Mr. Shaun Quinn:

I thank the Chairman and members of the joint committee for inviting Fáilte Ireland to discuss the development of tourism. I am accompanied by my colleague, Mr. Paul Keeley, the director of business development at Fáilte Ireland, who will join me in engaging in the committee's deliberations this afternoon.

Members will be aware that 2016 is something of a record year for Irish tourism. By the end of the year, we will have recorded close to 9 million tourism visitors during 2016, which is an increase of 11% on last year and of almost 50% on the trough of 2010. All the key source markets are performing well with many recording double digit rates of growth, as Mr. Gibbons outlined. Our visitors appear to be very happy with their holiday experiences and over the past five years, our value for money ratings have been climbing to new highs. Employment in tourism is also increasing, arguably at a faster rate compared with many other sectors of the economy. This is, in large part, the result of the Government’s decision to maintain the applicable VAT rate at 9%. At a local level, many of our most remote communities have recorded their best tourism season in several years. Initiatives such as the Wild Atlantic Way have no doubt significantly bolstered their fortunes and those of many other regions.

Although welcome, success such as this can breed complacency at a time when the horizon for tourism is far from cloudless and calm. The headline statistics are eye-catching and can easily imply a sector on a growth trajectory and without challenge. The recent performance of tourism has been greatly fuelled by a benign trading environment, as Mr. Gibbons noted, which is characterised by favourable exchange rates, increased air access and adequate industry capacity to accommodate growth. This environment is now changing and becoming less certain. Whether Irish tourism can aspire to greater heights or even consolidate its current position will be very much down to strategies of its own making and, in particular, to how it responds to emerging issues at home and overseas.

At home, we are already experiencing difficulties in accommodating visitors in our more densely populated and most visited urban centres. The hotel accommodation base in these areas is clocking up high occupancy rates. Of particular concern is availability in Dublin, which is essentially at capacity for most of the year. With two of every three visitors expressing a desire to spend at least part of their holiday in Dublin and with supply constraints and value dipping, there are implications for how the Ireland destination may in time come to be perceived in terms of competitiveness. Our analysis, conducted by Fitzpatrick Associates, indicates a respectable pipeline of planned new hotel projects for Dublin. Unfortunately, much of this is scheduled for completion in two or three seasons from now. The way in which the tourism sector and local authorities collectively grapple with this acute shortage over the medium term will be one critical factor in determining how tourism across the country as opposed to only in Dublin will perform in the longer term. Regrettably, this challenge could be lessened by the potentially potent implications of Brexit.

Irish tourism's high dependency on a single market - Britain - has been well documented and was described very well by Mr. Gibbons. Prior to the economic downturn, every second visitor to this country travelled from Britain. In the intervening years, this reliance has been reduced to two in five visitors, which remains uncomfortably high in the context of Brexit.

Within Britain, Ireland is very much perceived as an extension of sorts of its domestic holiday market, competing with Scotland, the Lake District and Cornwall. The weakening of sterling against the euro dictates that the Republic is now also a much more expensive extension of this market in the minds of potential British visitors. We are seeing as much from our own recent snapshot of visitor attitudes, which indicates a decline in value for money perceptions among British visitors since the UK voted to leave to the European Union in the summer. The implications are, therefore, obvious. Within Ireland, Dublin is likely to be affected most given its relatively high exposure to the outbound city break market from Britain.

While Britain may pull out of Europe, Europe will not pull out of Ireland. Continental European markets offer the best prospects for a more sustainable growth model for the tourism sector over the medium term. Many businesses are making solid progress in that area. With the introduction of euro coinage in 2002, fewer than one quarter of Ireland’s visitors came from mainland Europe. This share has increased risen to 36%, equivalent to almost 3 million visitors. This represents a doubling of tourist traffic over the intervening period. Critically, these markets also tend to favour regions outside of Dublin which, unlike the capital, are by no means operating at full capacity for most of the season. These are also relatively high-yielding markets, which significantly outperform the British market in overall revenue terms.

Markets such as Germany and France are enormous travel markets with tremendous potential for Ireland, yet we still only have a modest share of them. Therein lies the challenge facing the tourism sector. The British market is obviously too big to ignore and every effort must be made to ensure that Ireland gets its unfair share, so to speak. Far-flung emerging markets in Asia-Pacific region also offer some opportunities to Ireland but not necessarily any time soon, given the time required to develop new markets. It follows, therefore, that a very deliberate and targeted strategy to rebalance the order books in favour of the relatively more lucrative continental European markets must be a major plank in the sector's response to current challenges. This will mean not only making more marketing investment or doing more of the same, but will also require Fáilte Ireland to increase investment in a number of areas.

They include, for example, building sales and marketing capability within businesses ready and willing to diversify and gain a foothold in mainland European markets; enhancing the international appeal and multi-lingual interpretation of visitor experiences and expanding trade distribution channels open to selling Ireland to their clients. It also means leveraging the potential of brands such as the Wild Atlantic Way which we know are already resonating well in Germany and France.

The recovery of the tourism industry following the economic downturn has been solid and steady. Most recently, growth rates have been well in excess of what would be labelled sustainable. However, much of the growth has been facilitated by external factors which can change quickly. The weakening of sterling is a case in point. As we head into more uncertain and potentially turbulent times, we must guard against complacency, so often prevalent in boom times, creeping into the sector. Growing pains within the accommodation sector at home and the prospect of either a hard or soft Brexit for tourism are wake-up calls to be heeded and acted on decisively.