29 November 2011

BUDGET 2012 MUST PROVIDE INCREASED MARKETING FUNDING FOR TOURISM

IHF Calls for Clear Tourism Strategy to Build on Recent Stimulation Measures

• Increased levels of marketing needed for Fáilte Ireland and Tourism Ireland

• Hotel and guesthouse sector remains in a very difficult and deep financing crisis

• Key challenges include access to credit, excessive local authority rates and energy costs

The Irish Hotels Federation (IHF) is calling on the Government to build on the jobs-based tourism stimulus package announced earlier this year by introducing measures in the forthcoming budget that enable Irish tourism to compete more effectively with international destinations. In its pre-budget submission, the IHF calls on the Minster for Finance, Michael Noonan, TD, to increase the real levels of marketing funding allocated to Fáilte Ireland and Tourism Ireland, support greater cost competitiveness within the tourism sector and ensure the availability of appropriately priced credit for viable businesses.

Tim Fenn, Chief Executive, IHF states that, despite visitor increases in 2011, the hotel and guesthouse sector is still facing low levels of demand and a very difficult trading environment. “While the international economic situation is beyond the Government’s control, the upcoming budget is capable of substantially improving the tourism and hospitality situation.  With the right measures, tourism has enormous potential to grow rapidly and contribute to economic recovery by increasing its market share of both domestic and international tourism,” says Mr Fenn.

Key IHF Tourism Proposals for Budget 2011:

• Increase the real levels of marketing funding for Fáilte Ireland and Tourism Ireland

• Introduce a scheme to waive 30 per cent of local authority rates on hotels and guesthouses

• Ensure the urgent introduction of investment and availability of appropriately priced credit to the hotel sector

• Allow the Joint Labour System to disappear without introducing replacement system

• Facilitate the orderly reduction of excess hotel capacity

Among the challenges facing hoteliers are low levels of room occupancy, excess capacity, unsustainably high energy costs and excessive local authority rates and charges that have not been reduced in line with the downturn in economic activity. With many leading hotels having gone into receivership or fallen under bank control, the sector continues to face unfair competition from bank controlled hotels operating on a cash flow basis with commercially unsustainable prices.

Increased Funding for Tourism Marketing

Marketing activity is a critical determinant of market share and the achievement of substantial tourism growth requires greater support of the “Ireland” marketing presence in international markets. The IHF is calling on the Government to increase the current real level of activity funded by the Fáilte Ireland and Tourism Ireland’s marketing budget and maintain ongoing specific additional marketing activity.

Mr Fenn states, “The major priority in the short to medium term must be to regain lost ground in Britain and other key international markets in addition to attracting new business/conference visitors to derive maximum benefit from the availability of the national conference centre. Attention should also be given to developing integrated regional tourism products in conjunction with the industry to address regional imbalance.”

Improved Cost Competitiveness

There is an urgent need to improve cost competitiveness, particularly through reductions in local authority commercial rates and energy costs and allowing the Joint Labour Committee (JLC) system of establishing wage rates to disappear without introducing any replacement structures.

The commercial rates system continues to be an excessive burden on the hotels sector and does not provide an effective method of revising rateable valuations to take into account major worsening of economic circumstances, returns on property or the ability to pay of enterprises. In light of revisions carried out to date in three local authorities, the IHF is calling on the Government to introduce a 30% reduction in local authority rates applicable to hotels and guesthouses in the remaining 85 rateable areas across the country. 

The IHF is calling on the Government to allow the JLC system of establishing wage rates to disappear without the introduction of any replacement system, such as the sick pay scheme recently muted by the Minister for Social Protection Joan Burton. The IHF maintains that changes to Ireland’s economic and regulatory environment over the past century have made the JLC system obsolete, particularly in light of the National Minimum Wage Act 2000 and the vast amount of other employment legislation.

Availability of credit

Solid tourism enterprises continue to experience severe difficulties accessing appropriate levels of credit from financial institutions and are at risk of being lost to the economy through short-term financial difficulties. The IHF is seeking adequate levels of credit to be made available on a risk-sharing basis with banks and/or direct lending by Government using the banking system as an agent. The Federation calls for a credit guarantee scheme or equivalent to be introduced and for a bank for reconstruction and development to be established and directed at the SME sector as part of the medium term higher growth strategy. Limited tax incentives should be introduced to facilitate investment and support equity for debt restructuring schemes in existing hotels to reduce borrowing to a sustainable level.

Removal of excess capacity

Excess capacity is having damaging consequences for the commercial viability and sustainability of the entire hotel sector. The IHF is calling for an orderly reduction of capacity to be facilitated by adjustment of the claw-back regulations attached to capital allowances for hotel development which acts as a barrier to unviable properties exiting the market. Measures must also be introduced to facilitate ‘change of use’ and ensuring that the planning process and regulations are not a barrier to capacity reduction.

Tourism – Ireland’s leading indigenous employer

Tourism remains a large, strategically important industry and employment generator, which is deeply embedded in the Irish economy. As Ireland’s largest indigenous industry, tourism employs almost 200,000 people across the country. The Irish Hotels Federation represents almost 900 hotels and guesthouses throughout the country, which in turn employ 56,000 people.

ENDS

FOR INFORMATION:

Eoin Quinn/Siobhan Molloy                             Dublin office: 01 6760168

Weber Shandwick                                          Mobile: 087 233 2191 / 086 817 5066