So the festive period has come and gone and at the time of going to press we are almost out of January. Economic uncertainty is seen as the biggest challenge for the hospitality industry in 2012 with customers thinking very carefully how to spend their money so businesses in our sector of the economy will need to keep close to the mood of the public and to respond to their requirements. The year will obviously present many challenges but more importantly opportunities.

Why? Because tourism is absolutely vital to our economy – not only because of its place in our heritage but also because it continues to furnish much needed revenue and is an important source of employment.  It provides employment and creates demand that allows for the provision of transport services and our local infrastructure to continue. Hospitality and Tourism is an export activity which helps with Jersey’s balance of payments bringing new money into our Island economy.  It also represents one of the best opportunities available to drive growth and importantly employment opportunities benefiting a broad range of businesses from small rural pubs to some of our major hotels, restaurants and attractions.  It also provides for a varied economic and cultural background to society and provided we work together there is no reason why we cannot have a share of the significant growing global tourism market. 

What are the Challenges and Opportunities for 2012?

PPP for Tourism – Strategically, the JHA sees this as a priority. The setting up of a new private-public sector partnership named “Visit Jersey”, a body to oversee the marketing of the industry, is close to becoming a reality with the Economic Development Minister confirming a target of having it operational early in 2012.

We believe this is good news for the future prospects of the hospitality industry with this entity having an independent Chairman and Board comprised of business leaders from Jersey and the UK.  Public sector funding for tourism will be maintained in 2012 and no costs will be incurred by “Visit Jersey” in terms of IT, HR, administration and infrastructure thereby maximising the full potential of the marketing budget for destination marketing and promotional activity.  We will continue to monitor progress and keep you advised of further developments.

The Year Ahead - Will present Jersey with further challenges, not just economic factors but demand factors in the form of the 2012 Olympic Games which starts on 27th July followed by the Paralympics and just before the Olympics the torch relay. The Queen’s Diamond Jubilee with the extra bank holidays is in June and the European football championships also in June. These will all have an effect on demand levels and Jersey will need to overcome this challenge, and overcome it with extra effort and tactical marketing activity will be important if we are to at least maintain our market share.

Inflation – The Jersey RPI increased by 5.0% in the 12 months to December 2011 with the RPI figure for March 2012 being released on Wednesday 25 April 2012. On an annual basis the increase in the rate of GST in June 2011 from 3% to 5% contributed approximately 1.3 percentage points to the annual change in RPI. Food prices rose by 7% with price increases, in part due to shortages of foodstuffs and steep rises in fuel prices, of more than 15% on cereals cheese and processed meats and 10% for butter, and oils. Fuel and light costs rose by 9% and alcoholic drinks rose by 8% with 4% increases recorded across Parish and all-Island rates, DIY materials, and repair and maintenance costs as well as mortgage interest payments. All this forces consumers to cut down on luxuries like going out and retail spend and inflation needs to drop back to lead to a rise in leisure spending.

Duty – A few hard facts – further increases of 5% on alcohol duty for 2012 following hard on the heels of a 6.2% increase in January 2011 meant that Jersey has one of the highest alcohol duty rates in Europe. These increasing duty rates penalise hotels, pubs, bars, responsible drinkers and important local industries. We are lobbying hard to Home Affairs, Health and the Economic Development departments to remove the misconception that duty rises somehow improve the health of the Jersey population, the actual reality is that a 5% duty increase will increase prices even further driving any problems of alcohol misuse out of a legally controlled environment of a pub and into a completely unchecked home environment where under age and excessive drinking could increase unchecked and out of control.

Licensing Law – Having lobbied hard reference this law it is evident the disparity between the lead departments needs to be overcome and quickly, therefore we await the delivery of a policy paper or White Paper that we can consider and respond to. A meeting of the key Ministers in late February will hopefully see some light at the end of the tunnel and with the Economic Development Department as the lead for our sector of the local economy we hope that some clear thoughts that work for the hospitality industry can prevail.

The World Economy - Our local businesses have had a tough enough time recently, caused by the knock on effect of the world economic crisis.  Although Jersey has weathered the storm better than most, we believe it is important to ensure our economy is properly understood, properly managed and properly resourced.  In the island’s key UK market, we will face significant challenges in 2012 with consumer morale being threatened by the Euro crisis, the threat of recession, rising unemployment and the general state of the economy, this could overshadow consumer confidence but having said that we are optimistic that we will see growth in 2012 with the Island securing its fair share of business. Let’s hope that Sterling can remain competitive against the Euro to tempt in foreign tourists to the Island.

Unemployment - Right now it’s a lot harder for young people to go into work which concerns us especially as we’ve got some good people coming into the workplace. We have good but limited career prospects to offer them here in Jersey. The finance industry is vital and offers great opportunity, but that doesn’t suit everyone.

As a result, we have got to look at encouraging and creating new opportunities particularly in hospitality without adversely affecting our present labour market.

Oxera Report on Tourism – Will it deliver what we really want? Will it give a ringing endorsement (quantified) of why Tourism adds so much value to Jersey's overall economy? Will it capture the true value Tourism plays in Jersey and why the tourism sector deserves 'special status' in terms of support both political and fiscally!

We will closely monitor the final conclusions of this report which has been commissioned to assess a better understanding of how we develop this vital part of Jersey’s economy. The report is a pre-cursor for the Tourism Strategy which will be worked on by the JHA and industry partners before being included in the Strategic Plan Green Paper due for consultation release in February 2012.

Regulation – A few key thoughts - let’s not over burden hospitality with further bureaucracy, regulation, red tape and unnecessary costs. Let’s get to grips with the proposed liquor licensing reforms. Let’s make sure that there is future tourism support. Let’s see the outcomes of the “Red Tape Review” and let’s see the removal of the barriers for the private sector accessing the Tourism Development Fund.

The Recovery - With the States of Jersey Assembly now reconvened following the elections at which many members campaigned passionately about the importance of the tourism and the hospitality industry, the JHA will be inviting them to a briefing on hospitality and tourism, which will centre on the positive contribution this sector makes to Jersey life and the local economy in general.

Hospitality and Tourism - With the government’s focus on jobs and growth this is a real opportunity to reiterate hospitality’s place in this recovery and that hospitality is an industry that contributes a minimum of £234 million to the economy, pays £5.5 million in tax plus personal income tax from the 6,000 people employed and £7m in GST. A vibrant, well run and well invested hospitality sector is important in supporting tourism as well as attracting business and employees to the Island. Similarly, without support for tourism this essential industry will continue the contraction that has been experienced in recent years.

Jersey Conference Bureau - You will be aware that the JHA have asked for the question of developing a conference centre in Jersey to be revisited and this was discussed with new JCB Chairman, Peter Funk recently. This is not the first time this topic has been looked into but with potential changes to the product offer in the future we feel it is understandable to do so again.  It has been made clear that it will only be achieved if a compelling business plan based on realistic capital costs and a pragmatic revenue forecast together with a conservative view of performance data is put forward. The proposal will no doubt include a request for some form of public funding and a robust investment analysis will be an absolute must in this regard. The JHA has confirmed that it was happy to become involved in future discussions as an industry working group. Performance wise, conferences held up well in 2011 with 9,326 delegates, 33830 bed nights and an on-island spend of nearly £6m. Corporate bed nights reduced by 20%; however association business was up 22.3%. In the UK, the events market has really suffered. Reductions of up to 40% in events have been reported in the provinces and there have been a number of major conference hotels entering administration. And some major event agencies have also closed.  Enquiries have become increasingly last minute and the industry has to be on the top of its game to secure conversions. From a Jersey perspective, the number of conference delegates rose last year. Albeit it is a small amount but in a market that is stagnant and where there is massive rate discounting by UK competitors, this is good news, as is the Bureau being shortlisted by the readers of Meetings & Incentive Travel Magazine as one of the Best UK Convention Bureaus alongside Glasgow, Newcastle and Birmingham. 

JHA Draft 2012 – 2014 - Business Plan and Budget

The Business Plan’s strategic framework identifies 7 key objectives + KPI’s set as well as the key financial points. It has been developed through an agreed prioritization process, which seeks to further increase the outputs generated by our activity as the industry’s trade association. In doing so it has been designed to meet or exceed all the projected targets.  The plan requires some further amends with further discussion with the committee before being signed off and posted on the JHA website.

Lobbying Round Up

Together with the points so far touched on, a number of government proposals are out to consultation, including the Strategic Plan (see below) and Licensing Law as well as ongoing pieces of Employment Law such as employee representation in workplace disciplinary and grievance hearings. A White Paper on the Jersey Licensing Law is due before year end and the Red Tape Review hopefully at the end of quarter 1. We’ll be responding on all of the above.

Snippets

Strategic Plan – Consultation - The Council of Ministers has published a Strategic Plan consultation paper which explains the issues ministers want to concentrate on over the next 3 years. It also sets out the background to these issues. Ministers want to know whether you agree with their priorities, or if there are other things you think are more important. Your views are important as the Strategic Plan, once approved, will set the future direction for States policies. The JHA has confirmed that it would like to meet with ministers about policy issues, relating to the Strategic Plan consultation with the Chief Minister or other ministers relevant to our subject area. There are a number of ways of responding to this consultation, which you can view online. If you would like a paper copy of the documents, please call 440428 or view at:

http://www.gov.je/Government/Consultations/Pages/DraftStrategicPlan.aspx

Minimum Wage - Rates Agreed - The minimum wage will go up to £6.48 per hour from 1 April. Following a decision in the States, Social Security Minister Francis Le Gresley will now order the 16p-an-hour rise as recommended by the Jersey Employment Forum. The trainee rate will also go up from £4.74 to £4.86 an hour. An earlier move by Deputy Geoff Southern to add an extra 4p to the minimum wage figure was rejected by 43 votes to eight. He had proposed the increase to keep the minimum wage at just over 40 per cent of mean weekly earnings as it had been in recent years. The offsets to apply are detailed below.

Minimum wage rates since 2011 - 1 April 2011 - 1 April 2012 - Minimum wage (per hour) £6.32 to £6.48. Trainee wage (per hour) - £4.74 to £4.86. Maximum weekly offset against minimum wage for accommodation   £69.21 to £70.94. Maximum weekly offset against minimum wage for accommodation and food £92.27 to £94.58.

Public and Bank Holidays for 2012 - New Year's Day - Monday 2 January 2012; Good Friday - Friday 6 April 2012; Easter Monday - Monday 8 April 2012; Early May Bank Holiday - Monday 7 May 2012; Liberation Day - Wednesday 9 May 2012; Spring Bank Holiday - (moved to early June); Queen's Diamond Jubilee - Monday and Tuesday 4 and 5 June 2012; Summer Bank Holiday - Monday 27 August 2012; Christmas Day - Tuesday 25 December 2012 and Boxing Day - Wednesday 27 December 2012.

Date for your Diary - JHA AGM and Luncheon - Thursday 29th March 2012 Pomme d'Or Hotel - AGM - 12.00 - 1.00 - Luncheon - 1.00 - 1.15

Jersey Craft Guild of Chefs - Launched recently at Highlands College, the event was very successful and fully supported by many in the industry who were wined and dined by the academy students, alongside Michelin Starred chef Jeremy Medley and infusions4chefs demonstrating molecular gastronomy techniques. As an incentive and to introduce the Jersey branch, the Guild has kindly offered a half price membership for the first year. Students can join for £10 and all others can join for £22.50 - this offer is available for one week only. Please remember the Craft Guild is not just for chefs, but the wider hospitality industry and food related industries.  For further details, please contact Eileen Buicke-Kelly on 608646 or by email Eileen.Buicke-Kelly@highlands.ac.uk

Jersey Food Festival - As part of the on-going promotion to establish Jersey as a gastronomic destination, Jersey Tourism is staging its second food festival from 19 to 27 May 2012, with support from the Genuine Jersey Products Association. The festival kicks off with an al fresco food fair at the waterfront on Saturday 19 and Sunday 20 May. It continues with a week-long programme of activities. The festival aims to showcase the very best of local produce and talent, as well as exploring the wealth of food related activities that visitors and residents can participate in. As with last year’s event, emphasis remains on the iconic Jersey Royal potatoes, as well as the fantastic dairy and award-winning shellfish sectors. The aim is to drive business to producers, hotels, restaurants, markets and food stores and both organisations would like to hear from you with your ideas about how you can get involved. Activity should be food related and showcase what your organisation and the island has to offer. If you would like to be included, Donna Le Marrec  This e-mail address is being protected from spambots. You need JavaScript enabled to view it and John Garton  This e-mail address is being protected from spambots. You need JavaScript enabled to view it are happy to meet up to discuss ideas. Ideally a programme of events will be finalised by the end of February.

Creating Jobs – As previously mentioned, jobs will be one of the top priorities for the States over the next three years. Getting Islanders into work is one of six main aims identified in the first draft of a plan unveiled by the new Council of Ministers that will set government policy for the years ahead. Ministers have also announced that they are doubling the size of a workplace scheme that helps unemployed people find work. The Advance Plus Scheme has already helped get more than 100 Islanders aged 20 and over into work. The target for the next 12 months is 200.

Talking of creating jobs - How are you fairing with your employment licences? – are you having any difficulties with your non local allocations? – are unworkable restrictions now apparent? please let us know.

Tour Operators - 2012 could be make or break year for UK tour operators, says KPMG.  24 UK tour operators went into administration in 2011 and more casualties are expected in 2012. A number of UK travel companies and tour operators will struggle to survive in 2012 unless they radically change their business models and adapt to a fundamentally new market environment, says advisory firm KPMG. The phenomenal rise of low cost carriers, online travel booking and the challenging economic backdrop, combined with fuel and Air Passenger Duty increases could make 2012 one of the most challenging years yet.

Best Regards,

Gerald Fletcher

Gerald Fletcher

Chief Executive Officer