Hotels ‘face tougher competition’
Irish Hotels Federation (IHF) president Dick Bourke said the State’s infrastructure is not capable of sustaining this type of investment in the short term and he forecasts an incredibly tough trading environment for hotels.
Mr Bourke said research indicates that planning permission exists or is being sought for an extra 270 hotels. Industry experts estimate that this could results in an close to 22,500 new hotel rooms which have to be completed by June/July of 2006 to avail of generous capital allowances. There are currently 45,000 hotel rooms in Ireland.
Mr Bourke said that while it is impossible to predict exactly how many of these proposed developments will proceed to fruition, he believes that property developers will push most through to benefit from the tax breaks involved.
“We just do not have the infrastructure at present to fuel the growth in visitor numbers to sustain this type of development. Trading is tough now but it is going to become even more competitive and there will be business casualties along the way,” added the president of the IHF.
Mr Bourke cites a number of problems for the industry.
Inadequate but improving road infrastructure.
No second air terminal at Dublin airport.
No open skies agreement with the US.
No national conference centre.
Wage, services insurance, indirect taxation costs eroding competitiveness.
“The Government needs to sort out the delays to the second terminal at Dublin airport and a national conference centre in Dublin. Then they need to look to the roads. If massive conferences come into Dublin there is no way to spread the benefit of pre and post conference activity to the regions if there roads are not there,” complained the president of the IHF, whose members employ 57,000 people.
Mr Bourke said that while insurance costs have begun to moderate they remain well ahead of competing markets like Britain, Spain and Portugal where insurance costs are as much as 40% to 50% cheaper than in Ireland.
The explosion in hotel room capacity will create an incredibly competitive environment as the industry waits for infrastructural developments to meet demand as the planned revenue from foreign tourists grows from €3.5bn to €7bn.
The owner of the new Radisson Hotel in Cork, Des O’Dowd, believes the big winner will be the consumer but fears that hotel developments driven solely by tax breaks could falter.
