The Irish Self Catering Federation is pleased to have the opportunity to address the committee on the topic of encouraging Irish people to holiday in Ireland and reviewing the 2010 season and planning for the 2011 season. The Irish Self Catering Federation is the national body recognised by Fáilte Ireland to promote the interests of the self catering sector in Ireland. The federation has a national council representing all types of operators in the different regions. It is a not-for-profit organisation and all representatives are volunteers. At its last AGM, the federation had in excess of 250 members, operating almost 2,000 self-catering units nationwide. We represent and lobby on behalf of members at national level in matters of tourism policy and with organisations such as Fáilte Ireland, Tourism Ireland and Government Departments.
The membership of the federation is diverse, which is also a reflection of the self-catering sector as a whole. We represent all the following categories within the sector, namely, registered holiday cottage group schemes consisting of eight or more units, registered holiday apartments with eight or more units, listed and approved holiday homes and apartments of fewer than eight units, and campus accommodation available for tourist lettings in the summer season. Our federation is a relatively new organisation that is approximately eight years old and has until now served solely as a representative body. However, in response to the ever-changing demands of the marketplace and our members, a new consumer on-line reservations service is in the final stages of completion and will be launched in spring 2011.
The self-catering sector is of particular benefit to Ireland's tourism industry as many of the properties are located in rural and costal communities, many of which would have difficulty sustaining a hotel and which have few alternatives for industry other than tourism.
As already mentioned by the Chairman, self-catering customers typically take longer breaks and spend more money in the local economy in restaurants, pubs, shops and visitor attractions. Therefore, an important linkage exists between those businesses and our customers and their service, prices and availability have direct effects on the self-catering holiday experience.
The 2010 year to date saw most self-catering operators and marketing organisations place even greater importance on attracting Irish customers than before as 2009 saw worrying declines in the numbers of inward visitors from Great Britain, which traditionally is our most important market. The currency differential coupled with a major drive to promote holidays at home in Great Britain were major contributors. This trend was expected to continue during 2010 and the visitor numbers have actually fallen further. The French and German markets also saw declines and the United States market has never been of large relevance to our sector. The effects of the volcanic ash cloud in conjunction with a dynamic home holidays marketing campaign saw additional interest from Irish customers during the early season. However, the trend of very late bookings, in common with other sectors, as consumers watch weather forecasts and shop around for discounts, has been very prevalent this year.
Self-catering operators located in areas which are traditional holiday destinations or have ready access to activities or cultural pursuits, reported high occupancy levels during June, July and August. Others, located in destinations where their incarnation owed most to their proximity to yet another new hotel development fared less well, despite offering very low prices. Outside the peak summer season, business has been disastrous.
The Irish Self Catering Federation, supported by Fáilte Ireland, has encouraged and facilitated members this year to become involved on a co-operative basis with local activity and amenity providers and to develop imaginative packages combining cultural, adventure or historical pursuits with their accommodation. This has proven successful as tourists have appreciated both the added value and ease of access to the activities and 2011 will see further development of these types of breaks, combining self-catering accommodation with, for example, admission to local historical sites, angling facilities or tickets for a music festival. It is vital for 2011 that continued resources are available to run and promote events, festivals and activities because it has been demonstrated clearly that these are the major drivers in attracting Irish people to take breaks at home.
There are great challenges facing the self-catering sector. Similar to the hotel industry, the construction boom of the past ten years, particularly from 2006 to 2008, has left a legacy of oversupply of self-catering units in a declining market. I point out that while there is no oversupply of approved units, such an oversupply exists in respect of an approved properties of which there may be an excess of 10,000. This oversupply, coupled with intense price competition from the hotel sector, is contributing to major problems with profitability for the majority of self-catering operators. In addition, the rental prices of self-catering accommodation in competing Mediterranean countries like Spain and Portugal have fallen dramatically in 2009 and 2010. In addition, a major problem exists with holiday homes which are not approved or registered with Fáilte Ireland, whereby they are being rented by owners who are making no financial contribution to the maintenance of standards or marketing for their area. Their cost base is lower and this is enhanced by the fact that they will neither pay local authority water charges as private dwellings nor need to invest to comply with standards and quality control. Unrealistic prices are being offered and this has also had a knock-on effect on revenues for our sector.
The self-catering sector needs the assistance of national and local government to survive the current climate and to be able to retain some level of profitability for re-investment. Successive years of losses will result in deterioration of property standards and the quality offering for tourists will be seriously diminished. Business levels in the rest of the year outside summer school holidays are dreadful at present.
The following are issues which this joint committee can consider and its influence could be critical in assisting the self-catering sector to survive in the present and medium-term future. First, I refer to working capital credit for viable self-catering businesses from the banks. Most self-catering businesses at best are operating at a break-even level and owners' reserves are already depleted after poor 2008 and 2009 seasons. However, there appears to be a general policy among the main banks that tourism-related businesses are not worth supporting at present and this must be changed urgently.
The second issue pertains to local authority charges. Water charges for our members have increased by between 150% and 400% in many counties over the past number of years. Due to very low occupancy rates for four to five months of the year, we request that local authorities waive the standing charge on meters for periods when water consumption levels are zero or negligible. Additionally, we call on local authorities to become much more active in seeking out unapproved self-catering accommodation to share the burden of revenue generation in this area. This also may be of assistance in the area of pricing of accommodation rental.
The third issue concerns improved and extended quality broadband access. Many of the peripheral rural and costal areas in which our members' properties are located have poor or no broadband availability. This is crucial not only for visitors wishing to use laptops, etc., on holiday, but especially for our members who need access to conduct important e-commerce activity. This programme must be speeded up and become less expensive to access, where available.
Fourth, I refer to the new non-principal private residence, NPPR, charge. This newly introduced €200 charge is almost certainly a misnomer when it relates to Fáilte Ireland registered and approved self-catering units as they certainly are not private residences. However, since its introduction in late 2009 and the subsequent early paydate again in 2010, payment compliance levels have surprised the local authorities. Self-catering providers accept that this is their effective rates contribution. However, it is not acceptable that this charge, unlike all other local authority charges, is not allowable as a business expense for those self-catering operators who categorise their accommodation sales as rental income. This means that the charge is much more than €200 when the property owner must first deduct VAT, if registered, and income tax to produce it.
Representations by our federation to the Minister for Finance have resulted in a reply that states "there is no provision currently for allowing this charge as being a deductible expense from Rental Income". We urge this joint committee to ask the Department of Finance and the Revenue Commissioners to add the NPPR charge to the list of items allowable as expenses from rental income. This element has created much more resentment than the charge itself. We also propose that this allowance be limited only to properties that are registered or approved by Fáilte Ireland as recognition of its ongoing contribution to tourism promotion and standards. This may also potentially help incentivise some unapproved operators to embrace the approval process.
The fifth issue pertains to television licences. Much concern exists in the self-catering sector about the cost of television licence charges for registered group schemes in particular. Why is this the case? The provision of televisions is a mandatory requirement for the approval and registration process for self-catering units. Many units are unoccupied for up to six months per year. At present, An Post is enforcing a policy of one television licence per self-catering unit, even though it has been a long-time practice that one licence per self-catering group scheme was acceptable. This is where all units are located on the same site and managed by the same entity. This is in comparison to hotels, for example, which, regardless of their size, be it ten or 450 bedrooms, only require one licence. This also is the case for guesthouses and bed and breakfasts. This is an obvious inequality as registered self-catering group schemes with eight units or more are registered under the same Tourist Traffic Acts as hotels and guesthouses. This is common practice in the United Kingdom and most other western European Union states and it prices the licence on a sliding scale.
We request that the joint committee consider this situation and intervene with the Minister for Communications, Energy and Natural Resources to find a resolution to this issue, which is currently supporting an inequality and is a considerable financial burden our members cannot afford.
Sixth, the State tourism bodies, namely, Fáilte Ireland and Tourism Ireland have been very supportive of the self-catering sector over the last few years. This has not always been the case but both agencies have worked very hard to allow self-catering to share an equal promotional platform with other accommodation sectors. In turn, we must now respond with new and innovative initiatives to grow our attraction to Irish and overseas holidaymakers. Fáilte Ireland also has been doing excellent work in the training and development of our members' skills. Our federation strongly supports current industry calls to ensure that funding levels for both agencies are increased or at worst are not reduced. Large numbers of jobs are being lost or are under threat in our sector at present and the support of both agencies will be crucial in the year ahead in our efforts to reverse these trends and survive.