Saturday 23 February 2019

With VAT hike and Brexit worries, clouds loom for the Irish tourism boom

Tourism growth potential is coming from new air routes as well as increased sea access with the launch of the ship WB Yeats.
Tourism growth potential is coming from new air routes as well as increased sea access with the launch of the ship WB Yeats.

Ailish O'Hora

Loftus Hall is an imposing sight on Wexford's Hook Peninsula, one of the country's most attractive tourist destinations. Touted as one of Ireland's most haunted buildings, it can trace its history back to the Norman invasion and is said to have opened its doors to the devil back in the 1700s.

Down through the years it has been a convent and a hotel as well as a private home, but it is now owned by businessman Aidan Quigley. The devil is long gone and the house now attracts thousands of altogether more welcome visitors every year to this increasingly popular part of what is now branded Ireland's Ancient East.

Leaning on the hall's spooky past, Quigley - who bought the 25,000 sq ft country pile in 2011 - opened it to the public the following year on Friday July 13 as a tourism destination for paranormal lockdowns and interactive theatrical tours.

"One of our regular events is the Bealtaine May Pagan festival and Samhain at Halloween which links directly the Ancient East brand which has become a great platform for our tourism business, and those in the area in general, as part of the Visit Wexford initiative," said Quigley. According to Tourism Ireland chief executive Niall Gibbons, the Ancient East brand is just one example of initiatives driving growth in the industry outside of the main cities. "Part of our challenge is extending the season and widening the growth in tourism across the country," he said. "We also want visitors to spend more and stay longer and that is part of our market diversification strategy."

He adds that Tourism Ireland, which is responsible for selling the island of Ireland overseas as a destination, has just launched its €10m "Fill Your Heart With Ireland" marketing drive in the US and main European markets in a bid to drive this growth.

The Irish tourism industry is robust, though not without its challenges. After eight years of consecutive growth, 11.2 million overseas visitors spent €6bn here last year and there are 325,000 people employed in the industry on the island.

The target for 2019 is to grow visitor numbers to 11.6 million and spending to €6.5bn, according to Gibbons. The biggest spenders are visitors from mainland Europe, in markets like France and Germany, and growing numbers from the Nordic countries. Air access from this market is expected to increase by about 5pc this year with new markets opening up. For example, flights to Ireland West Airport (Knock) from Cologne. The North American market of the US and Canada has doubled from 1 million to 2 million visitors over the past five years and the prospect for growth is strong, Gibbons added. New routes include Dallas and Minneapolis as well as Montreal, Calgary and Hamilton in Canada.

China is another growth market, as is the Middle East. Air access from Asia is due to increase by 15pc, driven by new routes from Beijing and Hong Kong last year, and Shenzen this spring. The Middle East market is already served by Qatar, Etihad and Emirates while the market is also expected to be boosted by visa-free travel from the UAE.

The British market is the biggest by volume. Visitor numbers hit 4.5 million last year and they spent €1.5bn. This market is also important for the off-season as more than 40pc of British visitors come in the first and last quarters. Growth potential is coming from new air routes as well as increased sea access with the launch of the ship WB Yeats.

"The market finished slightly up last year which is great given the uncertainty with Brexit and external challenges around trade talks which can impact on consumer confidence. Then there are currency issues, for example, if there is a hard Brexit you could see a deterioration in sterling making Ireland more expensive for British visitors," Gibbons said.

"Tourism Ireland was born out of the Good Friday Agreement as an all-Ireland initiative. Northern Ireland had record 2.3 million visitors last year - that's a tangible peace dividend in uncertain times. Tourism brings peace and peace brings tourism," he added.

However, Gibbons also said that one of the biggest challenges facing the industry is keeping the lid on costs and maintaining our cost competitiveness.

"Cost competitiveness are key watch words for 2019," he said. "Dublin isn't competing with Paris and Rome... it's more a tier of cities like Amsterdam, Copenhagen and Barcelona. And if we are consistently pricing above these cities that will impact on demand. Certainly during the course of 2018 there were pressures there, though nothing like where we were in 2008. The digital infrastructure around price comparison, for example, that's there now is much more sophisticated and travellers are acutely aware of pricing. There is good value around," he added.

There was much hand-wringing within the industry when the Government restored the VAT rate for the hospitality sector to 13.5pc in the last budget.

"It's something that we are very concerned about and we'll be keeping a very close eye on it, especially with the sterling implications of a hard Brexit," said Eoghan O'Mara Walsh, chief executive of the Irish Tourism Industry Confederation.

"There are 20,000 small tourism and hospitality businesses in Ireland and the VAT hike has to be passed on. Only time will tell what the impact is in the medium to long term. Having said that, we're still positive about 2019 based on increased air and sea access to Ireland, and the ongoing €2.5bn being invested by the industry."

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