Oireachtas Joint and Select Committees
Wednesday, 21 October 2020
Joint Committee on Media, Tourism, Arts, Culture, Sport and the Gaeltacht
Tourism Sector: Discussion
Apologies have been received from Senator Malcolm Byrne and Deputy Brendan Griffin, who might join us during the meeting. I remind members and witnesses to turn off their mobile phones or to switch them to flight mode as they interfere with the sound system and make it difficult for the parliamentary reporters to report the meeting. Television and web streaming will also be adversely affected.
We have with us representatives from the Tourism Recovery Taskforce to discuss the impact of Covid-19 on the tourism sector, which we know is vast and startling throughout the country, particularly as we move to level 5 tonight. On behalf of the committee, I welcome Ms Ruth Andrews, chair of the Tourism Recovery Taskforce, whose report I have had the opportunity to read. I also welcome two other representatives of the tourism sector, Mr. Seán Connick, managing director of the Dunbrody Famine Ship and Kennedy Homestead in New Ross, County Wexford; and Mr. Paul Gallagher, general manager of Buswells Hotel. Those of us who are rural Deputies will often have stayed in Buswells and are very glad of the good accommodation it provides.
Two of our witnesses are attending remotely. The format of the meeting is that I will invite Ms Andrews to make a brief opening statement which will be followed by a question and answer session with members of the committee. Ms Andrews will note that the committee may publish the opening statement on its website following the meeting.
It is important to note there is uncertainty as to whether parliamentary privilege will apply to witnesses giving evidence from a location outside the parliamentary precincts of Leinster House. Please note that the constitutional protections afforded to witnesses presenting in person in Leinster House may not be extended to those presenting remotely. No clear guidance can be given at this point as to whether or not absolute privilege is extended to evidence given on matters of a statutory nature. Therefore, if witnesses are directed by the Chair to cease giving evidence in regard to a particular matter, they must respect that direction. I am sure that will not affect our witnesses too much today. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
I invite Ms Andrews to make her opening statement.
Ms Ruth Andrews:
I thank the Chairman for the opportunity to address the committee today. As chair of the Tourism Recovery Taskforce, I am pleased to provide a brief overview of the tourism recovery plan and to discuss the wider impact that Covid is having on the tourism industry.
Tourism is the most important indigenous labour-intensive sector in Ireland and generates very substantial export earnings and tax revenues. It is woven into the fabric of Irish culture and social life and is of critical importance to regional economies in particular. As tourism is so integrated into the economy and so diverse and overwhelmingly made up of SMEs, it has suffered from a lack of visibility and recognition as an internationally traded service.
In addition, tourism plays an important role in promoting Ireland's image abroad, generating a positive impression of Irish people, landscape and culture on visitors which can influence other aspects of our relationship with the world such as investment decisions or educational choices.
Covid-19 has created a perfect storm for tourism. A trading environment requiring social distancing and limited gatherings, together with travel restrictions that have meant overseas tourism has virtually disappeared, is threatening the survival of a large part of the tourism ecosystem in Ireland. Tourism provided €9 billion to the Irish economy in 2019 and supported 260,000 jobs. This year's figure is likely to be less than €3 billion and 180,000 of those jobs are either already lost or very vulnerable. As in all countries, tourism faces an existential crisis and the impact of Covid-19 on our industry is likely to continue well into 2021. The situation in Ireland is exacerbated by the fact that we depend on overseas tourism for 75% of our revenue.
As a consequence of the initial lockdown from mid-March the tourism industry requested the establishment of the tourism recovery taskforce, TRT. A tripartite structure was recommended, including industry, tourism agencies and departmental participation, to ensure the TRT would have a collaborative approach to mitigating the impact on the sector and developing a three-year recovery plan for the tourism industry. In late May the then Minister for Transport, Tourism and Sport, Shane Ross, and the then Minister of State, Deputy Brendan Griffin, established the TRT as a private-public body comprising 14 members, including industry and external business expertise, tourism agencies and representatives of the Department.
The tourism recovery plan was submitted to the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, Deputy Catherine Martin, on 30 September. It makes 33 recommendations for the survival and recovery phases. Prior to submitting the recovery plan, the task force provided several other inputs to keep the Minister apprised of its deliberations. These included an initial statement made just in advance of businesses reopening in mid-June; an initial report in advance of the Government's July jobs stimulus which highlighted the key recommendations for business survival at that time; and a chairperson's note to the Minister on 21 September, in advance of the full report to her, which outlined pre-budget recommendations for the survival of the industry.
The TRT consulted widely with industry as part of a consultation phase in its first month. That resulted in 813 submissions. Further consultation was also undertaken with wider Government and external expertise. This led to the establishment of eight work streams, led primarily by TRT members and including external participants and industry experts. Each work stream considered a specific area of importance to the survival and recovery of the sector with a view to informing the final plan.
The plan makes recommendations to help to ensure the survival of tourism businesses and jobs and to help the sector to stabilise and recover in the years to come. It focuses on providing business supports, enhancing sustainable employment, re-establishing international access, strengthening marketing investment, promoting competitiveness, increasing investment in the tourism product, building a sustainable recovery and implementation by a recovery oversight group. Immediate and long-term measures in each of these critical areas will support the retention and recovery of businesses, jobs and livelihoods. The TRT strongly believes that with the right investment and support, particularly in the survival phase, tourism can retain capacity, skills and strategic assets that will strengthen the pace of recovery when restrictions are eased to enable international tourism.
Some 12 survival recommendations were made, including business continuity grant aids and additional operational supports for enterprises; adjustment of the employee wage subsidy scheme; professional development supports for workers in the sector; liquidity measures to support vulnerable but very viable businesses; facilitating the resumption of inbound international tourism; increasing competitiveness through a VAT reduction and actions to lower the cost and increase the supply of insurance; and increased domestic and overseas marketing expenditure.
As an industry practitioner and chair of the TRT, I welcome the measures announced in budget 2021 for the survival of the tourism industry. They will support the industry in the short term. It is important that the industry is recognised as being hardest hit by Covid-19 and that investment in the sector now and through the stabilisation phase ensures the pace of recovery will be strengthened when restrictions can be eased. The implementation of a tourism recovery plan oversight group will be an important next step. The recent establishment of the tourism and hospitality forum by the Tánaiste and the Minister is another very welcome initiative.
I fully understand that recent developments mean the time is not yet right to reopen Ireland for international tourism. Nevertheless, I cannot stress enough how important it will be for the recovery of the sector to find a way to get overseas tourists back into Ireland. We must do so in a safe manner of course, and the EU's recent adoption of the traffic light system is an important first step in this regard. It is now vital that we fully explore the appropriate testing regime for implementation so that the current period of quarantine may be concluded.
Tourism has a proven track record in supporting economic recovery, as evidenced by the more than 65,000 jobs created post the 2010 economic crash. The industry stands ready to play its part again and secure a sustainable recovery for its long-term future. Even in these incredibly difficult times, I and my colleagues on the TRT and in the wider tourism industry remain confident that the Irish tourism industry can recover and develop as a world leader in sustainable tourism practices. The prize is huge. The industry can return to providing more than 250,000 jobs, particularly in Ireland's regions, and generating more than €9 billion for the economy.
Mr. Seán Connick:
I am delighted to get an opportunity to speak to some new faces and some that are familiar from my time in politics. I have moved into a different sector. Today I am not just representing my own attractions - the Dunbrody Famine Ship and Irish Emigrant Experience and the Kennedy Homestead - as I am also speaking as the chair of the Association of Visitor Experiences and Attractions, AVEA. To echo what Ms Andrews has already outlined, the impact of Covid-19 on the sector has been fairly catastrophic. Some 75% of our business is overseas business. The pandemic has had a huge impact on us in the form of loss of turnover and business. Many of our attractions are supported by retail components and restaurants. All of those add-on opportunities for turnover have also been badly impacted.
We are very thankful for some of the measures introduced in the recent budget, particularly the VAT reduction. Fáilte Ireland has been very supportive, for example by working very hard with the industry and staying in contact with us as stakeholders in recent months. It has provided us with various supports, including finance. We welcome all of the agency's interventions and contributions. All of these small grants, and the various grants offered through local authorities, are hugely important to the survival of our businesses. We are currently in survival mode. We hope to move to a phase of establishing a more sustainable footing and then prepare for recovery. We are hopeful that next year will see continuing investment through Fáilte Ireland, the rural regeneration and development fund and education and training for people interested in coming into our sector. We are also mindful of the importance of a strong marketing campaign to support the domestic market, on which we will be very reliant throughout 2021. A marketing programme must also keep Ireland to the forefront of international visitors' minds so that when we recover, hopefully with the return of travel in 2022, Ireland will be at the top of their lists of destinations.
That is all I wish to contribute at the moment. I would be delighted to take any questions from the floor. I thank the committee for the opportunity to speak.
I thank Mr. Connick for a very valuable contribution. I am sure the members will have lots of questions when we get to that point. I will turn to Mr. Gallagher. I thank him for being with us in person. As I said, many of us are familiar with his premises, Buswells. Would he like to say a few words?
Mr. Paul Gallagher:
I thank all the members for giving us their time. Ms Andrews and Mr. Connick have covered many of the areas we wanted to cover. Everybody can tell that we are now in a different world altogether. There is no footfall in Dublin and around the country all the hotels and the whole tourism sector are now in lockdown. We are in a very precarious place now in the business cycle. Many businesses will find it very difficult to survive. Solvency will prove to be an enormous issue as we come to the end of the year. As companies have to complete their audit accounts in the new year, the undertaking they will have to find in order to continue to trade will be extraordinarily difficult because hotels and much of the rest of the sector are unable to take on new debt based on their trading performance. It is, as Ms Andrews said, a perfect storm. I am happy to take any questions.
I thank Ms Andrews and her association for the work they have done in recent months. I am involved in the tourism sector. I do not work in it, but I am chairman of Longford Tourism and am involved in work with Fáilte Ireland, the Hidden Heartlands brand name and efforts to promote Longford as a destination.
I have read the TRT's report. It lists a number of proposals. I have just a couple of short questions. First, is Ms Andrews satisfied with the Government response? Should we now look at extending the stay-and-spend scheme beyond its current finish date of 30 April in order that people might be able to book ahead for next year? Ms Andrews stated that the oversight committee will be an important next step. That should be in place or Ms Andrews's association should be kept in place to oversee that these proposals are brought forward.
For the witnesses' information, the meeting will take the form of a question-and-answer session. Each member will ask a question and whoever feels in a position to answer it will do so directly afterwards. We will try to get around the whole room. I remind members that we have a little over 40 minutes left. I want to make sure that every member who has indicated - and every member has - gets in, so I ask members to be mindful of that with their questions.
Ms Ruth Andrews:
The stay-and-spend scheme, which, in effect, is unfortunately redundant now, given the level 5 restrictions that have come into place, was a positive move by the Government to assist the industry, particularly in the domestic arena. It will be important that we revisit the scheme when the time is right and that we use it to support the industry when we get back to reopening across the country and in all the key tourism regions.
As for the Senator's area, we were delighted to have Martin Dalby from Center Parcs as part of the TRT. He played an integral part and really understands how important tourism is to us. Particularly in the immediate survival phase and as we look to stabilisation, domestic tourism will be hugely important to us. There is a real opportunity there because a great deal of money is spent by Irish people travelling overseas every year. Our opportunity is, not just in the short term but also in the longer term, to get people to go out, encourage them to take more domestic holidays and get some of that spend back into our own economy and keep it there in order that people can see what terrific value and wonderful hospitality are here on their own doorsteps.
I welcome and thank our guests. I thank the manager of Buswells for always being kind to us. Mr. Connick thanked Fáilte Ireland. In what way has it been helpful? How is that relationship percolating down to the individual projects on the ground? As for banking, microfinance and the loan schemes the Houses have passed, how are they working out? Are the witnesses finding them difficult? I know what the manager of Buswells said about taking on new finance. That is a pressure for everyone. Does the tourism and hospitality sector feel it is being supported by the banks? Do the witnesses think the banks will stick with them into 2021 and beyond?
Mr. Seán Connick:
I thank the Deputy for his questions. From early April, Fáilte Ireland has engaged with the sector and set up online training, online portals, support through HR and various other support mechanisms that it has worked with, along with introducing some funding streams. Paul Kelly and his team have been very active in trying to support the sector. Obviously, there are huge constraints on what can be achieved because of the scale of what has happened to the sector but, overall, we have benefited from mentoring and financial support and continue to benefit from stakeholder engagement with Fáilte Ireland fortnightly, which is really important. We hope Fáilte Ireland, under the new funding schemes it got from the budget, will be further able to assist the attraction sector over the year ahead.
As for the banks, Mr. Gallagher alluded to the fact that there is a difficulty for us all in that we are closed. The visitor attraction sector and experiences sector close at level 3, so whether it is level 3, 4 or 5, there is little or no difference as far as the impact on us is concerned because we shut down at level 3. We are all incurring costs just to be closed. The amount varies but is anything from €10,000 up to €20,000 per month, depending on the overheads such as insurance, light, heat and other general overheads and costs we have just keeping the business ticking over in the absence of any income. I have referred to this as post-Covid debt. This debt is building up. It has been building up across 2020. It will continue to build up across 2021. To be fair, while the banks have been supportive to date, now that we are looking at a scenario in which we will probably be moved to specialist units, I am sure the sector will need the support of the Government, possibly through Fáilte Ireland, to come up with funding schemes or a scenario in which we have the opportunity to avail of loans at very low interest rates - if it is debt we have to take on - or grant schemes for some of the iconic attractions and some of the State's very valuable assets that we happen to manage and run. The current operation of the SBCI loan scheme and microfinance is really not suited to our sector in that the terms are too short, the rates are too high and, again, there is a reluctance on our attractions to take on this added burden of debt when the season ahead for 2021 is so unpredictable.
I thank Ms Andrews, Mr. Connick and Mr. Gallagher. I cannot even begin to imagine the stress that business owners - hoteliers, restaurateurs or anyone else involved in the tourism industry - are going through. It must be an incredibly stressful time, but I hope we will see a bright future. I come from west Cork, an area that is heavily reliant on tourism. There are a lot of attractions there. There was a phenomenon this year that I thought was absolutely incredible. In July, August and even into September, people were starting to discover Ireland, many of them, I think, for the very first time. They were flocking to the coast and to our beaches and were posting their experiences everywhere. They were on Instagram and Facebook. It was really eye-opening. Is there anything in this for our strategy going forward? Mention has been made of marketing strategy. Is there an opportunity here to rethink the way we do things? We always talk about how much money is spent here by international tourists. I think that was flipped on its head this year. Is there something we can learn from that for our strategy going forward? A few hotels and tourism providers experienced 10% or 15% boosts in July, August and September, which was completely unthinkable back in March. I would like someone to talk about that.
As for investment in sectors in the context of section 7 of the report, increased investment, and this relates to what I was just talking about, marine tourism really experienced a boost this year.
I want to declare an interest there as I am a former whale watching guide down in Courtmacsherry. As it is so safe, being out in the open in the fresh air, it saw a huge boost. I must mention Fungi as well at this stage - he is down in Courtmacsherry. The wildlife in the north Atlantic, which includes fin whales, humpback whales, minke whales, common dolphins and bottlenose dolphins like Fungi, is incredible. The big issue is that we do not have the marine infrastructure to support it, such as pontoons and piers. I would love to get the witnesses' opinion on that. Is there an opportunity here to invest in marine tourism? Finally, on food and restaurants, we are very proud of our food product here in Ireland. It is said that restaurants are struggling now but restaurants were struggling prior to the pandemic. I wonder is there some type of holistic solution we can incorporate. In our tourism and regional towns we see restaurants opening up then closing down and there is a turnover because the margins are just too tight and they are unsustainable. I would like a comment on that as well from whoever feels comfortable taking it.
Ms Ruth Andrews:
If I can jump in there before Mr. Gallagher does, I am delighted to tell Deputy O'Sullivan that I was one of those people who was actually down in west County Cork discovering its delights for two weeks during the summer. While I had to work down there it really was the first time I had spent so much time exploring how fabulous the whole area around Crosshaven was. I will not go into it but I could tell the committee about my holidays forever. It certainly has made me think about spending more time in that part of the world and indeed up and down the Wild Atlantic Way. Domestic opportunities, in terms of investing more in promoting what we have here at home, are going to be critically important and it is one of the recommendations we made in the task force's report. There is definitely great opportunity to improve main holiday stays in particular. We need to look at the product in that respect to maybe enable certain products to pivot a bit more towards family vacations etc. In terms of domestic holidays, we will always have that opportunity. Fáilte Ireland does a terrific job year-on-year and had a fantastic new campaign, before Covid hit, to promote tourism and it set targets about growing domestic tourism. The one thing we need to remember is that 75% of tourism in Ireland is international and while we can always look to improve the revenue we make and the number of domestic holidays taken, unfortunately it is never going take over from the revenue and the export income we get from tourism which globally is about international visitations.
On marine tourism the Deputy is absolutely right. People need to experience it the way we did and to look at what the likes of Crosshaven has and to think of what it could be if we were to invest further in marine tourism. There are huge opportunities there and ones we should not miss. Fungi is a case in point. When one looks at what one dolphin has done for one area and even the talk around that which, by the way, went well beyond our own talk in the last week about missing Fungi; it hit the airwaves over in Canada, the United States and became a talking point everywhere. It just goes to show the natural marine wildlife that we have and as long as we are careful and we manage it in a very sustainable way, which is very important as well, there is a real opportunity around that.
Food is a critically important part of tourism. It is almost an international travel currency these days. Again, through Fáilte Ireland and Tourism Ireland, we had invested a considerable amount of time and investment in creating a whole food festival for the autumn period which we started last year. Unfortunately we were not able to continue that this year but it has not gone off the radar. Food is critical as part of the experience of tourism generally so it is something we need to be very mindful of. Sustaining that kind of food to fork and that whole quality of the food we offer is important. It is interesting that the research overseas has often shown us that, for some reason, people do not expect to get good food when they come to Ireland. However, when they have visited, the experience they have had is second to none and they are very clear about that in all of the research we do so we do need to dial it up and there is an awful lot more opportunity in that. We have covered that in the recovery plan as well so it is definitely an are we can look to improve upon. I will go back to my colleague Mr. Gallagher.
Not to hog it but on 75% of our tourism being international, that is something we should look at changing in light of sustainability and also because nobody knows how long this virus is going to be with us. We should not be defeatist on the 75%, we should perhaps flip it a bit. I thank the witnesses for their responses.
I welcome the witnesses and thank them for their time. I will be specific. On the 33 recommendations made by the task force, what key items are remaining following the budget announcement recently? Also, how is the task force going to monitor the implementation of the report and what is the detail around the oversight? Who is going to be responsible for its implementation? That is a key area of focus. We are great at publishing these reports but the implementation is key. In my own county, Mayo, there was the establishment of a number of tourism organisations including North Mayo Tourism, Achill Tourism, Westport Tourism and the brand from the local authorities is mayo.ie. Understanding the trickle-down effect of funding from Fáilte Ireland or Tourism Ireland is key, so that each of these organisations is supported. I am really anxious to get that detail and try to identify when these organisations can tap into that. It is good to hear that there are mentoring supports in place, that they are being supported fortnightly by the different sectors and the different bodies but just to add to what Deputy Christopher O'Sullivan said, the strengthening of market investment under domestic tourism product is hugely important and it is good to see that we have moved from 10 million last year to 30 million this year. Staycations were a massive thing and I hope that is improved on into the future as part of the tourism strategy plan.
Mr. Paul Gallagher:
I will take that. Deputy Dillon is right. Reports are wonderful and printers love printing them and a lot of people put a lot of time and effort into making sure that they are great. Howeve,r until we have an oversight or an implementation group established to oversee the delivery of the recommendations, that will be the missing piece in the jigsaw. I know that Ms Andrews, as chair of the Tourism Recovery Task Force, has that as one of the recommendations, in at the very end. It is absolutely crystal clear to us that unless we make it live it is only a document and implementation of those recommendations is testament to a living document.
The Deputy raised a number of questions about what is left to do. A significant amount of the recommendations are not fulfilled. We never expected it to be done in one clean sweep. Obviously with the pressures facing the industry the budgetary measures of 7 October were absolutely critical to the industry but they are only part of what we need to be delivered. The industry itself has a part to play in delivering some of these recommendations but there is a lot in and around the activation for the overseas tourist markets to ensure we pump-prime our activity there for when we are ready to receive international visitors, when we have a testing regime that is robust, that people feel they can travel in safety. There is also a call there for further supports for Fáilte Ireland, about product investment on the ground. There will be a substantial amount required to assist with the training of the workforce. We have shed probably about 140,000 employees since the start of Covid.
We will not be able to find all those skills again in the marketplace so we will have to do a significant amount of training in order to deliver on the product that we offer. We offer a form of entertainment. No matter how one looks at tourism, we entertain people so that they have a great time here in Ireland at every level - financial, pleasure delivery and experiential. They are the key things that are yet to be done, although I could name more.
I direct my question to Ruth Andrews. I come from a Border area, Dundalk, which realises the importance of the tourist industry. Ms Andrews's opening statement is very comprehensive and she held nothing back. She referred to the last recession in 2010 and what a good job tourism did in getting the economy back and running and creating 65,000 jobs. Tourism is haemorrhaging now and is in a very bad position. In the past nine months more than 180,000 jobs have been lost and the economy has lost nearly €6 billion. I am happy that the tourism recovery team is being established, that is very welcome, and it is good that it has 14 members from different areas. However, are the right people getting the funds? Is it going to the grassroots people and SMEs? When I travel around the country and go to bed and breakfast accommodations, they are waiting for money from Fáilte Ireland and so on.
Ms Andrews's opening statement used the word "short-term" which I found alarming. She said "the measures announced in Budget 2021 for the survival of the tourism industry are very welcome and will support the industry in the short-term". What more is needed? The next six weeks of level 5 restrictions will be very important. What plans are in place for those six weeks and then for the three, six or nine months? She used great words like recovery, security and survival. All the right things are there but it is very important that people on the ground see the work being done. Many of them, the SMEs, are very unhappy because they do not seem to be getting the all money that is promised. Is the money being distributed fairly? Is everyone getting a fair crack of the whip? Some 75% of tourism here is overseas visitors. Are we doing enough to get business here? Is everything being done that can be done?
Ms Ruth Andrews:
The Deputy is correct, tourism is predominantly 20,000 SMEs. Every effort is being made to filter the supports we need to get to as many of those as possible. We have received Government funding and support in the budget. This morning Mr. Connick and I took part in the national economic plan discussion. Part of the development of the task force's report relates to survival. When we started our work at the end of May and early June, we might not have expected the survival phase to last as long as we now recognise it must. It is important to recognise that. Horizontal supports are available across the economy. Specific supports are available for tourism and there are also broader supports available through the local enterprise offices etc. Mr. Connick spoke of them in his opening remarks.
We want to ensure that the plan is implemented. The Minister, in accepting this report and taking it to Government, recognised that this an important next step and I can assure the committee it is something that she intends to follow through on very quickly. She does see the report as a living document and she understands that the next six months will be critical to implementing some of the survival measures. A lot of work has been done and there is still more to do.
On getting the supports to as many businesses as possible, every assistance is being given particularly through the work of Fáile Ireland. I want to recognise Paul Kelly, its chief executive, who is a member of the TRT whose participation is most valuable. It is always looking and talking to the industry to see how it can support every sector. A sector I work in that is probably not visible to many is the inbound tour operator sector. It brings 700,000 visitors to Ireland annually. They are high-spending visitors, spending an average of eight nights here. They consume every type of tourism product and even go beyond tourism product. They have lost 95% of their business this year. Without international access they have been unable to operate. That is a sector that requires support. The TRT has discussed supporting sectors which will be strategic assets to the recovery of tourism when we get to that stage. It is fully recognised that sectors within tourism need support because they are not able to access all the horizontal measures out there. They will be supported through what the budget has delivered but we need to find a way to ensure that domestic tourism grows and that it is spread across all parts of the island, not just the west coast. We have fabulous product in the Border counties, Ireland's Hidden Heartland and the Ancient East. We need to embed that and make sure that the domestic audience is fully aware of the terrific opportunity and great value in holidaying in Ireland.
This report is a three-year recovery plan. It is phased. We are aware that we need to do specific things now in the survival phase but we will also look to the Government and the national economic plan to support the recommendations that have been put forward. It will look towards ensuring that support continues so that we reach stabilisation and recovery comes, that tourism can recover really quickly. We have proven that in the past. There is an opportunity to keep businesses alive across the country so that when the recovery comes, we can strengthen it by the pace required.
I will stop Ms Andrews there. I must remind everyone that we must vacate the committee room by 4 p.m. There are 20 minutes left and five more members are offering to speak. I ask that the questions and answers be as concise and targeted as possible.
I acknowledge the witnesses and the horrendous year that their sectors has had. I thank them for being here. I thank Ms Andrews for her work as chair of the task force. I note the presence on the task force of a former boss of mine, Eoghan Corry, from my GAA journalism days.
Mr. Gallagher was very pessimistic, or maybe honest and frank when he touched on solvency. From his liaison with the Irish Hotels Federation and other industry partners, what is his sense going into Christmas and the new year of those who might not be in a position to trade in 2021? What is their status now?
A huge part of the report and a huge part of the testimony given today by Ms Andrews has been contingent on the international market being reactivated and the figure of 75% was quoted. I am also conscious that for people such as Mr. Gallagher or Mr. Connick it is not just about bookings, it is also about the spend. Previous tourism reports highlight the fact that the spend of international visitors is four times higher than that of domestic visitors. However, here we are in terms of a rock and a hard place because the report asks for a targeted reopening date to be communicated. Given that we do not know where we will be in six weeks' time, let alone the spring or summer of 2021, is this the ultimate in terms of the contingency plans, whereby the witnesses as professionals have to try to plug the hole between the domestic spend and the 75%? At what point can the domestic market try to rise beyond it?
Reference was made to a spend of €3 billion in this particular year. What is the potential to plug the gap between the €3 billion spend and the €9 billion spend accrued to the tourism market in a normal year? If the international tourism market is off the agenda for 2021, I am concerned because a huge part of the testimony today and a huge part of the report is contingent on it. I get totally that it is the model that sustains the industry but is there a contingency plan in terms of the growth capacity of a limited number of European visitors and the domestic market to plug that gap? I welcome Mr. Connick and I hope things are well in New Ross. I have enjoyed the Dunbrody experience on several occasions.
Mr. Paul Gallagher:
I thank the Deputy. With regard to my reference to insolvency, no business people will speak about becoming insolvent in public because their bank of recourse would become particularly nervous about their prospects. There is no doubt that businesses in Ireland are burning a significant amount of cash just trying to stay afloat. Mr. Connick mentioned earlier that a closed attraction is still burning money and a hotel that is closed is burning money. I see insolvency becoming a big issue, which is why the State needs to introduce measures by way of a guarantee at low interest rates for businesses to access, which are properly termed so they do not cause any other issues and do not require other lenders to be subordinate to that line of credit. One of the issues at present is that schemes available to businesses require other lenders to become subordinate and that just does not work.
I am very concerned about liquidity. As an example, next month the forecast of occupancy of Irish hotels is 4%. This means there will be 57,600 empty bedrooms every night throughout the State. It is a perishable good. If it is not sold today we cannot sell the same night tomorrow. It is foregone revenue. Likewise, attractions and empty restaurants are also perishable. Business owners are at their wits' end as to how they will sustain their businesses.
Level 5 might be level 3 on 1 December. As Mr. Connick mentioned earlier, levels 3, 4 and 5 are pretty much identical for hospitality. There is no real difference, quite honestly. There are some differences but not a significant number of differences. If we find ourselves at level 3 in December, it is a key month for much of the catering and restaurant trade to do well quickly, just as retail looks at these three or four weeks. We then have to wonder what will be the survival rate of businesses in the small and medium enterprise sector throughout the tourism family. We see it with airlines. In what state will our airline industry be in five or six months' time?
With regard to rebalancing domestic and overseas visitors, overseas visitors are not all tourists. Some of them are business people travelling for business reasons, such as for corporate meetings. They are significant and important to the Irish market. Throughout the country the regions require overseas visitors just as much as they require domestic visitors.
Domestic visitors have been great this year and we are grateful for them but there is a significant number of new deposits in Irish households. There is pent-up demand to spend money. The Deputy is right that we will have to find activations to open these wallets and get these people back out to all parts of Ireland to spend money and put money back into the local economy. The appetite is there from domestic residents of Ireland. We see it now. People are really pushing to buy Irish, buy local and buy in their towns and local shops. If people do not do this there will not be a shop in their local town, which will mean they will not have a local town. It is a very holistic thing. It is a full circle for all of us. All of our growth is organic and where it is not overseas we rely on each other. All aspects of the local economy are hugely important to all of us.
Ms Ruth Andrews:
To take up the point on bridging the gap between the international and the domestic, there are a number of recommendations to help drive the domestic market and they will require additional investment. As Mr. Gallagher said, it will be about encouraging people. Unfortunately with Covid, as we have seen only this week, with regard to the best laid plans in terms of dependency on the domestic market between now and Christmas, the rug has been pulled from under us for no good reason other than that public health needs to be protected. There will be pent-up demand and of this I have no doubt.
It is encouraging to see we have signed up to the EU traffic light system. It is also encouraging to know the Minister, Deputy Ryan, is looking at appropriate testing regimes to enable international travel. It is not just for the sake of the tourism economy, it is about business tourism also. It is about the economy as a whole. We are a small open economy and we need to get our borders open again. It will be critical that we get back to that. There is significant hope that by the end of the second quarter of next year we will see international travel start at some level to come back in a very safe way.
We will continue to look at the domestic market. We do this every year and it is important that people realise it. Domestic tourism is very important to us and it brings significant spend, particularly into the regions and particularly during the off-season. It has a huge value for us. We will continue through Fáilte Ireland to look at ways to activate and get more people holidaying in the domestic arena.
I want to touch on international travel. The report states it is vital that a testing regime be implemented given that 75% of our tourism is international and we depend on it. Heathrow Airport has a facility for testing on arrival. It is my understanding that other airports also provide this facility. The Government must give the go-ahead. Clearly this is with regard to when restrictions are eased and things stabilise. The witnesses have said they are hopeful this will be in the second quarter of next year. Call after call was made for robust airport testing by which we can all be assured. The entire summer has passed without this. We are now back at level 5 and realistically nothing will happen for the next six weeks. We are also looking at the Christmas period, when tens of thousands of Irish people along with visitors come home. How frustrating is it that an airport testing system has not been put in place as yet? When the restrictions lift on 1 December, regardless of what level we go to we will still have had tens of thousands of Irish people wanting to come home for Christmas. Robust testing would help alleviate the 14 day quarantine. It would also encourage other people to come to Ireland. People here would be comforted by robust testing on site and we could do away with the quarantine. In particular I am speaking about Irish people returning at Christmas.
Depending on the level, however, could we open up tourism in the new year?
Given the knock-on effects for hotels, restaurants, tourist spots, shops and the whole shooting gallery, how frustrating is it for the witnesses that this measure has not been implemented yet and there is still no definitive date? The Government might keep saying it is considering the matter, but the months are slipping by. We are close to the end of the year and there is still nothing definitive or even a commitment to or timeframe for same. What effects has this had on the sector?
Ms Ruth Andrews:
It is a cause of great frustration, but it is also something that the industry has to accept. We want tourists and visitors, including business people, who come to the country to feel welcome and safe. The industry has done a great deal of work on ensuring that we have the appropriate safety protocols in place. The guidelines have been issued and implemented across the industry with great gusto. As we build towards reopening international access, we will have the assurance that we have a product that is ready and able to welcome our visitors back.
The situation is frustrating because people do not make decisions about holidays two weeks before travelling. As such, the green list was never going to work for us, particularly in longer haul markets. However, Ireland has now committed to the EU traffic light system. From the get-go, we said that it was integral that we have alignment across Europe and that Ireland be a part of it so that the appropriate safety protocols and testing regimes could be put in place. Conversations between the Minister for Transport, Deputy Eamon Ryan, and the airports are ongoing to ensure that they are working towards an appropriate testing regime and that what we implement is satisfactory to the European countries from which we will welcome guests.
Without doubt, there is a great deal of frustration. Where securing business tourism is concerned, tour operators get clients who make decisions about where to go on their holidays six or eight months out. Currently, we cannot give people commitments because we cannot confirm that they will be able to get into the country. To be fair, that is not just an Irish problem. It is a global frustration. Examining the issue meaningfully now and working through it during this difficult period will bring us to the point of being able to welcome more international visitors as early as possible next year.
I thank Ms Andrews, Mr. Gallagher and my fellow Wexford man, Mr. Connick, for their comprehensive report. There is a danger of a vacuum occurring. How important will the transition from the tourism recovery task force, which I presume will conclude, to the recovery plan oversight group and the tourism and hospitality forum be? When does that need to happen? What is the best way of getting overseas tourism back? Is upskilling the digital media skills of the industry's staff important?
Ms Ruth Andrews:
The Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media, Deputy Catherine Martin, has committed to setting up the oversight group. Work on that is ongoing. The tourism recovery task group has wound up its work. Our job was to come up with a report, and its recommendations have been presented to the Minister. She has acknowledged that an oversight group is one of the most important recommendations and that she will implement it. I expect that to happen in the next two to three weeks.
The Deputy is right about digitalisation. It will be key, not just for now, but for the future. We were clear in the report about upskilling the industry's ability to access and use the digital environment more effectively. We have seen how important that has been for businesses in reopening and managing social distancing, for example, by being able to get people to book in advance. Digitalisation will play a significant part in keeping our tourism workforce connected across the regions so that people can upskill and access education through the digital environment. Digitalisation will be very important in delivering our marketing message as we move through the recovery plan.
I thank the witnesses for participating in this discussion. I wish to reflect briefly on the statement by Mr. Simon MacAllister, a valuation, modelling and economics partner in EY Ireland, that tourist behaviour "will undoubtedly be impacted in the long-term by this pandemic, for geopolitical, economic and [possibly] psychological reasons". I was taken by his mention of psychological reasons. Without going into doom and gloom, do the witnesses have thoughts on the matter? The psychological reasons will be a global issue in terms of confidence in travelling. We will face a major challenge in convincing people that it is safe to travel to Ireland or anywhere else. Even after there is a vaccine, we will have to face the issue of people not getting it and so on. Mr. MacAllister's point on the psychology of how to convince people that it was safe to travel was interesting.
Turning to the environmental impacts of travel, environmental issues are already here. They are not just coming down the line. This will have an impact on how people think about travel and tourism. What are the witnesses' thoughts on the potential smash of environmental and psychological concerns and how to make tourism work for us?
Ms Ruth Andrews:
It is a good question and I thank the Senator for it. Tourism Ireland, the body responsible for marketing Ireland internationally, has been doing extensive monthly research. In all of our key markets, we are tracking consumer sentiment towards travel and what kinds of travel and holiday experience consumers will want. We are seeing from the research that there is still a pent-up demand. People are just waiting for the opportunity to get back travelling. There is no doubt about that. We call it the dream phase, which has gone on for longer now than we would like. People have a confidence about getting back travelling. The vaccine will play a role in that confidence, as will the testing regime, the behaviour of our aviation sector and everything it does to make people aware of how it will ensure their travel experience will be as safe and secure as possible.
We will look to tourists who want a different experience. There will be a desire for more outdoor, great expanse tourism. The fantastic thing is that Ireland owns the colour green. People think of our green, clean environment. We can offer that to people. What we need to do is invest in products that enable people to access all of that and get out and enjoy our environment, but to do so in a way that marries a sustainable recovery with our environment, businesses and people.
The Senator referenced the psychology of tourists. As evidenced previously, once we have a vaccine and better treatments, younger people who feel that they are less impacted by this virus will be the first out of the chute. They will want to get back travelling again.
I wish the witnesses a good afternoon and thank them for participating. Mr. Gallagher did not have too far to travel. It is good to have him here. I apologise for being late for the start of the meeting. Wednesday is like musical chairs around the Oireachtas with committees and other sorts of engagement.
I will keep it brief. I have a few observations rather than questions and I am conscious that my colleague, Deputy Cannon, wants to get in. I thank Ms Andrews and her team for the work they did as the tourism recovery task force and for producing the report and the plan. It is critically important that they are here today to speak about the plan and their work and it is crucial that all Members of the Oireachtas familiarise themselves with the plan and the work the team has done. The implementation of the plan should not just be taken on board by this committee but by every Member of these Houses, who should also constantly push it, keep it on the agenda and scrutinise it.
I welcome that the Minister has committed to putting in place the oversight group. It is important that continuous engagement occurs between stakeholders throughout the industry, the Government and our agencies. Communication is important but so is having everyone in the one room, albeit a virtual one. Sometimes months of work can get done in a one-hour meeting when everyone is around the one table. That model is important. It was a most helpful way of doing business when I was in the Department and I cannot overstate how crucial it is that that approach continues.
There is strong potential for domestic tourism in 2021 and so we should focus on that. We are far behind where we thought we would be when the tourism recovery task force was put in place earlier in the year. That is disappointing for everyone. That focus, coupled with a more ambitious testing regime at points of entry to the State, should have been pursued further and at a greater rate earlier in the year. That is key to unlocking the potential for international tourists in the years ahead. The access issues we will face cannot be overstated. The only thing that gives me some hope is that we have seen that getting the right environment in place can create rapid growth in access. Let us take North America, for example. In 2011 we had seven routes to North America. By 2019, at the peak, we had 24 or 25 routes covering the US and Canada. That growth can happen. People in the industry might be forlorn at the moment about the difficulties in access, but routes can be grown. However, it takes the right policies and everybody creating the right environment.
I commend the work of Tourism Ireland in keeping Ireland in the psyche and to the forefront of the mind of the international traveller during this time. Once international travel resumes, it will be incredibly competitive and that is when the expertise, contacts and great experience built up by Tourism Ireland over the years will be needed. It has outstanding teams all over the world and they will be called into action in the time ahead to make a huge difference for this country, as they have done so often in the past. That will be critically important.
Many people in the industry will be watching this meeting or will watch replays of it. This situation is beyond challenging for them and is beyond the worst people could ever have imagined. I have spoken about having enterprises that are robust enough to withstand shock events. I worked in the hotel industry at the time of 9/11, which was one of the ultimate shock events and we had the outbreak of foot and mouth disease just before that. No one could have envisaged this pandemic happening and being of this magnitude. This time will pass too and there will be better days ahead. It is incumbent on all of us to continue to work together to get through this phase and this terrible period for tourism in Ireland and come out the other end. There are brighter days ahead. Mr. Connick is in New Ross, where a wonderful new greenway will be a fantastic international attraction. The same can be said of so many other greenways all over the country and so many other attractions that are there, or are coming on stream. There is a great future for Irish tourism but the work of the recovery task force and its plan will have to be implemented to a T. That is something on which all of us as public representatives will have to put our shoulders to the wheel. I again thank the witnesses for their time today and for all the work they have done.
Given that that was more a statement than a direct question, we will move on to Deputy Cannon. I acknowledge on behalf of the committee the work Deputy Griffin did in his time as Minister of State and, in particular, his work during the first lockdown. Everyone owes him a debt of gratitude. I thank him very much.
I thank all the witnesses for the work they have done in producing this report and bringing their considerable expertise, knowledge, wisdom and passion for the industry to bear. Hopefully, we can now work alongside them and others in delivering on the findings. I have a quick observation and I wonder if this matter came within the task force's focus during the commissioning of the report. I live in the hidden heartlands and I agree wholeheartedly that in the next three to five years there will be a new focus on holidays that involve wilderness. We have lots of wonderful wilderness in the hidden heartlands, or isolation to a certain extent, and activities tourism is a huge growth area, using the Shannon, the Slieve Aughty Mountains and other locations. Deputy Griffin also mentioned the development of a number of greenways which will hopefully connect Dublin to Galway and Athenry to Enniskillen in the next number of years, providing significant opportunities.
Ms Andrews also mentioned the need to digitally upskill the providers within our regions and there is a need in the hidden heartlands to make people more aware of what opportunities lay there for them. One opportunity that I use extensively is Airbnb. In certain contexts, debates and conversations, Airbnb gets bad press due to a perceived weakness in its model, as it reduces the number of housing units available where there is a very high demand for housing. I live in rural east Galway, where in the last five years a number of my neighbours have become Airbnb hosts. It is commented on frequently by people living in our rural community that they have seen people from Scotland, the US, France, Germany and Canada visiting our particular part of east Galway which would not have seen much tourism activity in the past. Some of the research that is being done internationally on likely travel trends in the next three to five years refers to pod travel, where a slightly extended family unit travels and stays on its own and is, to a certain degree, isolated when travelling or engaging in tourism activity. In certain areas, Airbnb would come into its own in that capacity. Did that feature in any way in the task force's deliberations? If so, what kind of outcomes did it arrive at regarding Airbnb's place in rural Irish tourism in the future? I think it has a significant role to play and I would be interested in the witnesses' perspectives on that.
Ms Ruth Andrews:
This plan is more at a strategic level, rather than getting into specific sectors or particular distribution channels. Airbnb was one of the contributors to the consultation phase and a very welcome one. Many existing products, whether bed and breakfast accommodation, guesthouses, self-catering accommodation or even hotels now use Airbnb as their distribution channel or window to the world. There is certainly a place for every type of product and every distribution channel that brings those tourists to us. The multigenerational tourism to which the Deputy referred has been a key facet of tourism for the last five or six years. We see it in the small group sector and it is very much an important element of who we target in the international markets and, indeed, on the domestic market.
Certainly, in terms of bed and breakfast accommodation and areas where we do not have a sufficient stock of accommodation, this enables people to get into the hidden heartlands. To have people opening up their homes to enable people to come and stay with them is absolutely an opportunity and a part of this. Airbnb is a distribution channel. It has been very much a part of tourism and business travel generally over recent years, and it will be into the future.
Mr. Paul Gallagher:
There are differing views depending on who one is talking to when it comes to Airbnb. As a hotelier, I see it as a form of unfair competition. I am not referring to somebody who has a twin-bed room in their house or apartment which they put on Airbnb. I am referring to whole floors in apartment blocks on Airbnb. We are all regulated, we are all tax compliant and we are all fire safety compliant. There are so many hoops we have to jump through that we cannot just rosy over the picture, as it were, that Airbnb is welcome in every form in which it exists. I am telling the committee that the industry does not think that and, certainly in the sector I would normally represent, we would have differing views as to how welcome it is. I recognise it is an important distribution channel and it brings valuable guests to Ireland. However, the services it provides require oversight if they are on a scale that is not just sharing rooms in a domestic dwelling.
Thank you. I have to conclude the meeting as we have far exceeded our time. I thank the witnesses for attending and for their contributions, which were significant. I thank them for their work on bringing us this publication, the tourism recovery plan. The members will consider everything that has been said today and we will report on that at the appropriate time.