Tuesday 1st May 2007

Joined up thinking needed to restore competitiveness
Next Government Urged to Continue Focus on Tourism Growth

The Irish Hotels Federation (IHF) today launched its election policy document A Focus on Competiveness – A policy for Sustaining Growth, which outlines seven action areas for the next Government to prioritise to ensure the continued competitiveness of Irish tourism. The IHF warns that, as the country’s largest indigenous industry, tourism needs to be protected to ensure it continues to be a substantial employer and contributor to the Irish economy. It states that, given a favourable domestic cost base, the sector has the potential to be a leader in restoring Ireland’s international competitiveness.

The IHF states that Ireland’s tourist industry is an enormous asset employing over 145,000 people in every village, town and city throughout the country. Unlike multinational corporations, which can move facilities at short notice, tourism is a fundamental part of the fabric of Irish society and culture. Nationally, it generates over €6 billion in revenue – equivalent to 3.1% of GNP.

The IHF is encouraging election candidates to instigate debate on a range of issues impacting on the continued success of Ireland’s tourism sector. In particular, the Federation identifies the top four issues concerning the tourism sector:

• Control of wage costs
• Marketing Funds
• Energy costs
• Local Authority Funding

Control of Wage Costs

The IHF calls for a commitment by any incoming Government to ensure that wage increases are not in excess of those provided by national agreements in order to safeguard against further escalations in wages out of line with other European countries. The Federation states that recent reviews of the National Minimum Wage rates of pay agreements are totally at variance with the objective of maintaining competitiveness in the Irish economy and must not continue.

Annette Devine, President, IHF, states, “Ireland’s tourism sector competes in a highly cluttered international tourism market with other destinations vying to win a greater share of tourists. Given the labour intensive nature of the industry, continued increases in the statutory minimum wage, exceeding those agreed in the National Agreement, have a significant negative impact on competitiveness in the hospitality sector. The next Government must introduce measures to ensure that the pay terms agreed in the National Agreements are not exceeded in future reviews of the National Minimum Wage Rates.”

Marketing Funds

There needs to be continued investment in marketing and promoting Ireland as a destination to overseas tourists. The IHF is calling for marketing funds to be increased and for the 2007 spend of €45m to be at least index linked to inflation. She states that the ‘Open Skies’ deal, which will see increased direct air access between Ireland and the USA, must be supported with specific marketing funds to exploit this opportunity to increase US visitors to Ireland.

Ms Devine notes the potential to see an additional 1 million US visitors to Ireland annually over the next seven years if the correct marketing supports are put in place. She notes that this would represent an increase in revenue of €1 billion to the Irish economy and needs to be supported by a special marketing fund of €5 million per year for five years to promote new US air routes to Ireland.

Energy Costs

The IHF calls on the next Government to remove barriers to achieving a more competitive energy market must be removed to reverse serious cost increases for energy supply. Ireland’s electricity prices for industry are the third highest in the EU, behind Italy and Cyprus. The cost and availability of energy is a crucial issue for the Irish hotel sector, particularly in an environment where increasing operating costs are threatening the competitiveness of the sector. The IHF urges the next Government to urgently review the functions of the Commission for Energy Regulation and ensure that, in reaching its decisions, priority is given to national competitiveness.

Local Authority Funding

The system of Local Authority funding is based on an antiquated taxation system of commercial rates that sees local authorities extract taxes relative to the size of premises without sufficient recourse to the profitability of the business operating in that property. The next Government must put in place a more equitable, broader based local taxation method instead of levying an inequitable tax largely based on property size rather than the profits of a business.

The IHF is also calling for the delivery of Terminal 2 at Dublin Airport on time in 2009, a reduction in Ireland’s rate of VAT on hotel accommodation to bring it in line with the rest of Europe and the establishment of a mechanism to ensure PIAB (Personal Injuries Assessment Board) awards are made more binding and not undermined. 

The IHF Policy Document can be viewed in full at:

http://www.ihf.ie/documents/IHFPolicyDocumentElection2007_000.pdf

ENDS

FOR INFORMATION:

Siobhan Molloy/Eoin Quinn                 Tel: 01 6760168
Weber Shandwick                              Mobile: 087 817 50 66 / 087 2332191

Irish Tourism – Top Line Facts

• Tourism is Ireland’s largest indigenous sector in Ireland, outstripping agriculture as the lead employer.

• Tourism employs 145,000 people, one in every 14 jobs in Ireland today.

• €2.7 billion went to the Exchequer in direct and indirect taxes from tourism in 2006.

• Irish tourism generates over €6 billion in revenue. This is equal to 3.1% of Ireland’s Gross National Product.

• Hotels and guesthouses are the largest employer in the tourist industry.

• 1,250 hotels and guesthouses are located in every town and village in Ireland, employing over 57,000 people.

• Irish earnings from tourism have grown by over 39% in real terms over the past decade.

• The Government and exchequer are the main beneficiaries from tourism with 52 cent of every Euro spent by overseas tourists going to the exchequer.

• Every €1 spent on Government funded tourism marketing programmes results in a €60 return to the state.

• The number of overseas visitors to Ireland in 2006 was 7.4 million – an increase of 9% on 2005.