A Yes vote would help the sun shine on tourism sector
Tourism has a vital role to play in our economic export-led recovery. After a severe downturn in visitor demand between 2008 and 2010 from overseas, and cutbacks in spending on domestic leisure travel, the tide is already turning. There was modest growth of 7pc in overseas visitor arrivals and the indications for this year from most markets are positive, despite difficult trading conditions.
Why is tourism important? Well, conservatively, almost 200,000 jobs are dependent on it -- together with several thousand more downstream jobs in retail, distribution, entertainment and other services arising from the hospitality and travel sector. Tourism is the economic lifeblood of many towns and villages which have few, if any, alternative forms of employment and wealth creation.
Transport, Tourism and Sport Minister Leo Varadkar yesterday underlined the importance of tourism to the capital, which he said was worth €1.5bn to the city. So, thankfully, the Government recognises the role of tourism as an agent of economic growth and has shown practical support in a basket of measures to stimulate visitor demand.
These include the jobs initiative, the simplification of visa requirements, and, most importantly, assisting the restoration of our competitiveness by reducing VAT on most tourism components, which is now extended through 2013.
One of the characteristics of tourism is being able to quickly generate increased earnings and jobs. This has been amply borne out by the CSO data, which show 6,000 new jobs created in the industry last summer. Improved business performance in the sector is helping to deliver growth and contributing to Ireland's economic renewal.
Assuring Ireland's tourism growth requires a stable economic and fiscal environment, so that businesses can plan to invest for the future, together with a good international reputation and a competitively priced product delivering value for money. A Yes vote in the fiscal Stability Treaty Referendum on May 31 will help secure these conditions and see Irish tourism sustained.
The downside of rejection of the treaty is economic uncertainty, a damaged international image and withdrawal of a vital source of additional funding should Ireland require it. Each of these negatively impact on tourism's potential.
Over recent years we have experienced the effect of reputation damage in several of Ireland's top source markets. The best prospects in the short to medium-term for growth in travel to Ireland lie in mainland Europe, particularly Germany and France. The former is the world's largest outbound travel market and one in which Ireland has yet to fully realise its potential.
In short, we need Germans and other Europeans to be well disposed to a visit to our country -- the collapse of demand for holidays in Greece this year demonstrates the downside of negative perceptions in key markets.
Economic uncertainty is anathema to good business planning, particularly in tourism where investment is long term, and the need for upgrading of infrastructure and product renewal is constant.
'Boom to bust' cycles have to be avoided at all costs and the fiscal treaty provides at least the prospect of greater economic stability through improved fiscal discipline and access to the European Stability Fund. Access to capital at an affordable rate to ensure continued investment in public infrastructure and private sector products will be critical to ensuring that Ireland can continue to attract tourists in increasing numbers, thereby creating more jobs, generating wealth and boosting exchequer returns. Tourism earnings yield significant income to the State, as an estimated 40c from each euro spent by the overseas visitor eventually finds its way into the Government's coffers.
While rejection of the treaty would not cause the euro to collapse, it could lessen the chances of the single currency surviving. The No protagonists cite the benefits to tourism of Ireland leaving the euro -- suggesting cheaper holidays would create a surge in demand. There might be a short-term gain, but the reality is that the cost of many of the inputs would increase -- not least the cost of fuel for Irish carriers thereby pushing up fares to and from Ireland. A devalued currency would severely reduce demand for outbound travel resulting in reduced air and sea services to and from a more economically isolated island.
The current debate across Europe and the push for a policy shift towards combining more economic stimulus with austerity is one which Ireland is actively pursuing.
The prospects of some support from the European Investment Bank and the reallocation of EU structural funds are welcomed by the tourism industry. In the past, tourism has demonstrated its ability to quickly produce increased earnings, jobs and other economic benefits. The €5bn-plus annual tourism industry has the potential to grow, based on robust market research.
The multibillions invested by hundreds of businesses across the country -- and the near 200,000 people whose jobs depend on it -- will be best served by a Yes vote on May 31.
John Healy is chairman of the Irish Tourist Industry Confederation, and a director of Tourism Ireland