Dara Calleary (Mayo, Fianna Fail)

It is good to be back in the House on the subject of the tourism industry. I welcome Senator Mooney back to the House. It is my first opportunity to liaise with him directly since his return. I am participating in this debate on behalf of the Minister for Arts, Sport and Tourism, Deputy Cullen, and I am sure Members join me in wishing him a speedy recovery from his current bout of illness. I welcome the opportunity to address the House today on the subject of the tourism industry. The House has proved a very useful forum for exchanging views and exploring important issues relating to the tourism industry and I look forward to our discussions.

The tourism industry makes a vital contribution to employment, economic activity and exports. It also contributes by encouraging social inclusion and access to labour markets. With the support of the Government, the Department of Arts, Sport and Tourism and the tourism agencies, the tourism and hospitality sector can overcome the current challenges and make a major contribution to Ireland's economic renewal.

In 2009, the tourism and hospitality sector provided up to 200,000 jobs, helped to generate €4 billion in foreign revenue earnings and generated in the order of €1.2 billion in tax earnings. While 2009 proved to be an exceptionally challenging year, tourism is a very resilient industry and has proven its ability to bounce back faster than other sectors after a downturn. Tourism is recognised as a vital, export-oriented service industry in the Government's framework for economic renewal, Building Ireland's Smart Economy. In further recognition of its important contribution to the economy, tourism was also among the areas focused on during the Global Irish Economic Forum in September 2009 and was the subject of some imaginative and challenging suggestions from the forum.

One of the strengths of Irish tourism has been the robust policy framework developed for the sector since 2003 when the New Horizons report of the tourism review group was published. This included clearly defined implementation arrangements through the State tourism agencies and a strong partnership approach with the industry. In December 2008, to ensure the strategic framework for tourism development was able to respond to the rapidly changing economic and social environment, the Minister for Arts, Sport and Tourism, Deputy Martin Cullen, established the tourism renewal group. The Minister asked it to review and, where appropriate, renew the existing tourism strategy contained in the New Horizons document.

The tourism renewal group conducted a detailed and inclusive examination of the tourism sector nationally and internationally, the existing strategic framework and key tourism related issues. The group analysed the implications of its findings and agreed on key actions required to support the tourism industry and help it survive, recover and grow. The resulting report of the tourism renewal group, launched last October, set out the tourism industry's contribution to Ireland's economic and social development and its prospects in a changed world, as well as a framework for action for the tourism industry's survival, recovery and growth in the period to 2013. The report proposes five survival actions to minimise the impact of current challenges and nine recovery actions to set the tourism industry back on a growth path as the world economy recovers. All of these actions are being vigorously pursued by the Minister, his Department and the relevant agencies in co-operation, where relevant, with other Departments and bodies, with a particular focus initially on the survival actions. Fáilte Ireland and Tourism Ireland have built in the relevant renewal group recommendations to their business and marketing plans for 2010. The Department is also working with a range of other organisations to develop opportunities to focus resources, achieve common objectives and maximise the impact on the tourism industry.

Building on the framework for action, the 2010 budget recognised the tourism and hospitality sector as a critical, labour-intensive sector and incorporated a range of measures to renew Irish tourism. The overall tourism services budget was increased by 2% to more than €150 million, including the maintenance in real terms of funding for the tourism marketing fund as recommended by the renewal group and a trebling of the funds for tourism product development.

We have been experiencing the impact of an international recession of unsurpassed severity. Every major economy, including our key source tourism markets, is suffering. In our own case, the situation has been exacerbated by unhelpful exchange rate movements and the challenges in our domestic economy. Tourism worldwide saw a significant downturn in the second half of 2008, which continued into 2009, due to the global economic slowdown and loss of consumer confidence. There were just under 7 million overseas visitors to Ireland during the year. This figure represented a drop of 11.6% compared with 2008. Outbound trips from Britain were particularly affected, with the euro-sterling exchange rate making it extremely challenging to attract visitors to Ireland and eurozone destinations generally.

In common with many other businesses in Ireland, tourism businesses are experiencing difficulties with regard to capacity, costs and credit supply. These difficulties are exacerbated by lower visitor numbers. Some of these problems must be addressed by the tourism industry. Others are being addressed generally by the Government, for example, through NAMA and the issue of supply of credit to businesses generally. The Government will continue to work with the industry to help the sector manage its way through these difficulties by stimulating demand, helping to address costs or securing access to credit.

Tackling the excess capacity that undoubtedly exists in the hotel sector is complex and, ideally, requires a market response over time. This year is likely to be another tough year in the hotel sector, with further adjustments taking place as the market responds to excess room supply. This process will gain further momentum in the coming months as more banks seek to clean their balance sheets and dispose of underperforming loans. These market-led adjustments are necessary to restore some level of equilibrium to the hotel market.

Credit availability also remains a real difficulty across the economy, including for the hotel sector. The Government's strategy for NAMA is centred on the goal of restoring a stable and functioning banking system. As part of this process we are establishing a credit appeals system that will allow small and medium-sized enterprises, SMEs, including from the tourism industry, to appeal when a credit application has been refused. This will provide a valuable independent recourse for businesses in their dealings with banks.

Regarding concerns about costs such as labour, local authority rates and energy, the Government is taking initiatives to help the process by, for example, securing a reduction in energy prices last year. The fact that consumer prices in Ireland have now fallen back to 2006 levels shows we are responding flexibly to the crisis. This has been recognised by the European Commission and international markets, helping to restore confidence in the Irish economy. I must acknowledge the tourism industry has made great strides to reduce costs and increase productivity over the past year or two. These are certainly difficult changes but if we get our costs right while also using the crisis to restructure and reinvent ourselves, we will return to a sustainable growth path.

With regard to Ireland's ability to compete in the international arena in the future, maintaining and enhancing competitiveness is a major issue for the tourism industry as it is for the economy as a whole. In addressing that issue, it is important to bear in mind that competitiveness is about more than price and costs. The tourism agencies continue to monitor Ireland's competitiveness as a tourism destination and the Minister is encouraging them to assist the industry in responding to changing conditions as appropriate.

Although there is little doubt that 2010 will be another challenging year for tourism, it is nonetheless important to remember that, despite the downturn, millions of people across the world will still take holidays this year. The industry and the tourism agencies are fighting hard for every bit of this business. Tourism Ireland has set an ambitious growth target of 3% for overseas visitor numbers and revenues this year, despite international experts predicting a 2% contraction. However, a number of eurozone economies are coming out of recession and these are important source markets for Irish tourism. Tourism Ireland will focus on major markets that are likely to deliver immediate returns this year, including Great Britain, Germany and the US, as research has shown these markets as our best prospects.

Tourism Ireland is the North-South body responsible for marketing the island of Ireland overseas as a holiday destination. The objectives of Tourism Ireland's marketing strategy are to convince overseas consumers that now is the best time ever to visit, to show them the tremendous value available from industry partners and to demonstrate how easy it is to get here by air and sea. Ireland must be positioned to take advantage of opportunities that will arise as the global economy stabilises. Tourism Ireland's commitment is to market through the challenges, work closely with industry partners and fight for every bit of business that is out there to be won. I have just returned from a joint Tourism Ireland and tourism industry mission in the US and I was struck by the commitment of the Tourism Ireland team and the industry professionals who joined us. It is evident that the American market is showing slow but clear signs of recovery and we are well positioned to capitalise.

Tourism Ireland is engaged in a huge tactical marketing programme across all major markets, communicating strong reasons to visit together with clear, price-led messages. Specifically, it is investing €26 million in a marketing drive in the first half of the year, including the biggest ever promotional programme of activities to showcase Ireland during the St. Patrick's Day period. Agreement has been secured to "green" iconic buildings and attractions like the London Eye, the CN Tower in Toronto, the Sydney Opera house and others.

On the domestic front, as we await a boost from overseas visitors, Fáilte Ireland has launched a brand new advertising campaign to promote holidaying at home this year with a budget of €4 million. The new campaign is rooted in extensive consumer research and consultation with the tourism industry and is being broadcast publicly. Fáilte Ireland is also boosting its promotion of business tourism and the opening in September of the new national conference centre in Dublin, to be known as the Convention Centre Dublin, will further enhance our capacity to attract international events.

The Minister for Finance announced, in his budget speech, that larnród Éireann had agreed to participate in a new scheme to be developed by Fáilte Ireland, aimed at offering discounted travel to senior citizens visiting Ireland from abroad. The scheme owes its genesis to suggestions from Members of this House. I am pleased to report that Fáilte Ireland has made significant progress in developing such a scheme, in consultation with larnród Éireann and Tourism Ireland. Our intention is to launch the initiative to coincide with the St. Patrick's Festival and with Tourism Ireland's major promotions across the world, especially in Great Britain. Furthermore, I understand that the parties are working with the aim of producing an exceptionally attractive unrestricted offer, which could be used widely across the rail network and would be simple to understand and which will be free to the qualifying customer.

The quality and value of the tourism product has improved dramatically over the past few years. Accommodation quality, particularly in the case of hotels, is among the highest in Europe. There are many more attractions to see and activities to partake in and we have managed to maintain and build on our natural assets and resources. Visitors constantly express satisfaction rates of more than 90% for their stay here. Fáilte Ireland is investing more than €20 million under its capital investment programme to improve and broaden the appeal of Ireland's portfolio of tourist attractions, activities and tourism-related infrastructure. Investment in business, sporting and cultural events will also be increased, as all offer good prospects for tourism growth in 2010.

Tourism enterprises are very concerned about the recession, weakened consumer demand, energy and labour costs and local authority charges, as well as access to credit, the regulatory framework and labour regulation. Fáilte Ireland is working closely with tourism businesses all over Ireland, supporting enterprises and helping them to achieve real cost savings and efficiencies. Business supports are aimed at assisting key tourism businesses to increase their international customer base, better manage their cost base, improve overall performance and marketing, particularly on the web, and sustain employment levels. I acknowledge the great work of the Irish Hotels Federation in helping us to address these issues and, in particular, John Power, the chief executive, who has announced his intention to retire this summer. I thank him for his work and wish him well in his new life.