Brendan Griffin (Kerry, Fine Gael) | Oireachtas source

I welcome the opportunity to address the House on the impact of Covid-19 on Irish tourism, our plans to support the sector in recovering from that crisis and all other matters pertaining to it. I have addressed the House on a number of occasions to reflect on tourism but never in the circumstances in which the sector now finds itself. It is right and proper that the primary focus of the Government should be on the public health crisis response. Nevertheless, we must also ensure that we do our utmost to help our economy to recover from what is the worst short-term economic shock in the history of the State.

The importance of tourism in Ireland cannot be overstated. The sector has made a huge economic and social contribution in recent years and played a leading role in driving the recovery from the latest economic calamity. Tourism plays a pivotal role, particularly in rural and regional areas, with most earnings retained within the country. Until now, as a labour-intensive sector contributing directly to more than 11% of employment, tourism has been a leading job creator, supporting 260,000 jobs in 2019. It is the largest indigenous sector. In normal circumstances, tourism helps to provide diverse employment opportunities for many lower-skilled workers and those unable to work full time. It also provides employment in rural communities and other often economically disadvantaged locations where alternative opportunities can be limited.

Approximately 70% of tourism jobs are located in regional and rural areas outside Dublin. Tourism is a significant export sector, with the majority of tourism spending being generated by overseas tourists. In 2019, international tourists spent more than €5 billion in Ireland compared with approximately €2.4 billion spent by residents of Ireland, North and South. The breakdown is roughly 2:1.

Tourism is one of the most directly affected sectors in the current crisis. With international aviation at a virtual standstill, the closure of tourism sites and a ban on public gatherings, the impact of Covid-19 on global tourism is overwhelming and immediate and has impacted travel and tourism like no other event in history. In the space of a few short weeks, the Irish tourism and hospitality industry has been decimated, with job losses in the sector estimated at this stage to be in excess of 200,000. The devastation being experienced is unprecedented. I sincerely empathise with those who have lost their jobs and livelihoods as a result.

For international tourism, the OECD projects that the shock could amount to a 75% decline globally in 2020. It is important, however, to note that the scale of the impact remains difficult to estimate given the unknowns that exist. The OECD also estimates that domestic tourism across the globe is expected to recover more quickly, but it will still be badly hit. It could be down 50% or more by year end. Crucially, all of this assumes that economic activity, both domestically and internationally, begins to recover significantly in quarters 3 and 4. If that does not occur, the results will be even worse. Many tourism businesses have now written off 2020 completely and some may not reopen until 2021. Others may go out of business and never reopen. It is likely to take years to recover business to anything like 2019 levels.

Since the crisis began, the Minister, Mr. Ross, and I have engaged with the industry with a view to understanding its concerns and needs. We established and participate in a Covid-19 tourism monitoring group made up of industry stakeholders, tourism agencies and Department officials. The group first met on 26 February and has met seven times in total thus far, including yesterday afternoon. That first meeting on 26 February was at the very start of the crisis here and we tried to get on top of it as early as possible. The meeting was the day after the postponement of the Ireland versus Italy rugby game. The information we have received from these meetings has been most valuable in formulating a response to the crisis in terms of how our agencies operate and the Government's response. I thank all the people who have been involved with the body to date.

Fáilte Ireland has set up a Covid-19 industry advisory group which meets weekly. The purpose of the group is to provide supports to the tourism industry and to facilitate the rapid sharing of information and insights to help improve the sector's understanding of and response to the crisis. In addition, Fáilte Ireland has developed and rolled out a suite of training and advisory supports for tourism businesses that enables them to respond to the challenges and threats now being faced by the sector. The focus of the supports has shifted from the shutdown phase of the crisis to the business survival phase, with a focus on preparing businesses to reopen and relaunch.

For its part, Tourism Ireland has postponed virtually all of its overseas promotional activity. It will resume activity when the time is right, not just in Ireland but also in our key markets. As a first step, it will carry out market research in some of those markets to gauge consumer sentiments towards holidaying again in a post-crisis environment.

Tourism must seek to survive before it can start to recover. The Government's focus to date has been on supporting those who have lost their jobs and supporting businesses to remain viable during this difficult time, with specially targeted supports to assist companies to stay operational and retain their staff. The Department has liaised with other Departments and industry representative bodies to align the economy-wide Covid-19 supports and initiatives with tourism and hospitality needs. As a result, many tourism businesses are now availing of the various cross-sectoral economic supports the Government has already put in place, including the wage subsidy scheme, increased unemployment benefits, the State credit guarantee scheme, working capital loan schemes, enterprise support schemes and the deferral of tax liabilities, VAT, social contributions and local authority rates.

In recent weeks, the Minister and I met representatives of the pillar banks and Banking and Payments Federation of Ireland to discuss difficulties being experienced by tourism businesses in accessing low-cost financial supports. We also met representatives of Insurance Ireland to highlight issues with the business interruption elements of policies and to press for a reduction in premiums for tourism businesses that are now closed.

The depth and breadth of COVID-19 related impacts on tourism and the wider economy mean that a speedy recovery is unlikely.

It is likely that the restart of the sector will be slow and phased and it will not be easy. We should not forget that it is a people-industry and these are the types of enterprises which are likely to be the last to return to full normality.

As a first step we must work with public health authorities to establish ways of making tourism enterprises safe for workers and consumers. On 1 May, the Government published a roadmap for reopening society and business to ease the Covid-19 restrictions and reopen the economy in phases. The framework sets out how we can keep the level of transmission as low as possible while balancing continuing restrictions proportionately with the positive social and economic benefits which will be brought about by lifting restrictions. Phase 1 provides for the welcome reopening of outdoor public amenities and tourism sites such as carparks, beaches, mountain walks where people are non-stationary and where social distancing can be maintained. The inclusion of golf as a sporting activity from the beginning of phase 1 is welcome for domestic tourism. Phase 2 will extend the travel limit from 5 km to 20 km and public libraries may reopen. Under phase 3 cafés and restaurants will reopen on 29 June. Hotels, hostels, caravan parks and holiday parks will reopen under phase 4 on 20 July. Phase 5 will see pubs, bars and nightclubs reopening, hopefully, on 10 August.

It is important that the tourism sector now puts plans in place for reopening in line with this roadmap. It will take some weeks for businesses to put adequate provisions in place to cater for social distancing which will be very challenging for certain enterprises and their employees. Fáilte Ireland is currently preparing a framework and guidelines, in conjunction with public health authorities, to assist the sector in this regard.

Tourism and hospitality businesses will require liquidity, working capital and business development funding to continue trading because demand and bookings from our international markets will be very slow to recover. The Government agreed on 2 May, at a special Cabinet meeting, a suite of measures to support further small, medium and larger business that are negatively impacted by Covid-19. The latest measures announced at the weekend are a €10,000 restart grant for micro and small businesses; a three month commercial rates waiver for impacted businesses; a €2 billion pandemic stabilisation and recovery fund within the Ireland Strategic Investment Fund, ISIF; and a €2 billion Covid-19 credit guarantee scheme to support lending to and the warehousing of tax liabilities for a period of 12 months after recommencement of trading.

Once we get the sector back open, we can look at what type of actions are needed to stimulate the recovery in the sector. For example, domestic tourism is sure to play a big part this year and next given the international tourism situation and how slow it is anticipated it will return. The Minister, Shane Ross, and I are considering the most effective structures to develop the recovery plan required for the tourism sector. We have already had some very useful contributions and proposals from industry stakeholders and our tourism agencies in this regard and all of these will receive due consideration as we develop a longer term tourism recovery plan for this important sector.

Given the severity of the crisis there are calls from the industry to reduce the VAT rate for tourism. Tourism will be a very competitive market globally as recovery takes hold and competing destinations will all be considering how they can best gain a competitive advantage. Tourism businesses are already putting together sales and marketing plans for 2021 and an early decision on a lower VAT rate for 2021 would help the industry to put forward competitively priced packages. This is something I will seek from the Government. It is something I am very passionate about and it will be much needed during the recovery phase. However, any measures taken, particularly on anything related to economic recovery, must be well co-ordinated across all sectors of the economy. A balance is required to ensure any measures taken will benefit the economy as a whole.

I will impress upon my colleagues in government the importance of supporting tourism in the recovery phase. I am under no illusions, however, that we as a country will face some very difficult choices on public expenditure in the coming years. Tourism has faced many challenges in the past, including 9/11, SARS, the volcanic ash cloud and foot and mouth disease, for example, but the current crisis is greater than all of those combined and it will take a huge effort to get tourism back into a well working recovery mode but we will all do our best.

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