The Irish hotel and guesthouse industry represents revenue turnover of £1.3 billion providing over 61,000 jobs. It generates over 2% of GNP and contributes £200 million annually to the Exchequer. Since 1995, the Irish hotel and guesthouse industry has experienced substantial growth where capacity has increased by 50% resulting in 850 hotels and 490 guesthouses accounting for over 45,000 rooms. According to the report, the industry is entering a new phase of growth and development. Rising operating costs, intense competition in the food, bar and leisure areas, skills shortages and a projected slowdown in tourism growth, along with a regulatory environment constraining productivity, are issues which should now be addressed. It is against this background that the report was compiled to show a strategic direction for the industry over the next five to ten year period.

Reducing regulation barriers, investing in workforce development and training, driving for higher standards, changing the classification system of properties and refocusing operations to being more based on a business module rather than a way of life are recommended. It calls for measures to build on the quality of labour and investment in staff training as a fundamental element of the industry's success. It goes as far as saying that manager training modules should focus more on instilling business acumen, and perhaps less on craft training. The report suggests they are key objectives to not only sustain the industry but to ensure the huge investment made in the industry is capitalised on.

While the report acknowledges the immense growth of the industry in terms of infrastructure, revenue and employment, it suggests that increased pressures across all areas of the business means that the industry must radically reform core elements of its business to develop in the future.

The report suggests that market forces should be allowed to drive the industry and calls for a number of regulations restricting hotel and guesthouse businesses to be removed, for example, the statutory regulation requiring all hotels to serve breakfast, lunch and dinner. So many alternative dining outlets are now available including restaurants and pubs, that the need for mandatory requirements for hotels to have a full food service no longer exists. The report looked at other EU countries where hotels offer varying ranges of food services, and in fact some hotels provide only accommodation and light breakfast.

According to Peter Bacon one of the consultants involved in the report: In any future strategy for growth and development a focus and emphasis on development of room services sales would appear to be crucial. It is worth noting that the current regulatory regime, which statutorily requires establishments wishing to be hotels to provide food by way of breakfast, lunch and dinner seems to amount to an unwarranted impediment on future development. It is widely accepted that food and beverages are marginal or loss making. The requirement to provide them amounts to a room tax, to the extent that cross subsidisation is required to sustain them.

"In view of the general tendency towards deregulation of markets and market services this aspect of regulation appears anachronistic and a potential drag on improving the competitiveness of hotels. In any future strategy for growth, a focus and emphasis on the development of room sales would appear to be crucial. The current regulatory regime for the provision of food seems to amount to an unwarranted impediment on future development," he says.

The report also advocates that the classification/grading system for hotels and guesthouses should facilitate customers understanding more clearly, the type of accommodation on offer. In this context the title 'guesthouse' means many different things in overseas markets. As Irish guesthouses in most cases are hotels without a full food and beverage service, it is recommended that they be incorporated within the description of 'hotel'. This would re-categorise hotels and guesthouses into four categories of hotels. While the specific names can be decided later, in general the four categories would be Full Service Hotels; Town and Country House Hotels, Budget Hotels and Aparthotels.

Dr. Philip Heneghan, of CHL consulting commenting on the report said that the buoyant market conditions of the 1990s allowed the industry in Ireland to expand easily and to produce acceptable returns while largely adhering to traditional strategies. But as occupancy growth rates flatten and even show signs of downturn, the pressure to deliver good results based on asset productivity and competitive advantage will intensify. There is only so much scope available simply to continue to raise room rates - growing customer dissatisfaction and an increasingly competitive market will undermine prices that are not supported by a high quality product and service.

"The traditional hotel model that has shaped the hospitality industry in Ireland, has served it well. Indeed, it has been one of the principal drivers in the development of a substantial tourist industry. However, as the industry has matured and as markets have changed, it is evident that this model is no longer adequate," he says. "The issues affecting the industry globally and in Ireland - rising costs, shortages of labour and skills, the growing impact of the Internet and eCommerce, to name a few - are not amenable to resolution by partial strategies, and especially not by the traditionally favoured method of incremental adjustments."

The report involved a consultative process with hotels and guesthouse owners throughout Ireland and the study of models abroad. It recommends a Strategy Working Group to be formed to implement the recommendations of the strategy. It suggests participation by all the principal agents of change in the industry including the IHF, hotel and guesthouse managers/owners, CERT, Bord Fáilte and officials of the Department of Tourism, Sport & Recreation.