Martin Cullen (Waterford, Fianna Fail)

I have noted the report, Overcapacity in the Irish Hotel Industry and Required Elements of a Recovery Programme, by Peter Bacon & Associates, which was published very recently. Its main conclusion is that between 12,300 and 15,300 hotel rooms need to be removed from the market if an appropriate balance is to be achieved that would allow the sector to recover to a stage where it can provide adequate returns and regain overall solvency.

I note the report's analysis that the overcapacity in the system at present has been caused by additional hotel development and investment in recent years and reduced demand and that in order to restore the financial health of the sector, there will in all likelihood be less rooms in future years. Many of the recommendations in what is a complex and wide-ranging report are for the industry itself to address, while others relate to the availability of credit, local authority rates and amendments to the accelerated capital allowances scheme. These issues are matters for consideration primarily by my colleagues, the Tánaiste and Minister for Enterprise, Trade and Employment, the Minister for the Environment, Heritage and Local Government and the Minister for Finance.

With regard to my response to the report, I continue to support the development of Irish tourism and, through the international and domestic marketing effort of the tourism State agencies, seek to increase visitor numbers for hotels and others accommodation providers. My input to the 2010 budget has ensured that it incorporates a range of measures and initiatives to renew Irish tourism. These include the maintenance in real terms of the funding for the tourism marketing fund, an increase in overall funding levels for tourism services and a trebling of the funds available for tourism product development. In addition, a new rail travel initiative aimed at senior citizens from abroad and a reduction in excise duty on alcohol products and VAT will assist the sector in addressing the cost of holidaying here. Key elements of the budget build on actions recommended in the report of the tourism renewal group to which I referred in my earlier response.

In commenting on the budget, the Irish Hotels Federation welcomed the decisive measures to restore the public finances and the acknowledgement by Government of the important role of tourism in the economy and specifically welcomed the measures that I have just outlined.

There is no doubt that the tourism industry as a whole had a very difficult year in 2009 and many challenges remain in the coming years. That said, there is, I believe, real potential for the industry to return to growth in 2010. The increased allocation of public resources provided in the budget – at a time of major financial retrenchment – is clear recognition by the Government of the important role that the tourism and hospitality sector will play in Ireland's economic recovery. I will continue to work closely and meet with the hotel industry to ensure that it plays its full part in that recovery.

See this speech in context