TOURISM’S NIGHTMARE
Action needed to avert disaster – Richard Curran,
THE question of opening up the country for inward visitors and outgoing holidaymakers has become the key battleground in the fight between public health and the economy. Nowhere in the economy has the impact of the pandemic been felt more than in the tourism sector. This was reflected in a detailed submission made by the Irish Tourism Industry Confederation (ITIC) chaired by Maurice Pratt.
The industry has racked up €1bn in lost revenue since the crisis began and there is still a long way to go. The ITIC has come up with an imaginative, realistic and detailed document on how to bring about a recovery in the sector over the next three to five years.
The situation is so bad that it isn’t even talking about beginning to recover until the second quarter of 2021, that is almost a year away.
It is full of interesting policy ideas, such as providing vouchers for holidaying at home, tax rebates for companies organising conferences, and introducing a new public holiday for late September to lengthen the tourist season.
It would also like to see a Vat reduction, a doubling of the overseas marketing budget, and a €10m increase in Fáilte Ireland’s domestic marketing budgets for 2020.
Many of the real measures it seeks are predicated on getting rid of the two-week quarantine for those visiting or returning to Ireland. This is at the heart of the Government dilemma as it involves increasing health risks for economic return in a sector it appears to value little.
The decision to put tourism, our biggest indigenous employer, into a Government department with sport and the Gaeltacht, spoke volumes. Then to facilitate Fianna Fáil deputy leader Dara Calleary getting some departmental responsibility as chief whip, sport and the Gaeltacht were taken out of that department.
Perhaps that may prove to be better for the attention tourism might receive, but it shows what little thought is given to where it should belong in the Government roadmap.
The ITIC measures need people to start coming back to Ireland in large numbers.
Its plan outlined different scenarios which would envisage some boost at home from staycationers, but which didn’t rule out 30,000 fewer jobs in the sector in five years from now.
If the quarantine is lifted it will open the way for visitors from listed countries to come and holiday in Ireland. Overseas revenue from tourism last year was worth €5.1bn to the economy.
But lifting the quarantine will also free up Irish holidaymakers to head abroad, with their cash, to the sun. The more we might gain coming into the country, the more we might lose in Irish cash spent outside the country.
The ITIC wants the quarantine lifted in line with the recommendations of the aviation task-force. The industry needs to get people back into the country. The more barriers are taken down, the greater the chances of getting the industry back on track.
However, this means greater coronavirus risks from Irish people returning from abroad where they have contributed very little to the domestic economy by spending their money somewhere else.
It is the ultimate mess for an industry that reached record levels of visitors last year. The new Government looks set to deal with its first political hot potato when it outlines a badly-needed travel advice plan following a Cabinet meeting tomorrow.
Keeping the tightest restrictions possible will surely mark the end of thousands of tourism sector jobs. Opening up too quickly may see Ireland follow other countries where there has been a spike in new cases.
If there is a middle ground here, it is surely that people are encouraged to holiday and spend at home, while the highest level of checks possible on incoming visitors or those returning to Ireland, is maintained.
If there is no middle ground on this issue we are heading for a jobs catastrophe that will cost the economy dearly or a resurgence of new cases that will cost society dearly.
Aryzta dissidents want to see a smaller and simpler business
DISSIDENT shareholders at Swiss-Irish baked goods group Aryzta didn’t so much park their tanks on the lawn last week, as nudge their artillery further forward. The tanks were parked several weeks ago when the group, led by Veraison, forced an EGM at which they want several board replacements.
The dissidents increased their shareholding in the group to more than 20pc. Together with another known disgruntled shareholder they can rely on at least 24pc of the votes at the EGM next month.
Given that typically just 50pc of votes are actually cast at these events, the Swiss activists may feel they are within touching distance of replacing several board members with people they believe have more experience in the industry, including two former Aryzta executives.
But even if they are successful, the big question is what would the new board do differently. Gregor Greber, founder of Veraison, told the Sunday Independent they would simplify the business.
This would involve further disposals of assets, possibly up to €600m worth to reduce debt and return to profitable growth.
Greber did say that he represented longterm investors who would not just seek to opt for fire sales. He suggested that the US division of the group was fixable and implied that it would not automatically be sold. Hard to see where the €600m would come from without selling the US division.
He said he believed the company chaired by Gary McGann had failed to listen to its shareholders. McGann and his team can point to the extreme duress of its debt levels and problems especially in the US. Covid-19 certainly hasn’t helped either.
When asked what he would have done differently in recent years, especially given the balance sheet challenges facing the management and board, Greber said it would be unfair to blame people and unfair to go back into history.
He said McGann had done a lot of great things but the board could have handled the 2018 fund raising differently and done more to maintain shareholder trust.
Greber said he believes the proposed new board replacements are more familiar with the industry, the big customers and clients, and retaining key relationships.
Aryzta has already hired Rothschild & Co to conduct a strategic review of the business. It isn’t clear yet what its recommendations will be, which may include a plan very similar to that advocated by dissidents including Veraison and Aryzta’s biggest shareholder, Cobas.
If they are not successful in their attempts to oust board members next month, Greber says they will remain committed to their investment and they intend sticking around for the long haul.
Music to Gary McGann’s ears I am sure.