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Shannon Development feels the pinch

Shannon Development may be compelled to dig into its property assets to fund its tourism programmes following rejection by the Department of Tourism of pitches for extra funding from the Mid-West Task Force.

The regional development agency, which took on the additional role as regional tourism authority in 1988, has been largely self-financing since the 1990s thanks to astute management of its region-wide property portfolio. But the property slump of since 2008 has meant that, in addition to the dearth of potential buyers, any sell-off of land or buildings would be at substantially reduced values. Property income for the agency has also been diminished by tenants vacating premises, rent arrears and reduction of rental terms, to help keep enterprises ticking over.
The departure from Limerick of the bulk of the Dell operation removes the largest tenant on the Raheen Industrial Park, which is one of the estates managed by Shannon Development and is set to knock a large hole in the agency’s income.
At the very time that its property income is in decline, Shannon Development is facing additional financial pressures to fund the extra efforts demanded in the wake of the Dell departure and its wide-ranging impact on the region. The agency enthusiastically took on the leadership of the Mid West Task Force set up by the Government a year ago. The Shannon Development chief executive, Dr Vincent Cunnane, accepted an appointment from Tanaiste Mary Coughlan to head up the task force. He brought one of his senior management, Olivia Loughnane, on board as manager of the task force and her interim report to government in July last year identified stepped up development of tourism across the region as a key plank in the regional recovery strategy.
“Securing and developing tourism enterprises can have the potential to sustain and create jobs in the short to medium term, which is what the Mid West economy now requires,” the report stated. While conceding that tourism in the region has been going through a lean patch, with around 1,000 tourism firms and 25,000 employed, “the full potential of the region can only be realised if the tourism sector is a key element of future development strategies”, the interim report added.
To underpin the accelerated drive for growth and job opportunities in tourism and to underwrite the initiatives and measures set out in the tourism proposals, the interim task force report called for additional finance to be made available to Shannon Development.
The report recommended, “Shannon Development should receive supplementary funding of €5 million for the next three years from the Department of Arts, Sports and Tourism to further tourism development and innovation.”
Under the heading of “specific immediate requirements”, the report also included –“the marketing budget of Shannon Development should be funded directly by the Department of Arts, Sport and Tourism”.
Neither of the pitches for supplementary funding has been provided for in the €155 million tourism activities budget of the Department of Arts, Sport and Tourism, the department’s press office confirmed in reply to questions submitted by The Clare Champion.
The actual subvention to Shannon Development from the Tourism Department is being maintained at its 2009 level of €832,000. The department points out that the allocation to Shannon Development has been made “notwithstanding pressures on Government finances”. The press office response added, “the bulk of Shannon Development’s expenditure is financed through its significant own resources income”.
In relation to the task force pitch for the department to underwrite the Shannon Development tourism marketing budget, the department pointed out that Tourism Ireland is in charge of international marketing of the island of Ireland and is this year working to a budget of €44.25 million, which is unchanged from last year. Within that budget is the €3 million promotion fund to be spent on promoting Shannon Airport as the transatlantic gateway to the West of Ireland generally. However, over the past year, sustained efforts have been made by Shannon Region tourism interests to have that budget switched to direct promotion of Shannon Airport and with Shannon control over spending of the budget. While regional bodies were led to believe that the €3 million would be assigned to promotion of traffic and routes at Shannon for 2010, there has been no change from the Department. The disappointment and concern of Shannon Region tourism interests has been strenuously impressed on the department and on Tourism Ireland and efforts are continuing to have the fund re-directed to Shannon.
The need for a dedicated and ring fenced marketing fund for Shannon Airport was also included in the task force interim report under “critical requirements for airport growth”.
In addition to the proposals for additional funding and subvention of Shannon Development tourism efforts and the recommendation for an 18-month promotion blitz for Shannon Airport to be financed, a task force recommendation that Limerick city to be brought into the Lower Shannon tax incentive scheme for building up tourism infrastructure has already been vetoed by the Department of Finance.

 

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