Sunday, 9th November 2008

Hoteliers Slam Proposed Hikes in Energy Bills
‘No Increase Acceptable – State Monopolies out of tune with Reality’

Requests by the ESB and Bord Gáis to raise energy charges from January 1st have today been condemned by the Irish Hotels Federation (IHF) as outrageous and blatantly insulting to Irish industry in its present economic state. The IHF states that seeking increases at a time of economic crisis is out of step with the reality of Ireland’s worsening economic conditions and that no increases will be acceptable to the IHF and its 1,000 members throughout the country who are seriously struggling to survive. The Federation states that the Government needs to intervene urgently to stop any electricity or gas price increases and show clear leadership to support Irish industry in dealing with its current serious challenges.

Speaking on the eve of its submission to the Open Forum on Electricity andNatural Gas Tariffs* hosted by the Commission on Energy Regulation (CER), the IHF outlines its objections to granting such unjustifiable increases which, in 2008 alone, would see increases of 25.6% and 23.4% being granted for electricity and gas, respectively. These increases are having a detrimental impact on the financial viability of hoteliers and guesthouses throughout the country. It is estimated that each year, the hospitality sector spends approximately €150m on energy, representing over 10% of operating costs of most hotels and guesthouses.

The IHF stresses that the current price setting mechanism through the CER can not work and is inappropriate in the today’s economic conditions. The ESB and Bord Gais can not be allowed to function as if their costs and revenues are insulated from Irish economic reality. State intervention is now required to prevent these monopolies from gaining systematic increases which have absolute disregard for the economic circumstances of the country. The IHF maintains that all businesses and individuals are in economic survival mode and that the State has a responsibility to show leadership and to assist in the creation of conditions to support industry and generate an economic recovery.

According to Matthew Ryan, President, IHF, it is madness that these monopolies can simply be allowed to carry on functioning as if the current economic conditions do not exist and have no impact on their models for price increases. The ESB and Bord Gais are state owned companies and if they themselves do not do so, they should be instructed by Government, their shareholder, to immediately find avenues to avoid increases and to expedite a reduction in their current charges. It is absolutely ridiculous that organisations such as the ESB and Bord Gais should hold the country to ransom in an environment where international oil prices have more than halved in the last two months. It should not be even considering an increase. The Commission on Energy Regulation must stipulate to ESB and Bord that any shortfalls be offset by greater efficiencies, reductions in their domestic cost base and a re-examination of capital expenditure as a temporary measure until the economy stabilises.

“These suggested increases clearly demonstrate that current system is not fit for present purpose given the current economy reality. The State has a responsibility to ensure that state monopolies and their regulation system play a role in creating and maintaining an economically viable industrial cost base and must be committed to supporting industry’s sustainability - not seeking to further exasperate difficult trading conditions,” says Mr Ryan.

Mr Ryan states, “The ESB and Bord Gais are seeking to increase prices at a time when international oil and gas prices are less than half where they were mid-year. The Commission for Energy Regulation must intervene to make national competitiveness a priority and ensure reductions in wholesale prices for oil and gas are reflected in prices set by the ESB and Bord Gais. We can’t be fobbed off by the regulator – no increase will be acceptable to our members. Clear State leadership must be demonstrated and the attitude of blindly shoring up state monopolies must come to an end.”

“Evidence on the ground clearly shows that hotels are facing extreme difficulties and in common with most industries in the state are now in survival mode. Ensuring competitiveness is now an issue of paramount importance to the hospitality sector requiring urgent action to reduce operating costs.”

*The Commission on Energy Regulation’s Open Forum on Electricity andNatural Gas Tariffs will take place on Monday 10November 2008in the Gresham Hotel, O'Connell Street, Dublin 1 at 10am.

Economic contributions of the tourism
Over the longer term, the tourism and hotel industries have achieved substantial growth and have invested in skills, marketing, technology, products and services and physical facilities. The main economic contributions of the tourism industry include:

• Almost €5 billion in foreign exchange earnings in 2007 compared to €2.1 billion in 1995 and €4.3 billion in 2005;
• 8.3 million visitors;
• Domestic tourism expenditure of €1.5 billion in 2007;
• Almost €3 billion in revenues to the exchequer from tourism in 2007;
• Tourism accounted for about 4% of GNP
• Hospitality industry accounts for 250,000 full-time, part-time and seasonal jobs;
• Greater spread of regional economic activity than most other industries;
• 7% of services exports;
• Provides a substantial entrepreneurial resource as the vast majority of tourism enterprises are small and medium enterprises.
• 57,000 people employed in the hotel and guesthouse sector – largest employer in the tourism sector.
• 920 hotels with 60,000 rooms.
• 360 guesthouses with 4,300 rooms.
• Total of 64,300 hotel and guesthouse bedrooms in Ireland.

ENDS

FOR INFORMATION:

Siobhan Molloy / Eoin Quinn Tel: 01 6760168
Weber Shandwick Mobile: 086 817 5066 / 087 233 2191