Mr. Stephen McNally:

We had a meeting in Olivia Duff's hotel last week. I am from Enfield so I am not too far away from Kells. She has a great industry there which is fantastic in terms of job creation. She rears turkeys there and farms lamb too. It was a great fact-finding mission for us.

We know that when people land in Ireland they generally take a car to travel around. Hoteliers have told us that the midlands region has been the slowest to recover. This feeds into the point made by the Deputy about too many hotels in unsuitable places. That said, this year has been a lot better for the midlands. The 9% VAT rate has helped a lot. Interestingly, I have a chart here which illustrates the VAT rates right across Europe and 17 countries have the same rate as us or a lower rate. I am talking here about countries like Germany, France, Belgium, the Netherlands and so forth. In Belgium the rate is 6% and the rate in Germany is also lower than here. While the 9% rate here is a reduction, a lot of other countries in Europe have also identified the need to attract tourists to get their industries moving. The vital point is that we are an island so we must work harder to get people into the country. Reducing landing charges and VAT helps to bring people in. While the reduction in the VAT was meant to be a short-term measure, as we look across Europe we realise that many other countries have similar or lower rates. Britain has a higher rate than us but most of the rest of Europe has rates that are pretty much the same as ours, in recognition of the importance of tourism to their economies.

Much will happen in that area as the new South West Way is being linked to it, all the way up to Newgrange. However, we have much work to do as we have to ensure that when people use the way that there are enough experiences on the route. Incidentally, the food product is very good on that route. I am confident about it. We have to get it on map and bring it to the various countries. We would have visited the Berlin market in Germany and the world travel market in London. We take many of these trails and maps with us and show them to everybody we meet. They want to know about the food, where they will stay and the distance from the airport. I am confident about the future if we can continue to bring in the visitors, remain competitive and keep the pricing right because we are getting very good feedback in general from Fáilte Ireland. If something is out of kilter we tend to deal with it as quickly as possible.

In regard to the hotels, some 62% of our industry is outside the main centres. In other words, 62% of hotels are not in the Corks, the Kerrys, the Galway city centres, Killarneys or Kilkennys and are still under considerable pressure. Many hotels are making their way through the market and their prices are effectively being reset. In the long term many of them will be viable, especially if they are reset with a new pricing mechanism that allows them to buy a hotel at the right rate and move on from there. There are some places which have too many hotels as the hotels were built for the wrong reasons, maybe a tax break rather than for tourism. However, that issue is sorting itself out and we have seen a great improvement in the past 15 to 18 months. According to our members around the country there is no way we are out of this problem yet. We have had a better season. It is important that we are able to continue the growth in tourism numbers and continue the VAT rate for a few more years.

It is important to remember that our product, which is crucial for tourists coming into the country, has not been renewed for seven or eight years because of the recent difficulties. A great deal of refurbishment work has started. In my own business we have refurbished more than 400 bedrooms this year because we have had to renew the product. Lest anybody thinks that if we get more money out of the business it is going somewhere else, it is not. We have to renew our product and keep it up to date. We have to ensure the quality remains goods. The feedback from our tourist visitors time and again is that our product is good. Members will be aware from their local hotels that they are frayed at the edges, they need the furniture replaced. These are not massive refurbishments where we are taking down walls and moving things. They are about reinstating the product and making sure when the guests arrive that they well looked after.

In general, 75% of the bed nights we accrue in Ireland come from the island itself on a year round basis. If confidence in Ireland is not strong locally, business will suffer. While we have all the international visitors it is very important to have a strong local economy. The deals available are fantastic. If people can travel to hotels during the week everything gets thrown into the package. There is wonderful value to be had out there. That was particularly true this summer. Many Irish people stayed at home for their holidays which was great to see and the feedback on the value issue was that it was worthwhile. If we do not give value and set the wrong rate there will be nobody in it and customers will vote with their feet.