Tourism 'key to growth' - but hotels head for Nama

BUDGET BOOST:TOURISM WILL TAKE centre stage in the economic recovery, according to Martin Cullen, the Minister for Arts, Sport and Tourism. The Government "has finally grasped" that it is probably "the biggest blooming industry we have", he told The Irish Timesafter Wednesday's Budget, which included more money for his department and heavily discounted rail fares for visitors over 65.

Cullen, who said officials told him they can't remember tourism ever before being mentioned in a Budget speech, added that a predicted return to economic growth of 2 or 3 per cent in 2011 could be met with growth in tourism of about 15 per cent.

But he warned that a lot of the Republic's hotels, which have an overcapacity of "about 15 per cent", "will probably go, through Nama or one way or another". He said: "In fairness to [ hoteliers] they are kind of focused. What we want them to do is to focus on their own business, to stop worrying about what the other fella is doing, to focus on how you can be more competitive."

The Minister was clear about where the Republic's tourism industry got it wrong: "We priced ourselves out of the market. Golf is a very good example. We had and still have a fantastic golf product, but charging guys €400 and €500 for a round of golf on the west coast of Ireland was crazy. That is all gone, because they lost their market, and we have got to go and rebuild that market . . .

"If there is a silver lining somewhere in [ the recession] it is that we are being forced to reassess what we charge in this country for whatever it is that we are selling. Hotels became very expensive, food became very expensive, drink became very expensive. The things that people do on holidays, when we measured ourselves internationally, were making Ireland uncompetitive."

Cullen said his department's budget, which is set to rise by 2 per cent, to €155 million, was one of the few allocations to go up this year. A slight reduction in funding for marketing will be more than met by a drop in advertising charges.

The subsidised rail travel will make a big difference in a significant segment of the market, he said, cutting an often large part of the cost of a holiday.

The Irish Hotels Federation was quick to welcome the Government's focus on the industry. Its president, Matthew Ryan, called for the next step to be action on local-authority rates. "We need our costs to be competitive, too," he said.