Business Irish

Sunday 18 February 2018

May the visitors be with you? Don't rely on Star Wars to take Irish tourism where it needs to go

Kerry’s Skellig Michael will feature in the much-anticipated new ‘Star Wars’ movie, but we’re still not a big player on our own planet. Photo: Damien Eagers
Kerry’s Skellig Michael will feature in the much-anticipated new ‘Star Wars’ movie, but we’re still not a big player on our own planet. Photo: Damien Eagers
darth vader deposit photo
Richard Curran

Richard Curran

So much paper has accepted so much ink in the "controversy" of filming part of the 'Star Wars' film on Skellig Michael. Nobody in Ireland has seen the film yet so we don't know much of the Skelligs will appear in it. We have no idea what they will look like, and whether they might actually appear as a rocky hellhole in a far-off Galaxy, where natives eat their young.

So it is a little early to talk about a tourism windfall from the film scenes. 'Game of Throne's has helped bring some tourists to Northern Ireland and that is good, but the real benefit comes from getting people from abroad talking about Northern Ireland and raising its overall image.

In reality, tourism marketing falls into two categories. One is the very specific attraction to a particular place or event, Cliffs of Moher or the Wild Atlantic Way. The other is about the general more abstract image that a country represents - U2 are from Dublin, so was James Joyce. What do people living around the world think of when they think of Ireland?

The use of the Skelligs for filming part of the new 'Star Wars' film is likely to play favourably into the latter category, rather than cause a flood of hundreds of thousands of tourists to Portmagee in Kerry trying to get into boats to the stunning rocks.

Nevertheless, it is a good time to take stock of the tourism sector as 2015 looks like setting a new record for overseas visitors to our shores. Tourism has been one of our most successful exports and it has been a genuine success story of the recession years. Remember every foreign euro spent here is effectively an export.

Tourism Ireland is aiming to increase visitor numbers by a further 4pc next year to around 8.2 million. That would be a substantial turnaround on the low point of the austerity years of 6 million in 2010. The good news is that more tourists are coming. They are spending more money here and the season appears to be better spread out than it was in the past.

One hotelier in Dublin told me recently that November didn't really dip that much as the busy summer season rolled past September, only to have more business people and Irish people visiting Dublin in October and November as the economy grew.

But there are plenty of cautionary tales out there that suggest Ireland must be ambitious in its growth targets but also careful not to throw away a good thing.

Back in the late 1990s Bord Fáilte did an outstanding job modernising the international image of Ireland with a very slick advertising and marketing campaign. Ireland became less about the Shillelagh and more about adventure, culture, food and the outdoors.

It worked well and it helped set the industry on a new upward trajectory. Unfortunately, from a government policy point of view, some of that momentum was lost in the early 2000s. Visitor numbers were up which allowed for complacency to set in, but it didn't take account of where the industry could have been and what it might have achieved.

Lots of fine new hotels were built on the back of tax breaks by people who knew nothing about the hotel business. Instead of investing in the tourism product, there were too many price hikes.

Between 2000 and 2007 non-alcoholic drink prices went up by 11.3pc. Restaurant and bar prices went up by 38pc. Accommodation prices went up by 48pc. Our visitor numbers grew because Ireland was on a roll. Tourists from our key markets were also borrowing money for holidays during the boom and at home the industry was too short term in its thinking. Visitor numbers fell in 2008 and are only getting back to those record 2007 levels this year.

But they should have been much higher anyway, and the industry and government need to be more ambitious for the sector.

Next year we hope to get 8.2 million visitors to Ireland. Germany gets 31 million. Munich gets 6.4 million visitors for the Oktoberfest alone. Denmark gets 8.5 million and even Blackpool get 10 million. In tourism terms we are a minnow.

Of course countries like Germany are located in the middle of a giant European population belt and accessible by road, train, boat and plane. Of course most of the 10 million visitors to Blackpool are British and just drive there. But nevertheless it puts into perspective, the size and scale of the industry.

Some people might argue that we shouldn't try too hard for too many tourists on the basis that it could have a negative impact on the environment, quality of life, culture and pressure on infrastructure.

In reality, tourism is one of those industries that can deliver jobs to all parts of the Ireland and quickly. Once more visitors come, communities can benefit in terms of employment, almost instantly.

But there are real threats. Go back to 2008. That year we got 3.8 million visitors from Great Britain and 1.1 million from the USA and Canada. At the start of that year £1 would buy €1.40 and $1 would buy 68c. Today £1 buys a very similar €1.42 and $1 buys 94c.

Our competitive position for Americans has improved dramatically and last year North American visitor numbers grew to 1.3 million or 200,000 more than in 2008. However, with a similar sterling exchange rate, British visitor numbers last year were 3.1 million, compared to 3.8 milloni in 2008. Britain is our biggest market and the industry needs to keep plugging away at it.

Undoubtedly, the reduced Vat rate has helped the hospitality sector in recent years and it has helped boost numbers and ultimately the exchequer coffers. Operators must be careful about prices. Average room rates have been rising steadily, most especially in Dublin where there is a shortage of hotels.

Average room rates in 2014 nationally were €82.29. In 2007 they were €97.69. However, that national picture masks the extent to which the gap between 2007 and now has closed in Dublin.

Charging customers for tap water by the glass in restaurants is a recipe for developing a bad image which is damaging to the industry abroad. It is the kind of thing tourists hate and will highlight on social media and internet reviews.

To some extent we have been boosted by the low value of the euro against the dollar and sterling. Future changes in those rates could leave us vulnerable.

Another danger comes from the domestic tourism sector. As the economy improves, more Irish people are going abroad for their holidays again. The "staycations" of the recession might not be as fashionable in the year ahead.

Foreign trips by Irish residents have been increasing since 2012 and are likely to grow further, thereby putting pressure on the domestic tourism sector.

The industry is a major employer and those investing in the tourism product here deserve every help they can get. The potential for growth is enormous over the next decade but only as long as complacency and price hikes are avoided.

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