HOTELIERS WELCOME BUDGET MEASURES TO SUPPORT IRISH TOURISM

Tourism Positioned as Key Driver of Economic Growth in 2011

Tuesday 7^th December 2010

• Travel Tax and Incentive to increase air travel
• Funding of Tourism Marketing – Fáilte Ireland and Tourism Ireland
• Retention of VAT rates
• Availability of Credit

The Irish Hotels Federation (IHF) today welcomed the strong and decisive action announced in the Budget to assist the survival of the tourism industry and position the sector as a driver of growth in the economy in 2011. Tim Fenn, Chief Executive, IHF states, “We welcome the Government’s commitment to tourism as a key pillar of the Irish economy.  If given serious attention, tourism can be a significant driver of economic growth while also making a major contribution to our national recovery over the next four years.

Measures set out in today’s budget, including the reduction of the €10 travel tax and maintaining current levels of marketing funding and the retention of current VAT rates. Overall, the budget represents a decisive approach to getting the country back on its feet and restoring confidence in the economy both nationally and internationally. These will help the industry gain a greater share of an increasingly competitive international market.”

Travel Tax and Incentive to increase air travel

The IHF welcomes the reduction in the air travel tax, from €10 to €3,  it states that this in conjunction with the proposed traffic incentive scheme at our airports will inject some much needed growth into the tourism sector.

Mr Fenn states, “As an island nation, increased accessibility via our airports is a vital factor in growing Irish overseas visitors.  By reducing the travel tax, the Government has lessened this barrier and it should have a positive impact to assist in increasing visitor numbers from our key markets such as Britain and Germany.

Funding of Tourism Marketing – Fáilte Ireland and Tourism Ireland

The Federation welcomes the Government’s commitment to broadly maintaining current levels of marketing funding for tourism at €41.5m as a vital investment in the future of the industry. Mr Fenn states, “Targeted tourism marketing is a lifeline to maintaining Ireland’s visibility as a destination both internationally and domestically. With overseas trips to Ireland projected to be down by almost one million visitors in 2010, our key focus for 2011 will be to reverse the collapse in the visitors from Britain and to attract conference business to leverage the benefits of the Convention Centre Dublin.”

Retention of VAT rates

The IHF also commended the Government on retaining current VAT rates, particularly the 13.5% rate.  It believes that tourism and the hospitality industry will have a major contribution to make to our national recovery but it can only achieve its full potential in a business friendly competitive economic environment. The retention of the lower VAT rate will ensure that the tourism industry will be a viable economic driver.

Availability of Credit

However, the IHF condemned as a wasted opportunity the absence of any meaningful measures to assist small to medium sized enterprises gain access to adequate levels of appropriately priced credit. Mr Fenn states, “Despite the various efforts and initiatives to date from the Government, our members continue to experience severe difficulties obtaining credit from Irish financial institutions. This could be alleviated effectively with the introduction of a credit guarantee scheme or equivalent that would make credit available on a risk-sharing basis with banks and/or direct lending by Government.”

Mr Fenn concluded, “The measures are a major step on the long path to bringing the public finances under control which is essential to building a foundation for sustainable economic growth.”  

ENDS

FOR INFORMATION:

Siobhan Molloy/Orla Molloy                        Tel: (01) 676 01 68

Weber Shandwick                                       086 817 5066 / 087 770 5108

Background to Hotel /Tourism Situation

• International visitors have declined by 20.5% in the first six months of 2010, British visitors declined by 22.2% following earlier substantial declines in 2009
• Domestic holiday tourism trips declined by 8.2% between 2008 and 2009
• The average room rate declined by 11.8% in 2009 following a decline of 9.7% in 2008.
• The average room rate is now at 1999 levels
• Hotels have introduced substantial cost cutting measures while being constrained by costs such as labour rates and public sector determined costs. The operating cost per room declined by 16.5% in 2009
• Many hotels have gone into receivership and examinership and the worsened business environment has made it difficult for hotels and guesthouses to obtain required levels of bank credit to cope with the recession despite the various initiatives introduced by Government.