Sunday, 6th March 2011

INVIGORATE AND SUPPORT TOURISM – CALL ON NEW GOVERNMENT
Growth Could Create an Additional 20,000 Jobs by 2015, Says IHF

The President of the Irish Hotels Federation (IHF) Paul Gallagher today stated that, with a new Government and a fresh invigorated approach to tourism, the sector could be a significant engine for growth and job creation. Speaking on the eve of the IHF Annual Conference, Paul Gallagher said that the new Government will need to hit the ground running with a pro-business ‘can do’ approach to Irish tourism.  The IHF suggests that tourism must be to the fore of all economic policy decisions and, if specific actions are taken to support the sector, growth could re-emerge to create an additional 20,000 jobs by 2015. In particular, Mr Gallagher stressed action is needed to address the lack of credit facilities for viable tourism businesses and the excessive energy costs that are threatening the sector’s viability.

Mr Gallagher called on state controlled banks to provide flexible restructuring options for viable hotels.  He called on the Government to consider the establishment of a reconstruction and development bank or special banking division within one of the banks to address the current liquidity issues being faced by the sector.  He also urged that the new government should undertake a complete review of the function of the Commission for Energy Regulation (CER) to ensure full liberalisation of Ireland’s energy market, stating that it is a failed process as liberalisation to date had, in effect, served to increase electricity prices to a point where Ireland has the fifth highest prices in Europe.

“The Government must see the business sector as a partner not as a cash cow.  A key priority must be to ensure that the right environment is created to allow business flourish and create jobs. By creating appropriate circumstances that allow us to do what we do best we can not only secure current employment but increase our employee base right across every village and town.” 

Lack of Credit Availability
Mr Gallagher maintains that a business loan guarantee scheme must be introduced to assist small to medium sized enterprises gain access to adequate levels of appropriately priced credit, which is now critical.

“We are calling on the new Government to introduce a guarantee scheme similar to that in operation in the UK, where at least 50% of qualifying loans to viable businesses are guaranteed with borrowers paying a small (2%) premium to support the scheme. The IHF also calls for the establishment of a reconstruction and development bank or a special division within an existing bank to address the problem of overhanging debt,” he said.

Crippling Energy Costs
Mr Gallagher continued by stating that it could only happen in Ireland that liberalisation of the electricity market – which was undertaken to increase competition and assist reduce prices ­– ultimately resulted in higher prices.  

“The approach taken by the Commission for Energy Regulation has not served its purpose. Only last year, the Commission opted to implement a Public Service Obligation levy that resulted in additional average costs of €7,000 per annum being imposed on individual hotels which are struggling to survive.

“The overriding reason for encouraging competition in our energy market must be to lower prices for energy users, not increase them. After 10 years of deregulation, increases in energy prices have given Ireland the fifth highest electricity prices in the EU*. These punitive increases are having a detrimental effect on business viability at a time when cost competitiveness is a pressing concern for the economy. The immediate focus must be on providing electricity at the lowest possible cost and reducing existing prices.”

FOR INFORMATION:
Siobhan Molloy/Eoin Quinn                         Tel: 01 6760168
Weber Shandwick                                           Mob: 086 817 50 66/087 233 2191

*The Commission on Energy Regulation’s Decision Paper on the Public Service Obligation (PSO) levy for 2010/11 can be found at: http://www.cer.ie/GetAttachment.aspx?id=9fe5eaba-2aae-461b-8ca0-57e52ffc0a80