IRELAND’S LARGEST indigenous industry is “at a crossroads” and facing one of its most difficult periods in decades, a tourism conference heard in Killarney last night.
The 71st Irish Hotels Federation (IHF) gathering of 250 hoteliers also heard calls for a temporary reduction in the standard VAT rate by 5 per cent over the next six months to tackle the economic crisis and respond to UK cuts in VAT rates.
IHF chief executive John Power warned that for 2009 and 2010 “the focus would be on survival and on cash flow”. The next few weeks and the period surrounding St Patrick’s Day – the traditional booking period for US visitors – would tell a lot, he said.
There are currently 921 registered hotels with 60,600 bedrooms and 337 guesthouses with over 4,000 guest bedrooms.
The IHF annual report for 2008, launched last night, revealed that room occupancy had declined to 58 per cent, the lowest since 1994. However, the domestic market had grown slightly in 2008 and 64 per cent of all bednights in hotels were sold to Irish customers, an increase of 5 per cent.
The biggest drop was in the number of bednights sold to North American visitors, which was down 23 per cent, or almost a quarter, on the previous year.
The European market for bednights was more resilient last year, dropping just 7 per cent, while the number of bedrooms sold to UK visitors dropped by some 15 per cent.
Overseas visitor numbers were down by 3 per cent to 7.5 million in 2008, the report noted. The fall-off, primarily in the second half of the year, resulted in national tourism revenues coming in at €6.3 billion compared to €6.5 billion the previous year – the first drop since 2002.
Commenting on the fight for survival in the industry, there were now huge bargains to be had – particularly in the five-star sector – Mr Power said, with five-star hotels offering two nights’ BB and one dinner for €200 per person.
“Ambitious tourism targets” for reaching 10 million overseas visitors by 2012 may not now be met, he said. However, he stressed that long-term prospects for tourism remained strong providing Ireland confronts the challenges of being internationally competitive and being an attractive destination.
“We now find ourselves at a critical juncture, having come through an extended period of development over the last decade. Competition internationally has intensified dramatically as emerging destinations come on stream and the downturn in world tourism gains momentum.”
The conference, to be addressed today by Minister for Tourism Martin Cullen, will over the next two days hear calls for greater flexibility from banks in extending credit to hard-pressed hotels.
Last night, the IHF called for a temporary reduction in VAT over the next six months. The Government did not have the luxury of being able to wait for the Commission on Taxation’s report and the public service review before acting to counterbalance the severe economic conditions, it said.
“A temporary reduction in the standard rate of VAT from 21.5 per cent to 16.5 per cent and a reduction in the reduced rate from 13.5 per cent to 10 per cent would have the combined effect of stimulating the wider economy and addressing the competitive imbalance that now exists between Ireland and the UK,” IHF president Matthew Ryan said.
Mr Ryan also called for additional reductions in the public sector pay bill and increased taxes at incomes above €250,000 to tackle the economic crisis.