In the absence of the Minister for Transport and Power, who is indisposed, I move:
That a supplementary sum not exceeding £500,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1970, for the salaries and expenses of the Office of the Minister for Transport and Power, including certain services administered by that Office, and for payment of sundry grants-in-aid.
The purpose of this supplementary estimate is to provide an additional £500,000 to enable Bord Fáilte to pay grants in respect of development works carried out in hotels and other forms of holiday accommodation. The original provision for this purpose was £1 million which was voted as a grant-in-aid under subhead F.3 of my Department's Vote but this sum has proved insufficient to meet all the commitments that have arisen this year.
As Deputies will be aware, the tourist industry has made considerable progress during the 1960's and the 1968 earnings of £93 million were more than double those of 1960. This expansion has been brought about by a deliberate Government programme involving the investment of considerable sums through Bord Fáilte in development and promotion. Accommodation is of course a key area in tourism and here we have been very fortunate in having an hotel industry which has geared itself to the Government's development programme and has undertaken expansion and improvement to meet the needs of the increased traffic.
The hotel industry, in undertaking development works, has had the benefit of cash grants and interest grants from Bord Fáilte, as well as allowances for tax purposes in respect of capital investment. The Bord Fáilte grant scheme is operated on a flexible basis so as to provide maximum encouragement to projects which best meet the needs of the modern tourist in terms of location, standards and price. In this connection, the scheme takes special account of the position of the west which has so much to gain from tourist development but which is in some ways unattractive from a commercial investment viewpoint because of the more scattered local population and the lack of off-season business.
In drawing up the accommodation development programme and administering the grant schemes Bord Fáilte make estimates of the additional number of bedrooms required taking account of the rate and pattern of traffic growth, the increased capacity provided on transport services and the projections for future traffic increase. They must take account also of a certain amount of annual loss of accommodation which arises for various reasons, for example, hotels closing down or being converted to other purposes, reductions in the number of bedrooms through reconstruction and improvement works, etc. On the basis of all this information and the assessment of market demand, the board prepare annual growth targets. During the period covered by the Second Programme for Economic Expansion the target for hotel bedrooms was an average increase of 1,200 rooms a year. In fact, the number of additional rooms fell behind this figure and for the four years 1964 to 1967 there was a net shortfall of over 2,000 bedrooms. This could have led to a serious shortage of accommodation in some areas during the summer months were it not for the fact that a promotional campaign led to the rapid expansion of supplementary accommodation. Welcome as this development is, there are forms of tourist traffic such as group travel and organised package holidays which require adequate blocks of hotel accommodation. In order to secure the necessary development, the scale of the financial incentives was improved in 1967.
The improved incentives, accompanied by an easing of credit restrictions and a growing confidence in the future of Irish tourism, have led to an increase in the rate of investment. A further development has been the employment of more advanced methods in the planning and execution of hotel projects. The result of all this has been that the number of new hotels and the number of extensions and improvements to existing hotels which have been completed and have fallen due for grant payment in the current financial year have exceeded the assessment made when the estimates were being prepared over a year ago.
This has meant that Bord Fáilte have been unable to meet all the grant commitments arising and hoteliers who entered into development works in good faith have been waiting for their grant moneys. This in turn has affected builders and other firms providing services to hotels. It is in these circumstances that the need for a supplementary estimate has arisen. The additional sum involved, £500,000, is the minimum amount necessary to enable Bord Fáilte to meet the immediate and inescapable commitments— those cases where works have been satisfactorily completed and certified and where a grant payment must be made in the current financial year.
The increased investment stimulated by the 1967 improvement in the incentives has meant that the deficit in room numbers that I mentioned earlier has now been overtaken. A net addition of 2,050 rooms in 1968 and an estimated 3,200 in the current year has meant that the shortfall has been eliminated and we are now somewhat ahead of target. This does not of course mean that we should change over to a policy of discouraging development.
Our tourist industry has been recording very significant growth and the Third Programme for Economic and Social Development calls for continued expansion at the rate of six per cent per annum at constant values—a rate considerably higher than that projected for the economy as a whole. Our tourist programme is based on the achievements of that growth rate. It would be folly to devote State moneys to attracting additional traffic from abroad and to invest heavily in the expansion of travel facilities unless we ensure also that visitors' needs in hotels, guesthouses, etc., are adequately met. The additional bedroom growth which we have recently recorded provides only a modest margin and with tourist traffic expanding regularly there is so far no danger of over-development. Nevertheless the incentive scheme and progress thereunder is at present being reviewed. It was suggested recently that Bord Fáilte targets may possibly be too high. Bord Fáilte have had an objective professional study of the position initiated and a preliminary report indicates that expansion at or in excess of the Bord Fáilte estimates is required.
It is clear, therefore, that it would be wrong to call a halt to hotel development. We must, of course, be selective in this matter and for that reason the Bord Fáilte incentives are operated on a discretionary and flexible basis so that the development programme will be carried out in a balanced and rational way.
I feel there may be some misconception about the general pattern of our hotel development. There is a belief that the bulk of new accommodation takes the form of large new hotels operated on an impersonal basis without adequate regard to Irish traditions of service and hospitality. This is far from being the case. In administering the grant schemes, Bord Fáilte favour the provision of extra accommodation through the extension of existing hotels where possible, because the family hotel with its emphasis on informality and friendly service is an important element in our tourist industry. A large number of hotels throughout the country have in fact availed of the grant scheme to extend and improve their premises. The response in the western countries, where higher maxima apply, has been particularly good and out of a total of 3,556 additional hotel bedrooms provided in 1967 and 1968, 2,394 or 67 per cent were provided by existing and new hotels in the west. Of these 2,394 rooms, 1,008 were in extensions to existing hotels and 1,386 were provided by 46 new hotels.
The average size of the new hotels was 32 bedrooms. The same pattern emerges from an analysis of projects now in the pipeline. There has of course been a considerable rise in hotel standards also. This is in keeping with rising standards generally and is exemplified by an increase in the number of rooms with bath from 1,160 in 1960 to 8,163 in 1969. Overall, a satisfactory rate of expansion and improvement has been established which should enable us to continue to cater for a growing tourist trade.
Prices are an important factor in tourism and our hotels and other tourist services have been affected by rising costs just like all other enterprises. I am assured that by international standards our prices are quite competitive but we must ensure at all times that our prices represent good value for money. Some European countries which have got a reputation for high prices have seen the consequences in a declining tourist trade. I would echo the recent appeal by the president of the Irish Hotels Federation who urged hoteliers not to take the easy way out by automatically passing on increased costs through raised prices but to absorb as much as possible of the increase through more efficient operation.
As the programme for development of holiday accommodation is part of a general programme for tourist development, it might not be out of place for me to say a few words about the tourist industry generally. Our general objective under the Third Programme for Economic and Social Development is to secure an annual growth rate of six per cent at constant values. Within this overall objective, Bord Fáilte are seeking a significant increase in off-season traffic with the ultimate aim of achieving an acceptable level of year-round tourism. It is in the interests of all elements of the tourist trade to secure maximum utilisation of our resources and of course the benefits of year-round tourism in terms of more stable employment will be obvious to everyone. I am glad to say that the tourist industry is united in this aim and that all sectors are co-operating in the measures necessary to achieve it.
Another important aspect of the current tourist programme is the growing significance of car ferry traffic. In the 10-month period January-October, 1969, 108,000 cars were brought in on the direct car ferry services, representing an increase of 22 per cent on the corresponding period of 1968. This year we had the benefit of the new Cork/Swansea service as well as increased capacity on other routes. Next year, capacity will be further increased and British Rail will be providing a new service between Dún Laoghaire and Heysham. A welcome feature is that three of the existing car ferry services are operating on a year-round basis and it is hoped that by 1971 all the services will be operated all the year round.
With the general recognition of the economic value of tourism, there has also come an increasing awareness of its social and cultural aspects. I think it is important that we should recognise that tourism is a pervasive influence and it behoves us therefore to exercise careful discernment about the pattern of tourist development. We do not have in Ireland the type of attractions which appeal to the mass market and I consider that it would be a mistake to try to provide them. We have, however, unrivalled facilities for motoring, general sight-seeing and a whole range of recreational and other special interest activities. The discriminating visitor appreciates what we have to offer in Ireland and is particularly attracted to remote but scenic areas. Thus he makes less demand on organised or man-made facilities and at the same time advances the redistributive effect of tourism by bringing additional income to less-populated areas.
We are now approaching the end of 1969 but I am afraid it is not possible yet to make any reliable assessment of this year's tourism earnings. Figures for the first eight months of the year show that inward passenger traffic from Britain and Europe increased by 7.2 per cent over the corresponding period of 1968 and traffic from North America increased by 26 per cent. The overall increase for these areas was 8.8 per cent. I should point out, however, that estimates of traffic from Northern Ireland are not yet available and it is to be expected that returns from this sector will have been affected by the disturbed situation in the north. Furthermore, the overseas publicity on the Northern Ireland situation has probably affected traffic from other areas in the later months of the year. I would expect therefore that when the official returns are available from the Central Statistics Office, they will show that we have fallen behind the Third Programme target of a six per cent annual growth rate. Prospects for 1970 are also dependent on the situation in the north. However, given peaceful conditions in the north and assuming that no other unforeseen adverse circumstances arise, there are good prospects that we will achieve tourism targets in 1970 and secure continued tourism growth.
The continued development and improvement of our stock of holiday accommodation to meet market needs is an essential part of our tourist development programme and accordingly I commend the supplementary estimate to the House.
