BACON WARNS ENTIRE HOTELS SECTOR FACES INSOLVENCY

IHF Demands Swift Action to Save Biggest Contributor to Our Economy

The Irish Hotels Federation (IHF) has received a major, independent economic report* undertaken by economist Peter Bacon which stresses the serious challenges facing the hotels sector. It confirms the worst fears expressed by the IHF since the recession started. Mr Bacon in his report outlines a series of urgent actions needed now if the hotel sector is to survive.

The Report highlights the damage which is being caused to the hotels sector as a whole by financial institutions and banks supporting unviable and insolvent enterprises. It underlines the urgent need to address over supply within the sector and the negative effect of ongoing tax regulations which impede the ability of unviable hotels to exit from the market. The Report clearly reinforces hoteliers’ concerns that the industry will collapse unless action is taken. This cannot be allowed to happen given tourism is one of the largest indigenous contributors to the economy. These concerns have been expressed regularly by the IHF since the economic downturn started. They formed the basis of its recent pre-budget submission to the Minister for Finance seeking to assist tourism become a significant driver of the economy’s return to growth.

According to Matthew Ryan, President of the IHF, the Report contains a very detailed and structured approach on how to deal with a sector in crisis. “This Report is possibly one of the most detailed and comprehensive analyses of the sector ever undertaken and includes very serious measures to improve the viability of the sector. The Report calls for the urgent active participation of the stakeholders involved including the banks and financial institutions, the Government, the tourism bodies and the hotel sector itself to seek effective solutions.”

The Report also supports the urgent case which the IHF has made since 2008 for working capital and cost reduction supports to be provided to businesses which would otherwise be viable. These businesses are well-placed to survive in the current economic environment provided an effective restructuring of the industry is achieved.

Tourism’s contribution to the Irish economy
Tourism is Ireland’s largest indigenous industry, employing over 200,000 people across the country. Notwithstanding the recession, tourism is a major industry in Ireland generating considerable value in terms of exports, employment and tax revenues. Tourism made a direct contribution of €6.3 billion to the Irish economy in 2008, representing 4% of overall GNP.

•A total of 7,435,000 overseas visitors came to Ireland in 2008. In addition, there were an estimated 8,339,000 domestic trips;
•Tourism contributed €1.5 billion in taxes in 2008 of which €1.1 billion came from foreign visitors;
•Accommodation revenues account for almost 30% of the total and hotels supply 23% of all bednights spent by overseas visitors;
•€4.8 billion in foreign exchange earnings in 2008 compared to €2.1 billion in 1995 and €4.3 billion in 2005;
•Tourism accounted for 4% of GNP
•Tourism industry accounts for 250,000 full-time, part-time and seasonal jobs, of which almost 60,000 are in the accommodation sector alone.
•Greater spread of regional economic activity than most other industries;
•Provides a substantial entrepreneurial resource as the vast majority of tourism enterprises are small and medium enterprises.
•925 hotels with 60,729 rooms. 337 guesthouses with 4,070 rooms.