Minister Martin Cullen spoke to The Irish Times Travel supplement about the hotel industry on Wednesday, post-Budget;
He warned that a lot of the Republic’s hotels, which have an overcapacity of “about 15 per cent”, “will probably go, through Nama or one way or another”. He said: “In fairness to [hoteliers] they are kind of focused. What we want them to do is to focus on their own business, to stop worrying about what the other fella is doing, to focus on how you can be more competitive.”
The Minister was clear about where the Republic’s tourism industry got it wrong: “We priced ourselves out of the market. Golf is a very good example. We had and still have a fantastic golf product, but charging guys €400 and €500 for a round of golf on the west coast of Ireland was crazy. That is all gone, because they lost their market, and we have got to go and rebuild that market…”
Eh.
At one point in the late nineties there was a shortage of hotel rooms, partially weakening Ireland as a tourism destination. This would likely have changed naturally as the economy developed, accompanying the influx of foreign direct investment. In those circumstances the industry would have developed in same way as has elsewhere; with individuals or groups with an interest in building a reputation (and sustainable profit) in the sector setting up hotels. That would have quickly filled any vacuum in the market that existed.
Instead, the Government of the time, led by Minister Cullen’s Fianna Fáil party, altered the policy. Matt Cooper covers what happened thereafter better than I could in his excellent book Who Really Runs Ireland? The Story of the Elite Who Led Ireland from Bust to Boom… and Back Again.
My emphasis;
The support for development of the hotel industry made sense at one point. There was a shortage of suitable stock of hotel bedrooms and associated facilities, which put Ireland at a disadvantage as a hotel destination. Unfortunately the availability of massive capital grants to offset against income from other investments persuaded many land-owners and builders – with no experience in how to run hotels of real interest in the provision of the necessary service – to enter the hotel construction game. Continue reading “A minister's short memory; A Govt's short-term policy”