Mr. Tim Fenn:

I thank the Chairman, Deputies and Senators for inviting the Irish Hotels Federation to address the Oireachtas Joint Committee on Transport and Communications. The federation which was founded in 1937 is the national representative organisation of the hotel and guesthouse sector in Ireland. It is a key stakeholder in the tourism sector. Tourism is one of Ireland’s largest indigenous industries and provides almost 205,000 jobs, equivalent to 11% of total employment in the country. It accounts for almost 4% of gross national product. With 54,000 people directly employed by hotels and guesthouses across every town and village, the hotels sector is playing a critical role in contributing to recovery in the tourism industry and the wider economy.

While a number of serious challenges remain, the tourism industry is recovering and now on a much firmer footing, with the number of overseas visitors up some 9% this year and expected to reach 7.3 million by year end. This builds on last year’s strong performance during the Gathering and means that we are now achieving growth across all of our key markets, with particular successes in North America, Britain and continental Europe. It is important to note, however, that the recovery is not uniform across all parts of the country, but the outlook continues to be positive into 2015, with a further 6% growth in visitor numbers expected next year, bringing the total to over 7.7 million and delivering almost €4 billion to the economy, excluding carrier receipts. There is also cause for optimism on the domestic front following years of subdued consumer confidence in Ireland. Although fragile, we are seeing signs of an upturn in the home market, with people gradually starting to take more trips at home and spending more money in the local economy.

The recovery in tourism has been supported by a number of important measures such as the 9% tourism VAT rate. This has brought us more closely into line with tourism VAT rates in countries with which we compete across the rest of Europe, making us more competitive when marketing Ireland internationally as a tourism destination. As a result, the tourism and hospitality industry has created over 33,000 new jobs since 2011, making the 9% VAT rate one of the most successful job creation measures in modern times.

The strong levels of tourism growth in the past two years bodes well for the future. However, the industry is only at the beginning of a long journey and there is no room for complacency.

Much more needs to be done before the industry reaches its full potential as an engine of growth and job creation. Some of the challenges it still faces include the need for additional investment in tourism marketing and product development; greater cost-competitiveness within the economy; hospitality skills training at craft and entry level; and a more integrated approach to tourism development.

In terms of additional investment in tourism marketing and product development, the Irish Hotels Federation collaborates with both Fáilte Ireland and Tourism Ireland in the areas of product development, quality and standards, training, registration and classification and marketing. We were part of the tourism recovery task force, TRT, established to drive a speedy return to growth in inbound tourism from Ireland’s top four source markets. We are also represented in the marketing partnership group, MPG, for the Great Britain market and support the new Grow Dublin tourism alliance with Fáilte Ireland as part of the Destination Dublin strategy. We support Tourism Ireland’s strategy for next year to prioritise overseas markets that offer the best return on investment in terms of holiday visitors and revenue. The strategy will target visitors in these markets more closely with distinctive holiday experiences, events and special offers tailored to their interests. We also support Tourism Ireland in targeting emerging markets with high potential such as China which has now become more accessible following the introduction of the new British-Irish visa scheme.

It is clear that the tourism industry has shown itself to be an excellent investment vehicle for the country, one which we believe needs to be nurtured if it is to continue to deliver returns for the economy. However, since the downturn, the funding allocation for tourism marketing and product development has been cut back substantially and the tourism bodies have been operating within very constrained budgets. This puts the long-term sustainable growth of the industry at risk. There is a pressing need to ensure sufficient funding is allocated and we are calling for funding to be returned to 2012 levels at a minimum in order to maximise our growth potential. Recently, the Government and Tourism Ireland set out their plans to grow the number of overseas visitors to 10 million per annum by 2025. This would increase annual revenue from overseas visitors to €5 billion and result in the creation of an additional 50,000 jobs, bringing total employment in the sector to 250,000. While we welcome these targets, they could be more ambitious, given the wider outlook for tourism in Europe. With additional resources, Tourism Ireland could be well placed to meet these targets by 2020.

In terms of achieving greater cost-competitiveness within the economy, the international tourism market is exceptionally competitive and every tourism euro spent in Ireland is hard won. Value for money is an important factor in achieving growth in the number of overseas visitors, as reflected in research published by Fáilte Ireland earlier this week. The results show that Ireland’s value for money rating has doubled since 2009, with nine out of ten holidaymakers now expressing satisfaction. As such, the high cost of doing business in Ireland remains one of the most pressing issues faced by tourism businesses such as hotels and guesthouses. Since 2008, the hotels sector has brought down costs by 24%. This has been a significant factor in stabilising our sector. Hotels are now much leaner, having restructured their business models throughout the downturn, improved their products and lowered prices. On the other hand, the levels of Government determined costs have remained the same.

A more focused approach by the Government is required to reduce all costs imposed by State-owned agencies, namely, electricity costs, water, licensing, etc. Proposals for carbon tax increases should also be deferred until the economy is on a more stable footing. In particular, urgent action must be taken to address local authority rates and energy costs. The biggest single cost over which hoteliers have no control is local authority rates. Hotels make a disproportionate contribution to local authority funding, with many hoteliers being levied rates of up to €3,000 per bedroom and average local authority rates equating to €1,500 per bedroom, regardless of occupancy rates. We have members who are paying in excess of €400,000 per annum in rates. It is over a decade since the 2001 Valuation Act came into force, yet more than one half of hotels are still waiting to have their rates reviewed by the Commissioner of Valuation and those that have had their rates revised saw reductions of over 30%. It is vital, therefore, that the revaluation process is accelerated without delay and that a fair and equitable appeals process is put in place. In this regard, we note that the Valuation (Amendment) Bill 2012 is before the Oireachtas.

With regard to energy costs, energy-related levies are another source of concern in terms of cost competitiveness, in particular, the decisions taken by the Commission for Energy Regulation to impose additional levies on electricity customers at a time when costs are already too high. We are very concerned about future levels of the public service obligation, PSO, levy and believe a fundamental review of the scope and burden of the PSO is called for, including the projected burden in the coming years. This is an issue that needs to be addressed as a matter of urgency with the Commission for Energy Regulation.

With regard to serious skills shortages at craft and entry level, tourism generates employment for a range of skill levels across the country, often in areas in which the scope to develop other export‐focused sectors is constrained. The federation believes employment within the tourism industry benefits from vocational and craft training. We note the recent launch of the Apprenticeship Council and hope hospitality training will be given the necessary resources to support the anticipated increase in employment in the sector. A failure to act would be a missed opportunity to nurture the skill sets we need for the future. With unemployment at a rate of 10.7%, our overriding objective must be to get people into the workforce and give them an opportunity to develop their skills. This is particularly important for those aged under 25 years who are at risk of becoming long-term unemployed. Appropriate training would provide them with, possibly, their first work experience and a valuable stepping stone in their careers.

With regard to having a more aggressive integrated approach to tourism development, the tourism industry is playing an enormous role in the country's economic recovery and needs to have a more prominent role in informing and influencing national planning and development policy to ensure a more unified approach. Significant progress is being made in this regard, with unprecedented levels of collaboration between tourism industry partners, including closer co-ordination among businesses, local communities, State agencies and local authorities. Initiatives such as the Wild Atlantic Way are excellent examples of how this can work. With the Government due to publish its tourism policy statement shortly, the Irish Hotels Federation believes this greater collaboration will stand to us in the years ahead and ensure the tourism industry will be well placed to grow and prosper, the benefits of which will be felt across the entire country.

I thank the Chairman for giving me the opportunity to address the committee. We look forward to addressing any matter members may wish to raise.