Mr. Tim Fenn:

I thank the Chairman for inviting the Irish Hotels Federation to address the Joint Committee on Transport, Tourism and Sport. The federation is the national representative organisation of the hotel and guesthouse sector in Ireland. As a key stakeholder in tourism, we work with our industry partners to ensure there are the right conditions for tourism to grow and prosper, thereby contributing to recovery and job creation in the economy.

Having experienced a very difficult downturn, the tourism industry has seen significant recovery in recent years. It has been underpinned by a number of important Government policy initiatives such as the 9% tourism VAT rate which has made us more competitive when marketing Ireland internationally. As members will see from the graphic included in the presentation, Ireland’s VAT rate is in line with those in other European countries with which we compete. Currently, 14 countries have a VAT rate of 9% plus or minus 1%, while 21 countries have a VAT rate at or below 10%. Only five countries have a VAT rate above 13%. Other important measures introduced in recent years include the zero rate air travel tax and support for tourism initiatives such as the Wild Atlantic Way, Ireland’s Ancient East and Dublin - A Breath of Fresh Air which are proving to be an enormous success.

While strong tourism growth in recent years bodes well for the industry, continued growth cannot be taken for granted. This is an island destination and we face some unique challenges in terms of access and competitiveness. It is vital, therefore, that we have a tourism strategy in place to delivers sustainable, long-term growth and build on the significant economic benefits already delivered in recent years in every town and county. We are experiencing substantial additional demand throughout the country for skilled employees. There are tremendous opportunities to pursue a career in tourism, particularly for young people thinking about their future career choices. We are working closely with the Government, State agencies and education providers to highlight the career options available and develop sustainable training models for the industry. For example, we are developing new culinary apprenticeship and traineeship programmes that offer candidates opportunities for progression and professional development.

Our key policy objectives for the continued development of tourism include growing Ireland’s reputation and brand abroad, retaining perceived value for money satisfaction, targeting higher spending visitors, continuously improving tourism product quality and increasing sustainable tourism accommodation capacity. However, we face a number of significant challenges that need to be addressed, including cost competitiveness issues within the economy, the significant risks associated with Brexit and current insufficient levels of funding for tourism marketing and product development.

On the challenges posed by Brexit, the industry is very dependent on the economic environment of our major source markets and remains vulnerable to external economic shocks. As witnessed by the United Kingdom’s decision to leave the European Union, there can be no room for complacency. Brexit poses a particular challenge, given Ireland’s heavy reliance on holidaymakers and business travellers from the United Kingdom which accounts for over 40% of overseas visitors. Sterling has dropped by over 20% against the euro compared to this time last year and this has resulted in a worrying reduction in the spending power of visitors from Great Britain and Northern Ireland. While it is still too early to predict the full impact Brexit will have on the sector, many tourism businesses are already beginning to see a negative effect. The vast majority of our members are concerned about the implications of Brexit for their businesses. An added concern is the potential implications Brexit could have for the free movement of people between the United Kingdom and Ireland. Any disruption to the current arrangements would be detrimental to the tourism industry. It is essential that we avoid a hard border with Northern Ireland and that we maintain the common travel area and open airspace with the United Kingdom.

On investment in tourism marketing and product development, the international tourism industry in which we operate is exceptionally competitive and Ireland fights hard for every visitor and tourism euro earned. Tourism demand is constantly evolving and as conditions change, we must be ready to respond as an industry. This requires continuous investment in tourism marketing and product development to ensure our tourism offering keeps pace with global competition. Tourism has proved to be an excellent investment for the country, with every euro spent in destination marketing by the State resulting in a €34 visitor spend in the country. A pressing marketing challenge is the need to attract more visitors to the regions. Reduced marketing budgets have had a negative effect on regional tourism. The tourism industry continues to experience a three-tier recovery, with Dublin performing strongly, followed by other large urban areas and tourism hot spots. However, many rural tourism businesses continue to lag behind. This is further compounded by the disproportionate negative impact seasonality has on regional tourism. It is time to increase funding for the tourism agencies. Current low levels of investment cannot be sustained without putting our tourism brand at risk and limiting the capacity of the tourism industry to achieve sustainable growth. A substantial increase in marketing support is required to reduce our over-reliance on the UK market and safeguard future growth in tourism, particularly in the key European and North American markets. Further progress is needed before the industry reaches its full potential as a major engine for growth and job creation. Given the right environment, we believe the industry can continue to grow and create a further 40,000 jobs by 2021, in addition to the 50,000 already created since 2011. However, this requires continued investment and a renewed commitment to ensure tourism will remain at the heart of Ireland’s economic policy.

I thank the committee for giving us the opportunity to address it. We look forward to addressing matters members may wish to raise.