I move:
That Seanad Éireann commends the Minister for Tourism and Trade on the positive impact of his policy for the development of tourism; and urges the Government to continue with an increasing investment in tourism as the most efficient way to economic growth and job creation.
I welcome the Minister on his first visit to the House. Tourism has the potential to bring about the most significant growth in the Irish economy. This fact has not been recognised by senior politicians or public servants in the past. The Minister has recognised this potential and has succeeded in a short time in putting in place positive action to see this potential realised. I applaud him for his achievement in removing the "Cinderella" tag from the industry.
In 1987 we saw the start of the development of the tourism sector and since then the Government has begun to appreciate the growth potential of the industry. This has resulted in considerable increases in Government expenditure and investment. The return on the Government's investment is there for everybody to see. It has resulted in £1.3 billion in foreign revenue and an increase of 24,000 jobs and £800 million capital investment in 350 new development projects. This is a good start, but only just the beginning. Under the stewardship of the Minister, we have seen the industry get a real shot in the arm. It is characteristic of the man that he saw the possibilities for economic growth and job creation and very quickly put together a strategic plan to release the industry from the shackles that have impeded it for so many years.
The establishment of the tourism council has brought together for the first time key players in the industry. This group will play a critical role in putting an end to the haphazard unco-ordinated approach of the past. It will play a key role in the synchronisation of various interest groups in the industry. This unity of purpose is vital for achieving results. The Minister's identification of adequately funded marketing as the key factor in driving the industry forward is, as it were, putting the finger on the button. The attitude of senior politicians and public servants to public expenditure on tourism marketing in the past has been to view it as an expense rather than an investment. This narrow minded approach stifled the industry in previous years. There is no logic in refusing to spend a pound if it can make a pound, or, as in the case of tourism marketing, many more pounds.
It is for this reason that the Minister's initiative to put together a new fund of £3 million for a direct hard sell campaign in the United States is exciting and without doubt will bring about the desired result. The projected benefit is a 17 per cent increase in visitor revenues from the United States. This represents upwards of 52,000 additional visitors from the US, giving at least 500,000 additional bed nights. It will create 1,000 new jobs as well as extending seasonal employment and giving a projected annual additional £10 million in gross tax revenues to the Exchequer.
It is also a wonderful achievement for the Minister to have received an additional £5 million for marketing in the recent budget. The Government are to be congratulated on their foresight in making this significant amount of money available. The Minister for Finance, Deputy Ahern, deserves credit for this and other decisions in the budget, namely to improve the regulations for hotel owners in regard to inheritance tax and also to improve the capital allowances from 10 per cent over ten years to 15 per cent over six years. I ask the Minister to give us some indication tonight as to how this money is to be spent and I urge him to concentrate on the European market and on the off season period.
The budget shows that this Government recognises the progress the industry has made and its potential to go much further. However, we are still in my view only scratching the surface in terms of what tourism can achieve for the Irish economy. I am convinced that our economic future lies in tourism and the service industry rather than in manufacturing industry or agriculture. At very best we can only hope that manufacturing industry will hold its own in terms of jobs and that agriculture can achieve something similar.
Despite what the Government has done to date, there is great potential to do much more. I want to outline to the Minister a number of measures which must be put on the table for consideration in the coming year. We spent the last three days announcing the creation of 500 jobs in Galway by Boston Scientific. It is a wonderful achievement to get such a company and it is a welcomed by every Galway politician. However, its impact on the Irish economy pales in significance beside the achievement of Seán Quinn and the impact of his hotel, the Sliabh Russell in Ballyconnell, County Cavan. In that project, he has made an investment of £20 million. There are 115 people employed on a full-time basis, together with 60 part time jobs. The project only received 3 per cent of the capital cost, somewhat more than £600,000, in Government grants. There was not much excitement about the hotel. Had the Taoiseach not gone to open it we probably would not have known about it.
When I first visited the hotel, my impression on trying to find the place was that there could not be much of a hotel in the middle of nowhere. How wrong can a person be. It used to be nowhere, but it is now the centrepiece of some of the most beautiful rolling Ulster countryside which is becoming known to thousands of people in Ireland and much further afield. Some 62,000 people stayed in that hotel last year. The hotel has transformed the whole region. It has brought enormous spin-off to all kinds of businesses and economic activity in that part of the country. The sad fact of the matter and the point I am trying to illustrate is that there are few Seán Quinns in this country. It is only somebody like Seán Quinn or indeed Noel C. Duggan of the Millstreet Equestrian Centre who can put such facilities in place in rural Ireland.
The problem is that we politicians do not take the hotel sector seriously. We seem to have a jaundiced view of hotels, their contribution to the economy, the quality of the employment they offer and the amount of profit they make. That is evident from the number of cowboys who tried to get into the sector when it appeared under the BES that there were some soft opportunities in that area.
It is time that we as politicians accepted that a hotel employing 20 people is a far greater economic benefit than a factory employing a similar number. Hotels put 87 per cent of their sales revenue back into the economy. For every two jobs in a hotel there is a further job created in other sectors. Hotels contribute more to GNP than manufacturing industry, with foreign revenue having a particular impact on GNP. Hotels are the engines of growth in the industry. For that reason it is economic suicide to charge a hotel 40 per cent corporation tax where manufacturing industry enjoys a rate of 10 per cent.
The Irish Hotels Federation, whose chief executive, Mr. John Hogan, is here today, has for years called upon the Government to extend the 10 per cent rate of corporation tax to hotels engaged in the provision of international services. This year they have put forward a very reasonable proposal to introduce investment allowances to encourage hoteliers to reinvest in their premises and also to allocate 50 per cent of their retained profits to improve marketing campaigns abroad.
Penalising hotels with a 40 per cent corporation tax is the most regressive form of taxation. Reducing it to 10 per cent to correspond to manufacturing industry would immediately release a new wave of investment and economic activity, unequalled by any other change in taxation. The fall-off in revenue to the Exchequer would be made up in a few years because the 40 per cent corporation tax has gone past the point of diminishing returns. I know the Minister for Tourism and Trade, Deputy McCreevy, feels the same as I do and I urge him to continue his fight for this change. I appeal today to the Taoiseach and the Minister for Finance to take cognisance of the logic of this proposal.
The cost of car hire is another deterrent to the development of the industry. We are out of line with our main competitors in Europe. The cost of a class A car in Ireland is £259 per week, compared to Portugal which is £88; Spain, £99; Jersey, £136; Scotland, £199; and Florida, £130. This cost must be reduced as it is a negative factor, especially in the shoulder periods. The reduction in the vehicle registration tax given in the 1993 budget had the effect of reducing the weekly rental cost of a car by 8 per cent. This should be repeated this year in the Finance Bill and it should be continued on an ongoing basis. The lost revenue would be regained by the increased number of new cars required for hire.
While we have considerable capital investment in the industry in recent years we still lack major infrastructural development, for example, all weather facilities such as tropical water facilities which are comparable to those in the rest of Europe. If we are to succeed in developing a 12 month season and short breaks, which the Minister considers a priority and which is possible if we take the correct action, then we must put such centres in place, especially in the traditional tourist areas of Donegal, Connemara and Kerry.
Such projects have high capital costs. However, there is a significant amount of international mobile investment which is being attracted to other countries. We have no proper mechanism to attract such investment here. It seems ridiculous that the IDA travels the world in search of manufacturing investment which is becoming more difficult to find, yet it cannot talk to a major player in the tourism leisure sector who could invest in such projects. I am talking about companies as Centre Parks in Holland which has 15 such centres throughout Europe, including Sherwood Forest near Nottingham in England where it invested £70 million. Centre Parks considered this country, but they were not able to deal here. I propose that a joint venture between the IDA and Bord Fáilte should be allowed to attract such projects with the same range of incentives as the IDA offer to manufacturing industries.
One of the Minister's and Bord Fáilte's priorities is to extend the season. I take this opportunity to compliment the Bord Fáilte executives for the great work they do in promoting Ireland. Direct access from Europe into the west through Shannon is critical to this development. While scheduled services from the ten major European cities would not be viable in the short or medium term, a structured charter service two or three times per week could be viable if it was underwritten by Government and industry during its infancy and if the required marketing finance was made available over a three year period. It is an area which could be considered for the £5 million which was announced recently.
When we consider the off-peak offers to European travel agents by Ashford Castle and Dromoland Castle — £89 per room for two people, which includes bed and breakfast, and £25 for dinner — there is no reason why such a luxurious vacation should not become the most sought after in Europe. Access is a problem. This must be addressed, particularly as Paris is the only place being served by Shannon at present. This offer is in contrast to the best commercial single rate of £75 per night in a four or five star hotel in Paris or Munich. It is clear that if we could provide direct access at competitive rates then we could rejuvenate our winter and off-peak season. The lack of such services into Shannon from Europe is a greater impediment than the perceived loss which the industry in the west became upset about when the Shannon stopover ended.
I hope the Minister for Transport, Energy and Communications, Deputy Cowen, and the Minister for Tourism and Trade, Deputy McCreevy, will look at developing all year charter services into Shannon. This would enable hotels to stay open all year round and give continued employment, even if profits in the off-peak period were non-existent. The Minister's policies have had a positive impact on tourism development. The most efficient way to economic growth and job creation is to increase investment in tourism.