Saturday 24 March 2018

The Ryanair man who wants our tourism industry to take off

Two years into his stint as Fáilte Ireland chairman, Michael Cawley remains enthusiastic about growing our tourism business, writes John Mulligan

Michael Cawley
Michael Cawley

Fáilte Ireland chairman Michael Cawley leans back in his chair as he recalls the day when he was heading to the Ryanair office to tell Michael O'Leary that he was going to resign as deputy chief executive and chief operations officer at the airline. It was 2013.

"The day I went into Michael to resign, my wife (Evelyn) sent me off that day as if it was the first day in a brand new job. She said: 'If he kicks you out, don't worry, you can always come home'."

Despite Cawley's self-confessed "fear and trepidation" that day, O'Leary didn't kick him out, and instead offered him a seat on the Ryanair board as a non-executive director. Cawley had been at the airline since 1997, when the chartered accountant had joined from the Gowan motor group as chief financial officer.

Cawley (61) insists that he "nearly fell over with surprise" when O'Leary offered him the non-executive role - a position he was "delighted" to take.

Surely it was almost a given though?

"It's not very normal. We're in breach of every corporate governance thing going. The chairman (David Bonderman) is there for 20 years. But why would you be getting rid of people like Bonderman, who's probably the top aviation fella in the world?"

And as he leafs through his diary while munching on a sandwich at the Fáilte Ireland HQ on Dublin's Amiens Street, Michael Cawley insists he's not as busy as when he was at Ryanair full-time.

"Jesus no, I'm not," he says, despite the number of positions he holds now. "I've more than half my year free."

But it's a bit hard to believe he's not run a bit ragged, judging by the jam-packed diary entries plastered with his own handwriting. It looks like he'd have to pencil in his own funeral, God forbid.

Not only is he on the board of Ryanair and the chairman of Fáilte Ireland; Cawley has just spent the morning at the first board meeting of the newly-merger €10bn betting giant Paddy Power Betfair, before hot-footing it back into the Fáilte Ireland office. He joined the Paddy Power board in 2013.

He's also a non-executive director of the giant Cavan-based insulation maker Kingspan, is on the board of Hostelworld (the tourist accommodation site started by Ray Nolan and which floated on the stock market last year), and has a personal investment in Homestay, an Irish rival of Airbnb. He also backed energy firm Prepay Power.

"That variety is great and the basics in business are the same in most places," he says. "But the different types of customers, the different geographies - I'd have a great interest in that. It would be as much a hobby to me as it is work."

But he laments not having an assistant any more to help with the logistics of it all.

"It's the most difficult thing you've to do when you leave," he says, a hand resting on his diary as if it were a bible. "You've to organise your own timetable."

Despite all the directorships, it's at Fáilte Ireland, the state agency charged with developing the country's tourism industry, where the six-feet-plus Corkman, whose father was a Garda detective, now has the most public profile.

Appointed to the role in 2014 by then Tourism Minister Leo Varadkar, Cawley isn't afraid to say it as he sees it, warning those in the tourism trade earlier this year not to start "gouging" people with higher prices just because the sector is recovering.

The number of tourists visiting Ireland last year soared 13.7pc to over 8.6 million, with a 13.2pc increase in the number from the US; a 15.4pc increase in numbers from mainland Europe; and a 12.1pc rise in the number from Britain.

It's a role that Cawley obviously relishes, but one which it's unimaginable that he could have held had Ryanair not started its own transformation to a more customer-friendly and less antagonistic airline before he left his role there.

Would he have been perceived as too toxic for the Fáilte Ireland role had that transformation not been under way? Cawley thinks about it for a moment. "Probably," he concedes. "Toxic is a good way of putting it." He points out that Ryanair's current chief commercial officer, David O'Brien, is also now on the board of Tourism Ireland, having only joined recently.

"We may be toxic, but at least we have some added value," he jokes.

Almost two years into his five-year chairmanship at Fáilte Ireland, Cawley is keen to target a number of ways in which he hopes to boost tourism numbers and address the stark seasonality of the business that many areas of the country endure. He's also wants jobs in the tourism industry to be perceived as of being significant worth. He says that tourism directly supports 205,000 jobs, and has the potential for big growth.

"The jobs are historically regarded as being less than good," he explains. "The points for tourism courses are low, but in somewhere like Switzerland, they send their best and brightest into tourism."

"One of the things I set out to do was to make people proud of working in the tourism industry," he adds. "We want to make sure the contribution they make to the economy is recognised. I want parents to be as proud of their son or daughter who's a chef or in hotel management, as they would if they were an engineer or a doctor."

He admits that won't change in five years, but is certain that it can over time. The tourism sector should be able to grow by a high single-digit percentage in each of the next number of years, according to Cawley.

"There are not too many industries you can say that about. It's people-intensive, gives regional distribution and has a whole lot of virtues that we should be emphasising." Seasonality in the tourism industry is a "big issue", he adds, with some regions experiencing a summer season that may be busy for less than a month.

Educating tourism businesses on revenue management is among the goals for Cawley and Fáilte Ireland. "Revenue management is one of the most important things in Ryanair," he explains. "Equally, for hotels and restaurants, it's critical. So we bring people into courses every year and we get a fantastic response," he says.

Value for money is also a key proposition. Hotels, restaurants, cinemas, and even, somewhat bizarrely, hairdressers, are among the services that benefit from a reduced 9pc rate of VAT introduced by the government as a boost for the tourism sector and as a jobs initiative.

But hoteliers in particular have been accused of hiking prices, especially at times of high demand, beyond what could be considered reasonable increases. It's a charge frequently denied by the trade.

"We need to be very careful about the value for money proposition," warns Cawley.

That's especially true, he argues, when the value for money perceived in Ireland by tourists from Britain or the US, can be to a significant extent credited to a weak euro.

"The Americans and the British are telling us they're getting great value for money, but with the Germans, the Italians and the French we're losing it," he insists. Cawley recognises that some of the upward cost creep can be attributed to wage rises, but he's adamant there would have been very few significant wage increases in the sector over the past few years given the downturn.

"They're coming in now and they're modest. I hope efficiencies and productivity will absorb them."

He believes that increased demand is what's driving the price creep.

"The revenue per available room (a key metric for hoteliers) was 25pc higher during the peak season last year than the year before. That was on top of a double-digit increase in 2014," Cawley explains. "Now that was off a low base, but I don't think that 2006 should be the benchmark."

Meanwhile, Fáilte Ireland is working on a number of regional initiatives to help develop tourism products around the country. It's investing a total of €100m in capital funding over the next five years, with initiatives such as the Wild Atlantic Way, Ancient East and the rebranding of Dublin. There's also a large number of other, smaller, projects, however. This year, €55m will be spent by Fáilte Ireland developing and promoting tourism, with €13m allocated to Dublin, €18m to the Ancient East project, and €19m to the Wild Atlantic Way.

Fáilte Ireland said earlier this year that it's concerned at the dominance of traditional tourism "honeypots", and that the geographic imbalances need to be addressed.

"We've become much more focused on how we spend money," says Cawley, who adds that Fáilte Ireland has also begun working more closely with the Office of Public Works (which is responsible for the State's national monuments and historic properties) to enhance and promote attractions, for instance.

He says that Fáilte Ireland has allocated €2.8m for Knowth (a 5,000-year-old passage tomb in Co Meath, which together with Newgrange is part of a World Heritage Site), which he points out has been described as the "Louvre of the Stone Age".

"It has 50pc of all the Stone Age art in Europe," he says. "We've about 12 projects identified (in conjunction with the OPW), which over the next two to three years we will develop and enhance."

But is there a danger that money will be thrown at projects where the return may not always have justified the investment?

"Everybody has to give us a business plan," Cawley insists. "We have an investment committee which I chair. We benchmark projects and also revisit those that were grant-aided four or five years ago to see what worked and what didn't. We had five projects that received a total of about €8m in funding, for example. Two of those bombed out completely (he won't say which), but one of the successes was John's Castle in Limerick."

"By definition, we'll have mistakes, but we're tailoring our investment to match the interest of tourists," he says.

Cawley is being a bit of a tourist himself these days, he says, spending time in places such as Australia, where a daughter was expecting her second baby the day he sat down for the interview.

But two years after leaving his executive role at Ryanair, and with all that free time, is his wife keen for him to have less of it?

"Oh, absolutely. When Hostelworld came up, she said: 'You'd better take that, I'm getting fed up with you.' She thinks I'm a control freak. She's a control freak too."

And he admits that of all his directorships, Ryanair probably remains closest to his heart given the amount of time he spent there. "I know where most of the bodies are buried," he says. Knowth, probably.

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