John O'Donoghue (Kerry South, Fianna Fail)

I propose to take Questions Nos. 35, 43, 44, 58 and 251 together.

Since my appointment as Minister for Arts, Sport and Tourism in June 2002, I have spoken of my concern regarding the increasing levels of dissatisfaction evident in visitor attitude surveys about the value for money offered by the overall tourism experience in Ireland. I welcomed the fact, therefore, that one of the strongest messages from the tourism policy review group, in its report entitled New Horizons for Irish Tourism — an Agenda for Action, was that restoring competitiveness is the major challenge facing the tourism sector, and that the industry itself must offer better value to its customers if it is to maximise the opportunities for future growth.

It is too early to say what impact, if any, the current oil price levels will have on Irish tourism. A short-term hike may have little significance. However, if it is sustained over a longer period it could possibly generate inflationary pressures in economies generally. In regard to competitiveness, it must be borne in mind that competitor destinations are also affected by oil price increases.

Increases in oil costs impact on travel costs. However, our petrol prices have for several years tended to be at a lower level than those in many other western European countries. We are in an era of intense competition in which air fares dropped to unprecedented levels, which may in turn help to temper the impact of fuel price increases somewhat.

In recent years the tourism industry in Ireland has had to deal with a series of external shocks. We have successfully reacted to these shocks in a calm and measured way. The tourism agencies monitor the effects of these shocks on consumer psychology and travel behaviour and work with the trade to ensure that there are appropriate product and marketing responses. The oil price scenario will be approached in a similar manner.

There is no immediate single or easy solution to address concerns about value for money which I have stressed is not exclusively about pricing. Ireland has never been marketed as a low cost destination but during the years of significant growth in the 1990s it was competitive and was seen to be offering holidaymakers value for money. It has long been the case that inexpensive holidays have been available in other European destinations at certain times of the year. This may always be the case but it does not compare like with like. Competitiveness must be a function of the overall Irish tourism experience for customers relative to other competing locations, beginning with their initial inquiries about visiting Ireland through to their travelling here, where they go when they arrive, where they stay, who they meet, what they do and see, and their perceptions about price and quality.

In chapter 4 of its report, the review group assessed tourism in Ireland today and confirmed that there is no immediate, single or easy solution to address concerns about competitiveness. The group listed ten specific actions that require responses from both the private and public sectors, including proposals on taking responsibility for restoring competitiveness, inflation, benchmarking, customer relationship management, management capability, high standards for competitive advantage and training. None of the ten listed actions is directed to me or my Department. However, my role is to work, in so far as it lies within my power, towards ensuring that a coherent action plan is implemented quickly and effectively. To this end, I have established the high level implementation group to advise and assist in driving forward and monitoring the recommended actions set out in the report.

The first report of the implementation group is due in August and we will have to wait for it before we can assess the impact of the action plan on competitiveness and value for money and progress on other recommendations, including internal travel links. In the meantime, I am pleased to acknowledge certain developments in recent months that should result in tangible benefits for the tourism sector and make a difference to competitiveness and value for money such as minimal increases in the budget in indirect taxation and excise duties on products that are part and parcel of the tourism experience; the Fáilte Ireland initiative, in co-operation with the industry, to address the high cost of insurance for the sector and the accelerated implementation of the Government's insurance reform package which is bringing tangible benefits in the form of reduced premiums; the fall in the cost of accommodation as reported by the CSO; the significant drop in the average annual rate of inflation — at 3.5% in 2003, it was down from 4.6% in 2002 and it is forecast to fall further to 2.5% in 2004.

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