns have achieved litter-free status, with Ennis climbing strongly to claim the title of Ireland’s cleanest town for the first time.

“In the midst of the prevailing doom and gloom, it is refreshing to have a positive economic news story,” states Tom Cavanagh, Chairman, IBAL. “Tourists to the Capital are less likely to be met by cleanliness standards below what they experience at home. A positive first impression is critical to our tourism product. We speak constantly about how to protect our economic prosperity. Here is hard evidence of real strides to safeguard a valuable breadwinner. It is now up to the citizens to the play their part and keep their streets clean.”

John Power, Chief Executive, IHF, states, “Ireland’s unspoilt scenery and natural beauty attract millions of visitors to our shores each year and the image of Ireland as a clean and green island remains an important differentiator for our tourism product.”

Chef Anthony Worrall Thompson giving a cookery demonstration at the Dublin Taste Festival

A Taste of Dublin recently took place in Dublin’s Iveagh Gardens. Over 35,000 visitors attended the culinary event, with over 110 premium food and beverage exhibitors offering free samples. The festival, which is held in June each year, is a celebration of fine food and drink in unique city based locations and brings together the city's best restaurants, food personalities and speciality food and drinks producers. The event featured live cookery demonstrations with celebrity chefs, tutored wine tasting sessions and the opportunity to enjoy sample menus from the top restaurants.

(L-R): Maebh Breathnach, Shelbourne Hotel, Margaret Naughton, IHF and Anja Henschel, Shelbourne Hotel.

The Hospitality Diversity Awards funded by the National Action Plan Against Racism (NPAR) aim to highlight diversity management and integration within the Irish Hospitality and Tourism Industry. The awards recognise cultural integration and the work done to welcome international workers to Ireland as well as those with disabilities and varied backgrounds. The winners in the four categories of the NPAR Hospitality Diversity Awards were; The Shelbourne Hotel in the Hotel (Groups) category; Dunboyne Castle Hotel and Spa in the Hotel (Individual) category; Aramark/Campbell Catering in the Catering Operations category and Noel Recruitment in the Hospitality Recruitment category.

Speaking at the awards ceremony at Clontarf Castle, Natasha Kinsella, Chief Executive of the Irish Hospitality Institute, stated, “The judging panel examined the wider element of diversity in the workplace. They were looking for evidence of an inclusion programme, not only in relation to international workers but evidence of integration of those from minority groups, people with disabilities and local community groups, the winners were chosen on this basis.”