Hotels body calls crisis meeting over ‘difficulties’

THE Irish Hotels Federation (IHF) warned yesterday the sector isfighting for its very survival.

To address the massive downturn in the sector the federation has called “a crisis meeting” of its 1,000 members to discuss the dramatically worsening situation in the hospitality and tourism sectors, that is scheduled for 11am on August 12 at The Grand Hotel, Malahide, Co Dublin.

In a statement yesterday the IHF warned the sector faced “unprecedented difficulties”.

Operating profits have been wiped out due to the collapse in tourism with that end of the business unlikely “to return to peak levels for several years”.

Many businesses have gone into examinership, receivership or liquidation and without radical intervention the fall out “will have immediate and devastating implications”, it said.

Hotels under the control of the banks are operating at below-cost prices and distorting the market with unfair competition, it claimed.

That issue has to be resolved for obvious reasons and will be vigorously addressed at the emergency meeting, it said.

Several other issues, including the cost base of hotels which have not adjusted to the worsened market conditions, is a key factor adding to the problems of the sector.

Regulated wage rates and the need to manage the substantial excess capacity also need to be tackled.

It added the ongoing difficulty caused by excessive public sector charges remain a core difficulty for Irish hotels.

The industry is also being refused funding by the banks and “many hotels and guesthouses are finding it almost impossible to obtain adequate bank credit to survive through the recession”, it said.

To help resolve the crisis threatening the sector the IHF recently submitted several proposals to the Government that it wants addressed.

It has called for:nAn orderly reduction of capacity, facilitated through adjustment of the tax allowance provision.

nAn improvement in public sector costs to the industry. nAdequate levels of credit to be made available on a risk-sharing basis with banks.nTax incentives to support new equity investment in existing hotel businesses.nNAMA to be set up in a way that solvent hotels will not be undermined by hotel assets under bank’s control.

The IHF said it was calling the meeting due to sharp declines in international tourism.

In May the number of overseas visitors to our shores were 18.4% below May 2008.

British visitors were down by 22.8% over the same cooperative period, while in the Jan-May period overseas visitors declined by 9.6% compared to the same period in 2008.

In quarter one of this year domestic holiday trips fell 17% and domestic holiday travel expenditure was down by 25% compared with the Q1 of 2008, the IHF said.