17th September 2008

NATIONAL PAY AGREEMENT UNSUSTAINABLE FOR HOTELS

The Irish Hotels Federation (IHF) stated today that unless there is a substantial improvement in its trading environment, the hotel sector will be unable to pay the increases included in the proposed national pay deal announced this morning.

The hotel sector is already committed, under the legally binding Joint Labour Committee system, on 16 October 2008, to a pay increase of 2.5%, - the final phase of the previous agreement. The first phase (3.5%) of the proposed agreement would be applicable from mid July 2009. The effect of these increases will be that legally binding minimum wage rates in hotels in July 2009 will be 6.1% higher than in July of 2008.

This level of increase is not sustainable in an industry in a market where the additional costs can not be passed on to customers in price increases. Nationwide hotel occupancy rates are down 11% on 2007 and the CPI index indicates that hotel prices in the domestic market are 3.3% lower than last year. In addition, the North American, European and British markets in the hotel sector are down by 25%, 18% and 5% respectively.

Last July the IHF called for a pay pause in the new agreement, at least until the end of 2009. The situation has worsened since that call and the proposed agreement will put many hotels in an impossible position which will result in job losses.

“Labour intensive sectors, such as hotels where wage costs are over 40% of turnover, cannot afford any further wage increases until there is a return to growth in the turnover of the business to recoup these additional costs” said Matthew Ryan, President, IHF.

The hotel industry in Ireland employs over 65,000 people.  If we are to sustain those jobs, there must be a pay pause until the end of 2009” said Matthew Ryan. 

ENDS

For information:
Siobhan Molloy/Naomi Clarke             Tel: (01) 676 01 68
Weber Shandwick                                     (086) 817 50 66