Mr. Shaun Quinn:

I thank the Chairman and members of the committee for this opportunity to contribute to this morning's deliberations. With the permission of the Chairman I will read a brief statement on the current performance of tourism in Ireland, highlighting the work we are undertaking on the development side.

When I met with the committee in July of last year, I was anxious to emphasise that Fáilte Ireland believed tourism was turning a corner after a number of very difficult seasons. After struggling to survive since the onset of the economic downturn, a growing number of tourism businesses were in recovery mode. I am happy to confirm that the industry is improving and that growth in the tourism sector has been generally quite robust in the past year. The mood in the industry is particularly upbeat just now.

There are a number of aspects to the recovery taking place. It is driven principally by a recovery in overseas markets, and my colleague Mr. Mark Henry will go into more detail on this. Initially this applied to north America and continental Europe, but more recently the British market has improved too. The domestic market, on which many businesses are perhaps too dependent, is flat, which not surprising given the ongoing economic adjustment.

The Gathering also provided a much-needed boost and a valuable platform from which to promote Ireland to potential holidaymakers, as well as to family and friends, last year. An independent economic assessment of The Gathering has now been completed and estimates the impact to be up to 250,000 additional visitors last year. This contributed between €160 million and €200 million to the economy. This is apart from the obvious social impact of the 5,000 or so gatherings organised by communities. Members may be aware that Fáilte Ireland has entered into a commitment with local authorities and IPB Insurance to provide a €1 million fund each year for three years to support local communities to build on the legacy of The Gathering by continuing to organise key events linking with the diaspora. This was indicated by the Chairman at the outset.

Towards the end of last year some commentators actually believed that the success of The Gathering may have pulled business from 2014 back into 2013. This does not appear to have been the case, judging by the strong performance of most markets to date. Looking into the near distance, tourism industry sentiment is buoyant and upbeat and many operators are anticipating further growth this year. There are a number of factors contributing to this outlook. It is believed that domestic and key global economies are slowly improving, with a sense that visitors are holidaying more and spending more.

Three or four times a year we carry out a survey of members of the tourism industry to gauge sentiment and views on the health of the sector. The latest survey is now available and will be published shortly. I will share a few of the more relevant insights with the committee.

According to our barometer, three quarters of tourism enterprises anticipate an increase in business in the months ahead. To put that in perspective, in 2008 only 14% of respondents were in that position. This level of optimism is the highest we have seen since the downturn. Every sector surveyed is upbeat, but positive sentiment is strongest within the hotel sector. This optimism is based on trading conditions so far this year. For example, the majority of accommodation operators report an increase in visitors compared to the same period last year. Again, hotels remain the strongest sector. In addition to visitor numbers, revenue is improving and this is obviously helping the bottom line, with about half of the respondents reporting an increase in profitability so far this year.

The survey makes other key points. For example, there has been a decent start to the season for the self-catering sector, and hostels are performing well. A large increase in business is expected for visitor attractions, and North America is proving strong for golf tourism. There has been a reasonable improvement in the restaurant trade. Concerns remain around costs, specifically fuel and energy. However, positive factors include the retention of the 9% VAT rate, the Wild Atlantic Way, the legacy of The Gathering and the level of air access capacity. The benefit of the growth in tourism is spreading around the country. Performance in Dublin is strongest, as has been the case in the past, but this year most regions are experiencing a much better performance.

This growth in tourism is also reflected in employment numbers. According to the Central Statistics Office, CSO, last year there was a 14% increase in employment in the tourism industry in the areas of accommodation and food services. This represents an extra 17,000 jobs since 2012. These figures are based on a narrow definition of the tourism industry. Fáilte Ireland believes some 200,000 people are employed in tourism, and current trends suggest this could grow by 68,000 this year.

In short, revenue and employment numbers are going up, but the key aspect is how we maintain the momentum.

Regarding the forces driving competitiveness, there is little doubt but that our ability to recover market share at a faster rate than initially expected comes down not only to improving market conditions but also to our improving competitive position. Our value for money rating as a tourist destination has continued to move upwards for the visitors who come here and, thankfully, that message is beginning to percolate through in our overseas markets to those who have yet to come here. We seem to be shaking off the costly tag we acquired during the Celtic tiger era. That is due to a number of factors: first, the sacrifices made by many in the industry in getting costs down and, second, the Government’s decision to lower the VAT rate to 9%, which has been crucial to strengthening the competitiveness of Irish tourism.

Pressure points remain, including rising utility costs, local authority rates and debt repayments. As the market recovers and more people come, there will be a tendency for prices to rise because it is a free market, but in that context, we must remain vigilant on the issue of value for money relative to our competitors and make sure we do not repeat the failings of the past if we are to sustain the recovery.

The second issue facing the industry is having a deeper understanding of the changing consumer and specifically whom we are targeting. It is a dynamic marketplace which is continually responding to change. In the past two years, in collaboration with our colleagues in Tourism Ireland, we have adopted a more strategic approach to identifying and defining customers overseas who are our best prospects, the experiences they are looking for and how we can provide them. It is a new way of targeting growth, based on a new segmentation model, and it very much guides everything we do. The Wild Atlantic Way is, in part, a response to that approach. The emphasis of these new models is on customer motivations, rather than demographics; therefore, rather than presuming everybody of a certain age or social class wants the same thing from a holiday, the new model looks at the triggers. The approach targets the groups within our overseas markets with the greatest potential to come here. This research-based targeting of customers requires a rigorous disciplined approach and needs to be continued even as the market recovers. In the past year we have been very active with Tourism Ireland in sharing these insights with our industry partners.

An added challenge for the industry because this is a very small destination on the international stage is achieving stand-out in a very noisy and cluttered market. We believe this is best achieved with projects of scale and singularity such as the Wild Atlantic Way which can capture the imagination of targeted customers and resonate with their motivations. That is something local authorities along the west coast are supporting as we roll out the Wild Atlantic Way concept. With their help, we have managed to complete our signage programme for what is now the longest themed touring route in the world. Next, we will put in place a large number of discovery points and associated touring facilities with a specific grant allocation announced in last year’s budget. Businesses and communities along the west coast are very excited by this development because it gives them a mechanism to reposition the west in a way that will resonate with our target customers. This is a priority in marketing for our Tourism Ireland colleagues, to which Mr. Henry will probably refer.

In a similar fashion we are taking a fresh look at Dublin. Despite the fact that it has been performing well in the corporate sector, we need to look at how it is branded and marketed because many tourists who come to Ireland spend a night or two in Dublin, either at the beginning or the end of their holiday. It is a very important part of the product. We are developing a network of discovery trails throughout the city and working with the local authorities in the county of Dublin and the local industry to open up the experience to what we call a city plus experience.

As with the Wild Atlantic Way, we are also scoping a new proposition for the east and south of the country based on the rich array of cultural and heritage assets from the north east, the midlands, the south east to Cork. This comes on foot of significant investments we have made in areas such as Kilkenny, Waterford and Cork city, to name but a few.

We have played a leading role in driving significant investment in tourism in the past five years. Approximately €120 million in capital has been invested in almost 60 major projects. This year we will be investing approximately €8 million in capital on the Wild Atlantic Way. As things improve in the sector, it might be tempting to ease up on such investment, but our competitors are very aggressive and we must continue to invest wisely to ensure our tourism product is in a position to compete and we can earn our fair share of the pie. On the Internet and in the online era, we are living in a rapidly changing world. Travel and tourism has been one of the areas most affected by this new technology. Developments in digital marketing and selling continue to transform the manner in which consumers consider and choose a holiday. Not surprisingly, our competitors in other destinations continue to invest. This is where Ireland must invest too and an area in which we are not very well positioned in terms of our entire offering is digital channels. This is not about tourist boards but about individual tourism businesses and how they leverage the power of the Internet and social media.

Fáilte Ireland shares the optimism pervading the tourism industry, but we are not complacent. We are focusing on areas in which we believe visitor numbers will grow further and confident that if the sector continues to maintain the current balance of quality and value it provides, we can sustain further growth. Tourism can provide economic growth, revenue and jobs with a regional spread, unlike most other sectors. It provides employment in areas in which foreign direct investment cannot. As many members will know from their constituencies, what is good for tourism is good for Ireland. We in Fáilte Ireland will be doing our best to ensure things get even better.