Tourism bosses – under the umbrella of the Irish Tourism Industry Confederation (ITIC) – have placed nine recommendations before the Government, to partially include in September’s Budget, in a bid to keep Ireland’s tourism and value-for-money offering competitive in the face of ongoing challenges.
While government supports propped up the industry during the worst of the pandemic crisis, Irish tourism still lost more than €12bn as international visitors were locked out of the country.
Pent-up travel demand is now being met with a weakened industry support network, globally – as is evident across the travel chaos at many international airports.
Ireland’s in-bound offering is being challenged by a range of issues from rising prices – across hotel and food/drink prices and car hire rates – to a scarcity of hotel rooms and staff shortages.
Ireland’s tourism sector generated close to €10bn in annual revenue before the Covid crisis – sustaining regional economies and many rural communities across the country, in the process.
But, ITIC has warned that Ireland’s reputation has now been dented.
“The sector is now facing a challenging trading environment against the background of the ongoing war in Ukraine, a softening of consumer sentiment due to rising inflation and interest rates, and increasing costs of doing business in Ireland at a time of economic uncertainty,” it said.
But; while international travel is bouncing back, Ireland’s connectivity has been revived and in-bound visitor numbers are increasing on a monthly basis, ITIC still sees a full recovery for Irish tourism – to pre-pandemic levels – being at least three or four years away.
ITIC’s 9 recommendations to the Government are:
1: Maintain tourism investment
ITIC wants the Government to maintain tourism investment in the upcoming September Budget. It said such spending will be “vital to stimulate tourism demand in what is likely to be a “softer” year in 2023. Spend should support the management of cost inflation and help the industry meet its sustainability commitments.
2: Retain tourism Vat at 9% until full recovery secured
ITIC wants the 9% Vat rate for the tourism and hospitality sectors retained until the sectors are fully recovered. It said the Vat level has been a “key component” of Ireland’s improved competitiveness. “The intervention has proven to have contributed to improving Ireland’s competitiveness and needs to be maintained to keep Ireland on an even keel with its European peers,” it said.
3: Sustainability supports
A tailored suite of training, mentoring and financial supports is required for tourism companies to reduce their carbon footprint and ensure the sector plays its part in reaching Ireland’s target to reduce greenhouse gas emissions by 51% by 2030, ITIC said. The range of Government supports currently available to manufacturing and agri-food enterprises needs to be extended to tourism businesses, including the recently announced Green Transition Fund to entice business away from fossil fuels, it said.
4: Initiatives to meet labour shortages
A tightening labour market threatens the ability of the sector to deliver the visitor experience at an acceptable standard, ITIC has warned. Since pre-pandemic years the tourism and hospitality sectors have struggled to fill positions in certain functions and skills, a situation which has been exacerbated by the pandemic, it said. ITIC said there is an “urgent” need to amend the regulatory environment to allow businesses to recruit overseas staff where a proven shortage of skills has been identified. It also wants continued investment in training and upskilling to provide career stability and retain staff for the long-term.
5: Addressing hotel capacity
There is an acute shortage of tourism accommodation. Approximately 15% of hotel stock has been contracted by Government for humanitarian uses and this can only be a short-term solution with more appropriate accommodation found for refugees and asylum seekers. With this hotel stock re-introduced into the tourism equation, allied with the circa 3,000 new bedrooms currently under construction, supply should increase significantly thereby moderating price and delivering better value to the consumer.
6: Increase pace of insurance reform
Securing affordable liability insurance continues to be an issue for tourism and hospitality businesses. The Alliance for Insurance Reform has identified 20 business sub-sectors catering to tourists which struggle to get cover or are reduced to one underwriter with an effective monopolist’s hold over the sector. The Government must improve the pace of reform and actively work to attract new international entrants into the market to provide a more competitive marketplace, ITIC said.
7: Enhancing the tourism retail offering to GB visitors
Following Brexit, tourists from Britain were automatically allowed participate in an EU-wide scheme that allows non-EU tourists visit and shop tax free for goods they bring home at the end of their holiday. Tourists from the North have been excluded from this shopping scheme as goods in Northern Ireland continue to be treated under EU VAT rules. The addition of these millions of new potential tax free shoppers, located on Europe’s doorstep, has been warmly received across Europe. The main countries that benefit from tourists from Britain have all opened their tax-free shopping schemes without restriction with significant marketing initiatives generated to encourage tourism from Britain. The impact of this is that shoppers from Britain are already the second highest tax free spenders in Europe averaging €1,167 per retail transaction. This strong recovering travel and spend is resulting in VAT savings being made by shoppers that is then freeing up spend into other areas – such as hotel, car hire, and restaurants. Ireland however is the only EU State that has introduced restrictions on tourist spend in this time, particularly for tourists from Britain. Where competitor European countries are seeing retail spend from British visitors increase dramatically, Ireland is seeing the opposite trend. Due to the restrictions Ireland is seen as a considerably less attractive position for tourists from Britain considering a holiday location.
8: Increase supply in the Car Rental sector
ITIC wants a restoration of vehicle registration tax (VRT) reliefs. Under-resourced car rental companies will have to rebuild their capital base and it will take time for car rental companies to build car stocks back up to pre-pandemic levels, it said. “While not a silver bullet for this year, the restoration of VRT reliefs on short-term car rental, that were recently abolished by the Government, would help with to incentivise a fleet rebuilding programme,” according to ITIC.
9: Invest in data, research and marketing
ITIC sees a need to invest in technologies and strengthen the sector’s capacity in data collection, dissemination, and market research to monitor performance, economic impacts, while identifying opportunities, risks and vulnerabilities. Timely insights on demand trends and visitor behaviours are essential for good business planning, it said. “A sustainable recovery will be dependent on clear targeting and positioning marketing strategies,” ITIC said.