The Internet is helping to drive down prices in the tourism market, although some people still don't want to know, writes Joe Humphreys.
Rip-off Ireland: a catchy phrase, but how valid is it? Certainly less so than two years ago when it first entered the national lexicon in the midst of the euro changeover.
Prices in many sectors have since stabilised, if not fallen, relative to inflation. Competition is on the rise and tourism operators are adjusting to the new reality by offering more special deals and discounts.
Mention "rip-off" now and you'll get short shrift from hoteliers and restaurateurs. "Whoever invented that phrase . . ." John Power's voice peters out as he contains his anger. "It's like a millstone around our necks. A rip-off means people are profiteering. There's no evidence of that," says Power, chief executive of the Irish Hotels Federation.
"A rip-off means people are forced to do something and then fleeced," he adds, "but people can shop around. Look at the back page of the paper and see the offers. If you're not happy with hotel A then you can go to hotel B."
He has a point. A glance at the back page of The Irish Times shows hotels are offering discounts of up to 25 per cent on the same period last year. A sample from last month illustrates the point: Hotel Westport was offering two nights bed-and-breakfast and a dinner from €169 per person sharing, compared to an advertised price of €225 in July 2002; Killarney Ryan three nights and three dinners from €249 versus €300 last year; and Faithlegg House Hotel, Waterford, €259 for three nights, two dinners and free entry to its golf course - compared to €299, excluding €25 a round of golf, last year.
Does this not prove, however, that hotels were ripping off customers 12 months ago, if not now? Power rejects the claim.
"It comes down to supply and demand. Hoteliers have to take a view of the year and price accordingly and at the end of the day, the market determines the price."
The view is echoed by Niall Geoghegan, marketing manager of Jurys Doyle, one of a number of hotel chains on a cost-cutting drive at present. "Ireland is no different to other countries in reviewing its pricing policy. International demand has been affected since September 11th."
There is a "misperception", he adds, that value can't be found in Ireland. "Sure, there are elements of the product mix which are expensive and people have to be more discerning. But to blanket the whole product and say it's expensive is not in touch with reality."
For many in the tourism sector the rip-off tag was a by-product of changing over to the euro. Price differentials were suddenly more visible and comparisons became easier to make through the Internet. However, says Fiona Byrne, chairwoman of the Towns and Country Homes Association, this doesn't mean operators were profiteering. In her sector, she claims, 10 per cent of B&Bs have being leaving the business each year for the past four years.
She says the association's 1,600 members increased prices by just €1-€3 a night this year and last March agreed to freeze those prices until at least April 2005.
"We are setting our prices for next year even before we see how the present season works out."
Describing the season to date as "poor", she says domestic demand in particular has been hit by the hotel offers. B&Bs are also being squeezed by increased regulations, stemming primarily from the EU, on such matters as fire safety and kitchen hygiene. "They are trying to turn us into commercial properties," she remarks.
Similar grumbles emerge from the food and drink sector, which has taken the brunt of criticism for price rises in recent years.
The Restaurants Association of Ireland admits prices have risen but denies its members are to blame. The association's chief executive, Henry O'Neill, says it has suffered from a perception problem by virtue of being "the last link in the supply chain".
Claiming "there is no room for discounting because margins are so tight", he notes 21 members have left the industry in the past seven months. "Only one sold their business as a going concern."
Nonetheless, dozens of restaurants managed recently to introduce new "value menus" under a cost-cutting initiative, which O'Neill freely admits was a response to the "rip-off" criticism.
"Restaurants are taking a gamble that when people come in they may order off the menu or will return again or come more often." The initiative is due to be relaunched next month with up to 500 restaurants claiming participation. However, says O'Neill, it would be a mistake to think proprietors could afford to lower prices across the board.
"Wouldn't it be ludicrous to price yourself out of business?" he remarks.
The slow-down in price increases and reductions in some areas have undoubtedly been helped by increased competition. In the hotel sector, the number of rooms jumped from 27,000 in 1996 to 43,000 this year and occupancy rates for last May were just 51 per cent, the lowest in years - down 8 per cent on 2000.
A similar picture has emerged in the hostel sector, where the number of beds increased by 50 per cent between 2000 and 2002, to 6,000. "There was a day when you could not get a bed in July in a hostel," says Robin Hickey, chairman of Independent Holiday Hostels Ireland. "Now it's a bit easier, not because there are less people but more bloody beds."
Increased competition has led to greater discounting this summer "on a par with what is going on in the hotels", notes Hickey, who is attached to the Kinlay hostel group.
It's far from a price war, however, and this extends from the fact that the industry is "more resilient than others". Hostel-goers don't tend to be as influenced by external shocks like September 11th and the war in Iraq.
That's not to say they're all student back-packers. The "middle-aged family" is taking a growing slice of the industry's customer base, Hickey says.
Another key driver on costs is the Internet, which has been linked to the new global tourism trend of "dynamic packaging": surfing the net to combine low-cost airline tickets with special online accommodation offers.
Businesses are adapting accordingly with Jurys Doyle one of a number of hotel chains offering special rates to customers who book on its website. "The business model has been reorganised around the web," Geoghegan says, noting that Internet booking is not just more cost-efficient for travellers but for hotels.
The trend has been picked up by the Economist this month which quotes research claiming travel is now the largest e-business in the world. One online travel consultant, PhoCusWright, predicted 30 per cent of all travel business would be booked online by 2005.
Some canny operators saw the trend long ago, among them Ireland Golf, which organises package golf holidays mainly for the American market. At a time when Irish golf tourism is enjoying mixed fortunes, the Tralee company is on the up, experiencing a 10 per cent growth in business this year and predicting a 50 per cent growth by 2005.
Chief executive Pierce Wall notes all bookings are done through the Internet. "We have no paper." He adds, despite talk of a rip-off industry, a phrase he reckons was invented by an excitable sub-editor, that Ireland remains cost-competitive when compared to equivalent destinations. He cites the example of an American customer who found it was cheaper to bring a group of 16 to the south-west this year than to the Myrtle Beach golf resort in South Carolina.
"Price is coming into it as a factor. Our repeat business is saying it is more expensive and we are trying to get clubs to rein in their green fees, but it can fall on deaf ears. Their attitude is that they can fill the market at any price, which is the case for a lot of them."
In addition, he says, it is difficult to persuade travelling golfers to journey off the well-worn greens of Ballybunion, Lahinch and Portmarnock. "We're trying to push the west coast, where the green fees and accommodation is cheaper, but the Americans don't want it. Perception and reputation is everything."
Despite the pleadings of the Tánaiste, Ms Harney, it seems many holiday-makers just don't want to "shop around". And whose fault is that?
Weblinks:
[ www.ireland.travel.ieOpens in new window ]
[ www.irelandhotels.comOpens in new window ]
[ www.rai.ieOpens in new window ]
www.commerce.ie/towns_and_ country
