IHF QUARTERLY BAROMETER REVEALS CAUTIOUS OPTIMISM AMONG HOTELIERS

20^th June 2011

·        64% of hoteliers are optimistic about the viability of their businesses

·        53% report an increase in overall business levels

·        94% feel the State visit by Queen Elizabeth II has had a positive effect on Irish tourism

·        66% say the Government’s jobs initiative will benefit the tourism sector

With the summer season underway, Irish hoteliers are cautiously optimistic about the outlook for their businesses according to results of the Irish Hotels Federation’s (IHF) of hotels and guesthouses. The survey of IHF members throughout the country reveals that 64% of respondents are optimistic about the viability of their businesses over the next 12 months.

Compared with this time last year, 53% of respondents report an increase in overall business levels; 36% report a decrease and 11% indicate no change. Results indicate that business levels are up in the domestic market with 46% of respondents seeing an increase in business from the island of Ireland. This contrasts with 29% who are experiencing static business levels and 25% who are witnessing a further deterioration in business from the domestic market. 

Early indications suggest a mixed performance from the British market, Ireland’s largest and most important source of overseas tourism revenues. While 38% of respondents are seeing an increase in business levels, this is offset to a large extent by the 33% who see no change and 29% who see an actual decrease in business. Respondents are more positive about the US market with 49% seeing an increase in business (31% see no change while 20% see a decrease).

Results indicate that business levels to date are mixed for both Germany and France, Ireland’s two biggest markets in continental Europe. Compared with this time last year, 23% of respondents are seeing an increase in business from Germany (55% see no change; 22% see a decrease) while 17% are seeing an increase from France (65% saw no change; 18% see a decrease).

When asked about the recent State visits, 94% of hoteliers who took part in the survey feel the visit by Queen Elizabeth II has had a positive impact for Irish tourism with 83% saying they expect to see an increase in visitor numbers as a result. A similarly positive sentiment is expressed for US President Barack Obama’s visit with 92% saying the visit has had a positive impact and 77% saying they expect to see an increase in visitor numbers as a result. The IHF expects the full benefits of the State visits to feed through to increased visitor numbers in the medium to long term.

When questioned about issues impacting on their businesses, hotels and guesthouse owners identify local authority rates as the most pressing issue. This is followed by utility costs (electricity and gas), wage costs, excess capacity, weakened consumer confidence and limited availability of credit. Over half of all respondents (53%) indicate they have experienced difficulties accessing standard credit facilities from their banks during the last year.

Tim Fenn, Chief Executive, IHF states: “While hoteliers are still facing issues around cost competitiveness, initial indications are that business levels are up and we’re beginning to see a turnaround in the sector. We’ve had a catastrophic decline in visitor numbers since 2008, so the sector is starting from a very low base. However, given the right conditions, we’re optimistic that hotels and guesthouses will see a return to growth this year.”

Job Creation Potential

Hotels and guesthouses broadly welcome the Government’s recent jobs initiative with 66% of respondents saying the range of measures announced would have a positive effect on the tourism sector. This comes at a time when employment in the hotels sector has experienced significant downward pressure: 40% of respondents indicate a reduction in staffing levels over the last 12 months (40% indicate that staff numbers remained constant while 20% saw an increase in staffing levels).

Commenting on the prospects for employment growth, Mr Fenn states that the Joint Labour Committee (JLC) system remains a serious barrier to job creation and must be abolished to enable hoteliers to unlock the significant additional employment capacity within the sector:

“The hotels sector offers huge potential for creating jobs very quickly if the Government allows hotels to achieve viability based on a sustainable cost structure. Key to achieving cost competitiveness is the abolition of the JLC system, which puts hotels and guesthouses at a serious competitive disadvantage compared to our biggest competitors such as Northern Ireland and Britain. Wages now account for 42% of turnover in Irish hotels which is over a third higher than in Britain. This is clearly unsustainable in the current environment when job creation is a key objective for the economy.”

Mr Fenn states that the overriding objective for the Government must be job creation, getting people started in work and giving them an opportunity to develop their skills base and careers. He states that, coupled with control of other cost inputs within the economy and a continued programme to improve Ireland’s image abroad, Irish tourism can create a further 20,000 jobs by 2015. This is in addition to the 180,000 individuals already employed throughout the sector.

A summary of the barometer results is available HERE

-ENDS-

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