BETTER WEATHER has finally brought an upturn in the tourism industry. That’s the good news. The bad news is that it could take five years to recover the ground lost as a result of high prices and an international recession. Still, a recovery is under way – visitor numbers from our main markets have begun to increase, and the number of Irish people taking their holidays at home has risen.
While celebrating this good news, the Irish Tourist Industry Confederation has also engaged in intensive lobbying designed to protect its members from the impact of recession and from the crazy, tax incentive-driven hotel developments that were encouraged by government. The tourism industry has significant difficulties. Excess capacity may amount to 20 per cent. Profits are down. And some businesses are struggling to survive because of reduced prices and room charges.
Irish hotel prices are now among the cheapest in Europe. Millions of euro have been spent on foreign advertising campaigns, drawing attention to the good value available. The falling value of the euro against sterling and the dollar has increased our appeal in Britain and the United States. In those circumstances, responding to industry demands by closing so-called “zombie hotels” and pushing up prices does not seem reasonable. It would be far better to raise the bed occupancy rates. In that regard, the Government could abolish the airport departure tax as a further incentive to foreign visitors. Such a move would also encourage airlines to put on extra flights and routes.
Rather than complain about hotel over-capacity, we should plan to fill the empty rooms. The home market accounts for two-thirds of hotel business and that proportion is expected to rise this year. By concentrating on developing facilities they already control, while adding value and special interest attractions, most well-run hotels can trade their way out of current difficulties. The Government contributed to current problems by making tax breaks available for new hotels. Further Government interference in the property market is not the answer, especially when such interference could be seen as politically partial.
When Minister for Tourism Mary Hanafin talks about meeting the National Asset Management Agency (Nama) to discuss the management and disposal of hotels that have been acquired by way of bad bank loans, alarms should blare. Any political interference in the management of these assets by Nama will destroy public confidence in the agency and fuel suspicion that political cronyism is at work. Ms Hanafin has a legitimate interest in promoting the health and future prospects of the industry. But the protection of well-established and family-owned hotels against cut-throat competition from speculative-driven challengers does not fall within that remit. When taxpayers were asked to fund Nama and recapitalise the banks, assurances were given that all of its property-based activities would be above politics. Taoiseach Brian Cowen should deliver on that commitment and ban his Cabinet colleagues from making representations or direct approaches to Nama.