Too many hotel rooms, says Vaughan

MORE hotels will probably need to close before the sector becomes sustainable, according to Michael Vaughan, chairman of the Irish Hotels Federation’s Shannon branch.

Mr Vaughan said there are about 60,000 hotel rooms in the country and that the figure is between 12,000 and 20,000 too high.
Even if there is a strong performance in the industry, capacity will need to be reduced, he said. “If we could reach a target of eight million visitors a year into the country, which is ambitious, we could probably reduce that to about 10,000 rooms.”
Mr Vaughan made his comments at the Fáilte Ireland/Shannon Development annual tourism industry briefing. He said the hotel sector in Clare is in a better position than in many other counties and he credited planners in the county for having taken a cautious approach.
Some weeks ago, Michael O’Leary said he would bring one million new passengers to Shannon if payments of more than €4 per passenger were made to Ryanair. Mr Vaughan said that the offer was completely unrealistic.
“In the current year, Ryanair will deliver 400,000 passengers to Shannon and for the first time, the airport will make some money out of it. It’s like me and my restaurant. How would I run a restaurant if I had to pay clients to come in and eat in it? That’s what Ryanair are asking Shannon to do and I don’t think it makes sense.”
Mr Vaughan said the Aer Lingus/Aer Arann business model, which has seen a number of new services from Shannon to the UK commencing, is preferable to what Ryanair offer. “Our view in the hotel and tourism business is that the model that has come in with Aer Arann is perfect for what we need for tourism. It offers a good mix of foreign and national business coming in and out and it’s more sustainable. Ryanair business in Shannon has been a carousel, where the business has come in for a few years based on a very, very competitive deal and it has gone off to another airport that would give a better deal. That’s not sustainable for Shannon and this type of sham deal is no good for us. We need sustainable business and the region needs tourism.”
Mr Vaughan called for new markets to be tapped. “We’ve lost 30% of our major market, which is Britain, and if we don’t regain that there will be closures. There are huge plans to regain it, but, as the academics who are involved in tourism at UL will tell you, when you lose a major market like Britain it’s not guaranteed that you’ll even get half of it back. We have a huge job of work to do and I would say we should look at places like Eastern Europe, Russia and Germany and try to stimulate demand. We are flogging a dead horse with Britain at the moment but part of that is because we haven’t a co-ordinated tourism approach. In this region, this year we will spend only about a quarter of a million on marketing. We need to be spending four to six times that amount.”
He called for Fáilte Ireland to be given a greater role in promoting the Mid-West. “The IHF, in line with the tourism renewal document published by the Irish Tourism Industry Confederation, is asking that the long-running saga of the Shannon Region being outside the tent of Fáilte Ireland be ended and that Shannon Development hand over the tourism remit for the region to Fáilte Ireland.
“We’re asking that Shannon Development would retain the tourism development role but that the actual promotion of tourism, day by day, be done by Fáilte Ireland. It’s time for this change, we’ve been outside of the loop for many, many years and we’re suffering so badly. Shannon Development are spending about a third less than they used to on tourism this year and Fáilte Ireland are willing and able to take up the cudgels. This duplication of resources has to end and we’re hoping that the new Government will see sense and make this change for us.”
Mr Vaughan also said that there are too many agencies involved in tourism and that there isn’t a single policy. “The difficulty we have in this region is that we have Shannon Development, we have Fáilte Ireland, we have Tourism Ireland, we have the Clare Tourism Forum, we have the Limerick County Enterprise Board, we have Limerick City Tourism, we have a plethora of tourism groups and yet no overarching policy. Very few people on the ground can understand the difference between Tourism Ireland and Fáilte Ireland. Tourism Ireland was a construct of the Good Friday Agreement and can’t be dismantled as a result of that but it is creating huge, huge issues for people on the ground in terms of promotion. We need one national tourism body that will promote and do the business for the tourism industry,” Mr Vaughan concluded.

Positive outlook for tourism this year
THERE are some signs of green shoots, those attending the Fáilte Ireland/Shannon Development annual tourism industry briefing heard.
Fáilte Ireland CEO Shaun Quinn pointed out that most tourism enterprises are relatively positive about the outlook for this year. “There are some positive signs in some of our key markets, particularly Europe and the US and business sentiment about future prospects has improved slightly. We have a good-quality product, we have better infrastructure and we are better value than before. We know where our target markets are and what needs to be done – particularly the need to grow market share in the UK. Tourism has a significant role to play in this county’s economic recovery and it is imperative that as we develop the sector in 2011 that we leave no stone unturned nor potential untapped,” Mr Quinn said.
He said Fáilte Ireland would help tourism businesses to seek credit. “Tourism businesses walked the tightrope in 2010, paring back prices and offering good value while ensuring their businesses remained viable. Many businesses, including those in the Shannon Region, are now expressing concern over access to working capital for the year ahead. One in five claim they have no access to working capital, a further three in five say that they have very limited access or that working capital is available but more limited than they would like. Only one in five claim to have adequate access to working capital.
“In an industry which is seasonal, the concerns regarding access to credit are quite serious. Fáilte Ireland is working closely with tourism businesses in the Shannon Region to ensure they are well prepared in their dealings with their banks and we are helping and supporting viable tourism businesses to access the credit they need.”
Launching Shannon Development’s tourism plans for 2011, Pat Daly, tourism and marketing manager with Shannon Development said, “Core to Shannon Development’s strategy for 2011 will be to continue to develop new reasons for visitors to come to the Shannon Region. This can take the form of new physical attractions such as the €14 million secured by our product development team for the tourism projects such as the €5.7m redevelopment of King John’s Castle and the €372,000 spectacular coastal walking route from Doolin to Liscannor.
“Sports events are currently worth in excess of €60m annually to the local economy and we have set ourselves the ambitious target of growing this by a further €10m in 2011. The region’s reputation as a sports destination has been greatly enhanced with Limerick being selected as European City of Sport for 2011. In addition to the ever-growing programme of events planned for the coming months, Shannon Development is working to secure a further four new high-profile international events for the region including the launch in April of a new mass participation sports event for Lough Derg,” Mr Daly said.