Thursday, 2nd May 2002

TOURISM CHIEF SAYS IRELAND 'BEING LEFT BEHIND' IN OVERSEAS TOURISM DUE TO LACK OF FUNDS & GOVERNMENT SUPPORT

The Irish Hotels Federation (IHF) today expressed grave concern at the dramatic decline this year in Ireland's profile abroad as a tourist destination. In a policy document Return to Growth sent to all election candidates, the IHF warns that our tourist industry needs Government action now to resolve a number of serious challenges facing the sector which is now Ireland's largest indigenous industry, employing over 145,000 people throughout the country.

The IHF's states that a decline in the volume of destination advertising is a key issue facing the sector. Ireland's share of promotional voice in overseas markets has been vastly diluted because other countries have substantially increased their financial spend on marketing campaigns in Ireland's target markets. The IHF says that Ireland is substantially loosing share of destination advertising in the British market to the competing destinations of England, Scotland Wales and France. These destinations where national tourist bodies, in an effort to recover from the events of 2001, have substantially increased their promotion budgets are gaining competitive advantage over Ireland where its advertising spend is less than last year.

According to Jim Murphy, President, IHF given that almost all of Ireland's overseas marketing funds are spent this year, when there is a substantial change in trend towards later bookings we are missing an enormous opportunity to gain an increasing share of this business. Irish tourism employs 1 in every 12 jobs in the country, in the past ten years alone, 1 in every 3 new jobs was created due to the growth in tourism and the Government needs to preserve this success which is now under threat. He stresses that it makes economic sense for the Government to invest in promoting Ireland abroad, given that every €1 invested on marketing programmes yields a direct €50 return to the State.

"Ireland 2002 overseas tourism marketing budget is less than that set at the beginning of 2001 in a much more benign environment before the negative events of FMD and September 11. A tourism marketing recovery fund of a minimum of €20m needs to be urgently established to redress the situation. An investment of €20m would generate an extra €300m of tourism activity in Ireland of which at least €180m would go directly to the Government. The failure by Government to invest in the overseas promotion of Ireland in overseas markets is seriously putting at risk the industry's potential to return to a path of growth following the negative impacts on tourism in 2001," says Mr Murphy.

The IHF is encouraging candidates to instigate debate on this and other issues facing the sector during the election. The IHF calls for a commitment by any incoming Government to maintain and encourage increased international and internal access. In addition, it suggests that it is crucial a business friendly environment is created for the industry and measures must be taken by the new Government to address many concerns including unsustainable rising insurance costs, high levels of VAT and the lack of a National Conference Centre, all of which are important to deal with the challenges facing the tourist industry.

Mr Murphy maintains that Ireland's island status makes it imperative that there is sustained encouragement for air and sea carriers to not only maintain, but increase access routes and schedules to Ireland. The choice of low cost easy access is a key factor for visitors to choose Ireland as a destination. The IHF's policy document is calling on the incoming Government to commit to the provision of low cost, turnaround facilities at Dublin Airport and that this facility, (Pier D) is fully operational by the 2003 season.

"Reliable, efficient and frequent schedules of flights to regional airports is crucial to assist the national spatial development of tourism in Ireland and the IHF is seeking that the Public Service Obligation subsidy for regional air services is maintained. Besides air access, we are concerned with Ireland's internal access structures and suggests that priorities should be focused on ensuring that road network developments and improvements are delivered on within deadlines outlined in the National Development Plan," says Jim Murphy.

Other key areas identified by the IHF which require Government action to be resolved are:

• Explosive increases in insurance in the last year have seen insurance costs rise by up to 300%. This means Ireland's insurance costs are between three and six times higher that those of its EU competitors. The putting in place of cost-effective efficient system to deal with genuine claims and taking criminal proceedings against the perpetrators of fraudulent claims are among the measures is being put forward by the IHF to redress this very serious situation.
• A number of family run hotels have been left seriously exposed by the collapse of the Independent Insurance Group last year. The Federation is seeking that the Insurance Compensation Fund should be reactivated by the Government and applied to the settling of claims against those businesses left exposed.
• Ireland's VAT rate on hotel services continues to be much higher than that of its EU competitors. A lower VAT rate is required to ensure Ireland's competitive position to attract international tourists. Ireland's 12% rate compares very unfavourably with the EU average of 5-7% more especially in the eurozone where transparency is apparent.
• The IHF is calling for the next Government to commit to the development of a National Conference Centre as Ireland is losing substantial revenues and business by its absence.

"It would be deeply regrettable if we were to do nothing now to resolve the challenges facing the sector. Given that trans-Atlantic airline capacity is over 20% below 2001 levels, expectations of reaching these 2002 overseas targets of 6.3m visitors will be highly unachievable unless corrective action is taken now," Mr Murphy concludes.

For Further Information:
Siobhan Molloy/Colette Walsh
FCC Shandwick Tel: (01) 676 0168 or (086) 276 5856