Why tourism can offer the cliffs of more, more more
Published 24/03/2011 | 05:00
This May, the British queen and, possibly, US President Barack Obama, will pay visits to Ireland. Both engagements will be steeped in symbolism for Ireland, but the hope is that the presence of both heads of state will filter down to what has been a heavily damaged bottom line for tourism figures.
Last year was one of the toughest for the industry in over a decade, with the Central Statistics Office recently reporting that just over six million people visited Ireland last year -- almost one million fewer than in 2009 and nearly two million fewer than in 2008.
That in turn is filtering down to services industries, with 84pc of hotels in Ireland having said in a survey this month that they fear going out of business in 2011.
Other economies, particularly those that have traditionally been core tourist-generating countries for Ireland such as the United Kingdom and the United States, have been suffering, making consumers there -- as at home -- less likely to splurge on foreign holidays.
There had been hope that 2010 would have marked a recovery in tourist numbers, but that didn't materialise. More recently, a report from the World Economic Forum (WEF) demonstrated just how significant the hurdles are to boosting tourist numbers. A WEF travel and tourism competitiveness study found that high prices here still cause issues for tourists, with only five other countries (all in Europe and including Switzerland and Norway) out of 139 surveyed ranking as more expensive than Ireland. Overall, Ireland was ranked at number 21 from 139 by the WEF in terms of attractiveness to tourists.
Tom Haughey, chairman of the Irish Tourist Industry Confederation (ITIC), believes that tourist numbers will grow again this year but says that there's much work to do to restore the sector to levels experienced a few years ago. This year tourism is expected to generate about €5bn in revenue in the country; while every €1m spent by tourists is estimated to support 30 jobs, according to the ITIC.
"A lot of the growth for this year depends on overseas marketing programmes," he says, adding that the United Kingdom, the United States, Germany and France should remain the core focus for Tourism Ireland, the state body that promotes the island abroad. Readers of the influential Frommer's travel guides recently voted Ireland as the top tourist destination for 2011, knocking Paris off the number one perch.
Mr Haughey stresses that the tourism sector remains hugely important to overall economic recovery, but says that while the industry has become significantly more competitive over the past couple of years, it's being done so on an unsustainable level in many instances -- especially for hotels that built major extensions within the past few years.
Excess capacity needs to be removed from the system, but he admits that no one has yet hit on a viable way of doing that.
"We really need not just to turn the tourism industry around but to so in a radical and dramatic fashion," says Mr Haughey.
Tim Fenn, the chief executive of the Irish Hotels Federation, agrees that 2011 will probably be a better year than last but remains very cautious on the pace of recovery and the ability of external shocks -- from ash clouds, to geopolitical unrest -- to damage the sector.
"Our members are more optimistic this year than they were in 2010, but it's still a fairly bleak vista from the point of view of debt overhang and excess capacity," he explains.
He adds that there are currently about 60,000 hotel bedrooms in Ireland -- possibly as much as 15,000 more than is currently required. He points out that even if the market had recovered appreciably by 2015 that Failte Ireland reckons there would still be roughly 7,000 too many rooms available in the market.
The ITIC has called for the creation of an independent Tourism Recovery Task Force that would reshape the market here, and also for businesses in the sector to be given access to a loan guarantee scheme. Mr Haughey reckons that at least 20,000 tourism and services-related jobs could be created here as a result of these and other efforts and that by 2015 inbound tourist numbers could jump 36pc.
At the end of 2010, when it launched its marketing plans for 2011, Tourism Ireland chairman Hugh Friel said that there should be "no let up" in continuing to boost competitiveness in the industry and urged the sector to remain positive.
'This is a very resilient industry," said Mr Friel. "We must remain positive about the future. Ireland remains a very desirable place to visit. We must work on this in the markets that we hope to return to growth in this current year."
Meanwhile, Fine Gael promised to scrap the controversial airport departure tax that was introduced by the last Government, and which was temporarily reduced to €3 at the last budget. Fine Gael has said it will only remove the tax if airlines commit to bringing in an extra one million passengers a year to Ireland. That undertaking would fall primarily on Aer Lingus and Ryanair but with both airlines having significantly cut capacity over the past year, the abolition of a €3 tax might not be enough of an incentive to significantly boost capacity.
The tourism sector will now be looking to the new minister now holding the brief, Leo Varadkar, for some radical thinking aimed at revitalising the industry.
There are currently about 60,000 hotel rooms in Ireland -- possibly as much as 15,000 more than is required