This article appears in the current issue of 'Hotel and Restaurant Times'

‘Frank Corr Seeks a Positive Response to the Jobs Initiative

The farmers are back on the streets as I write, clogging up Dublin with their tractors and live animals. They are legendary lobbyists and speak for their sector with a single voice.
Tourism on the other hand speaks through several channels and lobbies in a more restrained, yet effective manner. Indeed, unlike Bono, the industry has ‘found (almost) all that it has been looking for’ in the recent Government jobs initiative .
As a result, it is now time to deliver quality, value and more overseas visitors.

The new Government’s Mini Budget went beyond what most industry lobbyists could have reasonably expected. The big surprise was the reduction of the 13.5% rate of  VAT on a range of tourism-oriented services to 9%. This new rate will apply to restaurant meals, outdoor catering services, accommodation and even admission charges to tourist attractions, entertainment and sports venues. The new low rate has been gleefully accepted by the vast majority of operators, but many of these see it only as a reduction in cost, or in practical terms a 4.5% price increase. With some honourable exceptions (The Wineport Lodge in Athlone and Harvey’s Point Hotel in Donegal come to mind), the accommodation and restaurant sector has not been trumpeting the VAT reduction and passing it on to customers. More’s the pity, because this is not their money. It is a reduction due to the customer and taxpayer. If the tourism industry is to reap the benefit of the lower VAT rate, it should be promoted as a marketing advantage and used to counter the image which still persists in most markets that Ireland is an expensive destination in which to dine out, use public transport or enjoy visitor attractions.

The decision to cull the Air Travel Tax has been broadly welcomed by the airlines, but this initiative also challenges them to step up to the mark by opening new routes into Ireland. Word on the ground is that Aer Lingus and some European airlines are enthusiastic about the deal but that Ryanair wants to have its cake and eat it. This is hardly surprising, given Michael O’Leary’s total focus on his company’s bottom line, but the Meathman also knows a good deal when he sees it- and what is now on offer represents a very attractive deal. Airlines who agree to expand their services into Ireland can avail of substantial discounts from the DAA as well as a new marketing fund to promote the service in the appropriate marketplace. After all the complaints about the Air Travel Tax, it will be interesting to see what airlines are prepared to deliver new services in return.
Long haul carriers, domestic and overseas tour operators and hotels can also benefit from the long overdue easing of holiday visa regulations. Some anomalies still exist, such as the single-entry nature of these visas which prevent visitors from many countries taking day trips to Northern Ireland. Minister Varadkar says that he is working with Foreign Affairs on changing this regulation which flies in the face of the ‘Destination Island of Ireland’ strategy.  The changes proposed however do create an opportunity to attract a large new pool of visitors including long-haul tourists from Asia, the myriad which will travel to the London Olympic Games and natives of many nations who are currently resident in the UK. The initiative invites a positive response and it would be good to see Tourism Ireland, ITIC, the IHF, the airlines and other stakeholders getting together to work out a co-ordinated strategy.
Tourism industry operators can also benefit from the halving of  Employers PRSI on jobs paying up to €365 per week while the new Internship Scheme will also be attractive to hotels and other tourism businesses, given its six to nine month tenure. It is unlikely that these two incentives will create significant new jobs in the sector until growth becomes sustained, but they will serve to reduce overheads and as such are welcome.
One item on the industry’s shopping list that looks likely to be unfulfilled in the medium term is that of commercial rates. Minister Varadkar was quite clear when he told IHI members at their recent Hospitality Managers Conference that Local Authorities will receive reduced funding over the coming years and their dependence on commercial rates is therefore likely to increase rather than diminish. Restaurants and hotels may benefit from lower rateable valuations if the process of revaluation is accelerated, but Local Authorities will be in no hurry to complete this particular exercise, as the last thing they want is a diminished rates base.
The other outstanding issue is the Joint Labour Committees, but the industry now at least knows that they are to remain and will continue to set rates for hotel and restaurant employees in areas where collective bargaining does not operate. Minister Richard Bruton has gone further than the recommendations of the report by Kevin Duffy and Dr. Frank Walsh, by suggesting that higher payments for weekend work might be abolished and this has led to protests from trade unionists and some backbench TDs. Taoiseach Enda Kenny says that a final decision on the Duffy-Walsh report will be taken at Cabinet level and that decision will be awaited with interest by restaurateurs and hoteliers.
NAMA on its part has also cleared the air. It will not be selling too many hotels and will rely on the market to make any necessary ‘corrections’ in relation to accommodation stock. In other words hoteliers will just have to compete with what is out there.
Apart from the resolution of the JLC issue therefore, the industry knows where it stands. It has been given a new lower VAT rate, incentives to create employment , an end to the Air Travel Tax and a new Visa regime but on the other hand the Minimum Wage has been restored to its 2010 level, the JLCs are to stay and Commercial rates are unlikely to come down.
Overall it is not a bad deal and one which merits a positive response from all sectors of an industry which has always been proud of its ‘Can Do’ approach. Speaking at the Hospitality Managers Conference, IHI president Fergal O’Connell said: ‘The recent past has presented our nation and our industry with unprecedented challenges and considerable trauma, but it has not deprived us of our ability to manage change, to re-engineer our business models to operate in a new economic environment and to devise plans for a return to growth’.
That return to growth may have already begun. The Q1 statistics of visitor arrivals published in mid May by the CSO show an increase of 8.6% over Q1 of 2010 and represent the first quarterly increase since 2008. Industry operators were expecting an increase of around 4% and were pleasantly surprised by the figures, particularly the 7.2% increase in visitors from Britain.  It is however a real shame that we have to wait until the third week of May to get a CSO return for a period which ended on 31st March and indeed to have to rely on quarterly figures rather than the monthly returns which were published by the CSO up to 2010.

One swallow does not of course make a Summer, or even a Spring, but the market seems to be moving in the right direction and should be further stimulated by the worldwide coverage of the Queen Elizabeth and President Obama visits which was largely positive.
There is every reason therefore for the tourism industry to shake off the pessimism of the past few years, to invest in marketing, staff training, quality control and cost management, to look at an expanding world travel market and the opportunities it offers, to put on a smile and to adopt the mantra of a recent distinguished visitor.

‘Yes We Can’.

ends