Mr. Michael Cawley:

I am honoured to have been asked by the Minister for Transport, Tourism and Sport to become chairman designate of the National Tourism Development Authority or, as it is better known, Fáilte Ireland. I thank the Chairman and committee members for their invitation to present to the Joint Committee on Transport and Communications.
I was born and reared in Cork city. My father was a Garda detective sergeant and my mother, a housewife. I am the youngest of five children and have two elder sisters and brothers. Having attended Coláiste Chríost Rí, I completed a B. Comm degree at University College Cork in 1975 and qualified as a chartered accountant in 1978, having worked with Coopers and Lybrand for three years. I lectured for one year at UCC before joining Frank Boland Limited, a motor distributor, as financial accountant in 1979. Subsequently, I worked as finance manager and sales and distribution manager with Kodak Ireland before joining Athlone Extrusions, a plastics manufacturer, as financial controller in 1986. I was promoted to managing director in 1989 and led a management buy-out in 1990. The company was subsequently successfully floated on the Irish Stock Exchange.
Having spent three years as finance director of the Gowan Group, one of Ireland’s largest private family-run companies, I joined Ryanair as chief financial officer in 1997. In this role I was centrally involved in the airline’s flotation on the Dublin and NASDAQ Stock Exchanges in 1997 and its subsequent listing on the London Stock Exchange in 1998. In 1998 I assumed additional responsibility for the commercial department and was promoted to the position of deputy chief executive and chief operating officer in 2002. In this role, as well as deputising for the chief executive, I had responsibility for all airport negotiations, route selection, pricing, yield management, scheduling, sales and marketing, Ryanair.comand ancillary sales. In addition, I played a key role in investor relations and strategic management. My role involved managing relationships with governments, both national and regional, tourist authorities and industry players such as hotel groups.
During my time in Ryanair the airline grew its business from 3 million passengers in 1997 flying on nine routes with nine aircraft to 81 million passengers in 2013 flyng on 1,600 routes with 309 aircraft. In those 16 years Ryanair sold over 600 million seats and grew to be Europe’s biggest airline and the worlds’ largest international carrier. I stepped down from a full-time executive role in Ryanair on 31 March this year but will remain as a non-executive board member.
I am also a non-executive director of Paddy Power plc and Kingspan plc, both publicly quoted companies, as well as Prepay Power, a privately owned company involved in the energy sector.
In considering the further development of the tourism industry the key themes I wish to highlight are growth – earnings and employment growth. Like all sectors of the economy, tourism has been adversely impacted on by the recent recession. However, I believe the sector is now turning a corner and moving from a phase of business survival into one of recovery and growth. Tourism is one of Ireland’s largest indigenous industries and has considerable potential to grow not just in Dublin but also in the regions. The majority of tourists come from overseas markets. Over 80% of international visitors to Ireland come from North America, Britain, Germany and France. Consequently, economic conditions, employment levels and consumer sentiment in these countries can greatly influence the fortunes of the tourism industry. We are fortunate that these three factors in these key markets are turning positive once again. Irish tourism looks set to continue the early signs of growth which emerged last year. It is important to point out, however, that some countries grew their tourism numbers even during the economic downturn. There is much we can do to help increase our share of the market, irrespective of the external environment. The extent to which Irish tourism captures this growth opportunity, with its undoubted earnings and jobs dividend, depends on how it responds to several challenges which I will outline.
Members of the committee will be aware that the tourism industry has an important role to play in Ireland’s economic recovery. Tourism generates significant export earnings and initial Central Statistics Office, CSO, estimates indicate that tourism and travel earnings from overseas trips to Ireland amounted to some €4.1 billion in 2013. Tourism also makes a significant contribution to employment and jobs growth. Last year, based on the CSO’s narrow measure of employment in accommodation and food services, employment in the sector increased by almost 15,000 to 138,000. Using a wider measure, including accommodation and food services, Fáilte Ireland estimates that the industry employs some 200,000 people. If the improved performance in 2013 can be built upon - early indications for 2014 are positive - we can be confident of again reaching the peak level of 7.7 million overseas visitors recorded in 2007 and, in time, our longer term target of 10 million visitors.
There are, however, key issues to be addressed. The first challenge facing Irish tourism is the continuing need to enhance competitiveness. During the Celtic tiger era price levels in the tourism sector rose to unsustainable levels. Our customers sought better value and other destinations improved their competitiveness. Ireland became known as a relatively expensive country to visit. In common with many sectors of the economy, the tourism sector has reduced costs in the past few years as business models were reappraised and the cost base re-engineered. This has had the effect of improving value for money, although it has taken some years for this improvement to be recognised. Fortunately, however, recent research confirms that Ireland’s value for money rating has improved significantly. This improved value for money position reflects several factors, including price reductions across the full range of tourism goods and services, service improvements that represent enhanced value for the consumer and the retention of the very important 9% VAT rate on tourism items, announced in last year’s budget. It is important to remember, however, that in common with all sectors of economic activity, the tourism sector competes with other countries and regions which are also seeking to improve their competitiveness and attractiveness to international tourists.
As an island destination, Ireland is wholly reliant on competitively priced access transport. A key challenge to tourism will be to grow our extensive network of air and sea access routes to facilitate travel from our key source markets. I am particularly pleased to acknowledge the progress made on providing improved air access in 2014. The abolition of the air travel tax has been a key element in reversing a previously downward trend. Additional routes have been added and the quality of access in carriers and destinations serviced has improved. The task is to enhance this position further. Undoubtedly, the reduction to zero of the air passenger tax has been critical in this regard, as would further measures such as reduced airport charges which would enhance the attractiveness of Ireland to new and existing carriers.
To succeed, the tourism industry will need to be crystal clear on what it is offering the international visitor. This is sometimes referred to as our tourism product offering. It is important that it meet the expectations of tourists whom we know are looking for both value and a unique and authentic Irish experience during their visit to the country.

The challenge is to ensure the experience matches their expectations. This is particularly important because the Irish tourism experience is probably somewhat more nuanced than in other destinations. Research tells us that many visitors to Ireland want to get involved in an authentic "experience" and that these experiences are mainly rooted in three principal tourism assets – our natural heritage, our built heritage and our cultural heritage. These are also assets that – when presented properly – can differentiate Irish tourism from competing destinations.

We also need to know exactly which consumers we should be targeting for growth. In that regard, I understand that Fáilte Ireland has been engaged in a very significant research programme over the past 18 months to understand better who these people are and what it is they want to do when in Ireland. Just like any other consumer-based business, it is vital that we understand what the consumer wants or we simply will not capture the growth we are targeting.

I believe that a further challenge facing Irish tourism is to determine how and where it should promote itself so as to achieve a stand-out position in the international marketplace. Tourism is a global industry characterised by a very noisy marketplace with many firms, tourism boards, channels and competing destinations. It is also characterised by the bombarding of consumers with a great deal of choice and information. Furthermore, we know that tourism consumers carry out a considerable amount of research prior to booking, most of it online. Tourism consumers are, therefore, very much in the "digital space" and they routinely use online and social media channels to access and share information. I understand there is now considerable evidence to suggest that this peer-exchanged information or user-generated content is now more influential in steering consumer buying behaviour than anything a governmental agency or official tourism board can say. The challenge, therefore, is clear. If consumer research and information exchange predominantly takes place in digital media, Irish tourism's message and communication must be largely positioned in that same digital media. Equally, if the credibility of official websites has peaked, Irish tourism businesses, and collectively the Irish tourism industry, need to respond to this challenge. Fáilte Ireland will, of course, maintain its own online presence, but the real challenge may be in assisting tourism enterprises to stand out in these noisy sales channels by positioning compelling and creative content in the digital domain.

I would like to comment briefly on the regional impact of tourism. The growth of tourism to 2007 and its more recent signs of recovery are well documented. In reality, I am aware that not all parts of the country have benefited to the same extent. Given the clear economic and social benefits of tourism, it should be a stated goal to achieve an improved distribution of tourism benefits across Ireland. Regional distribution must be linked back to my comments on growth at the outset. It can never be about attempting to engineer some forced reallocation of a fixed tourism pie. It must be about expanding the overall pie by encouraging and supporting more businesses in becoming involved in tourism, most particularly those which bring fresh insights, innovation and new ideas. In this regard, the role of regional airports and consequent direct air access to the regions from international markets are particularly important.

As an industry, tourism has one attribute which makes it relatively unique. It is sometimes referred to as "an industry of every parish". In other words, unlike pharmaceuticals or financial services, which are often tightly clustered in one particular region or city, tourism has the potential to take place in any part of the country. However, it cannot be forced into place by some official policy. It remains a matter for those local communities and those local businesses that want a slice of the tourism action to come up with a service or an experience that will prompt the individual consumer to choose to go and visit their part of the country. This is their challenge. This, of course, will be easier to do in a growing industry.

As Irish people, we are all justifiably proud of our parishes and our counties. Parish and county are core features of the Irish social fabric. This is a strength and it is also a reason why The Gathering worked so well last year. Community engagement and community activation, rather than any action of an official agency, were the real reasons that initiative succeeded. I have a strong sense that we need to be careful not to allow what is a strength in a local context to become a limitation in a global one. As I mentioned a moment ago, tourism is a global industry, and many Irish tourist destinations and indeed many Irish counties do not enjoy a high recognition factor among international consumers. So while local communities and tourism businesses must work hard at putting together their tourism service or experience, Fáilte Ireland can play a stronger role in bundling these experiences together so as to build saleable propositions of scale and significance which can be sold internationally and which need not be tagged with a county label. The success of the Wild Atlantic Way initiative is an example of this principle in action and shows that this is the way to go in the future.

As chairman designate of Fáilte Ireland, I am particularly concerned about ensuring value for money in respect of all State funding and delivering the optimum return for the government on its investment in Irish tourism. In doing so, I am aware that I will benefit from momentum based on earlier programmes of work. Over the past eight years Fáilte Ireland has led and facilitated a reduction in the number of tourism boards in the country from ten in 2006 to two today. It has significantly reduced its overhead costs through an aggressive programme of outsourcing and shared services and has managed to reduce its staff complement in line with the challenging targets set out in the Government's public sector reform programme. These achievements have secured significant savings for the Exchequer while at the same time delivering a more attractive tourism offering for the consumer.

Fáilte Ireland has also played a lead role in supporting prudent capital investment in tourism product and infrastructure. Over the past five years, a total of €120 million has been invested in tourism assets such as the Viking Quarter in Waterford, the Medieval Mile in Kilkenny, the Greenway in Mayo, King John's Castle in Limerick, Malahide Castle in Dublin and Killarney House in Kerry. These are just a few examples from almost 60 projects which are now driving incremental overseas visitor numbers and spending in locations across the country. I believe there is a strong case for further significant capital investment in our tourism product if we are to be serious about regaining and increasing our market share. However, such investment decisions must be based on a detailed analysis of the potential of candidate projects to attract additional visitors and, in turn, additional revenues from outside the country. It is my hope to work closely with the executive team at Fáilte Ireland in supporting the important areas of work outlined above, in overcoming the challenges involved and in realising the growth that all involved in Irish tourism now believe to be possible.