Hotels warn credit crunch puts 60,000 jobs at risk

The Irish hotel industry has warned that 60,000 jobs are at risk unless banks increase the flow of credit to businesses and says the practice of paying staff double is no longer sustainable.

The Irish Hotels Federation, which is holding its annual conference in Killarney, Co Kerry, says the industry is facing one of the most difficult periods in decades. It called for a temporary VAT reduction of 5 per cent to tackle the economic crisis.

The IHF annual report for 2008, launched last night, revealed that room occupancy had declined to 58 per cent, the lowest since 1994.

Today, IHF president Matthew Ryan said hotels were experiencing real difficulties in securing funds from banks and said the Government’s recapitalisation plan has so far failed to bring about increased credit facilities.

He said banks treat hotels and guesthouses as a high risk sector and that this may be contributing to the reluctance to provide adequate working capital facilities. “Our concern is that the difficult short term credit situation will cause the unnecessary demise or contraction of otherwise viable hotel operations and constrain the eventual economic recovery,” Mr Ryan said.

Without firm action, he said, “a financial nightmare lies ahead” for the sector, which employs 60,000 people.

Mr Ryan also argued that hotels could no longer afford to pay the “exorbitant hourly rates” imposed under the Joint Labour Committee (JLC) system. He said current wage costs of over €20 an hour for Sunday working are “unjustified and completely out of step with other countries”.

He said hoteliers have been forced to curtail services on Sundays due to the statutory requirement under the JLC system, which was established in 1946 and requires hotels operating outside of the urban centres of Dublin, Cork and Dún Laoghaire to pay staff double time for working on Sundays.

Citing the Consumer Price Index, Mr Ryan said hotels and guesthouses across Ireland are experiencing growing price pressure with room rates down 5 per cent so far this in 2009.

The IHF has also called for free travel to be offered to all European citizens over 66 travelling in Ireland to boost tourism. In addition, it wants Ireland and Britain to have a common visa area and passport controls to be removed at ports of entry for all travel from UK.

Minister for Tourism Martin Cullen  addressed the conference this afternoon.