WE have enjoyed another good tourist season again this year to date with further job creation boosting the numbers employed in the sector to more that 230,000. At the moment, one in every nine workers employed in the country works in tourism, making it a valuable contributor to the economy and a sector in which everybody wants to see continued growth.
Figures released by the Central Statistics Office last month showed that the industry created 3,400 jobs in the second quarter of the year and this growth is likely to have continued through the third quarter, which is peak season in Irish tourism. However, we should not be complacent about this success, as members of the Irish Tourist Industry Confederation (ITIC) have warned about external threats faced by the sector.
The Brexit decision at the end of June by Great Britain to leave the European Union saw a significant fall in the value of sterling against the euro, making holidaying by people from the United Kingdom in euro zone countries such as Ireland less better value for them. It did not significantly affect our industry this year as many UK visitors would have already made their holiday plans by that stage, however they will be factoring in currency exchange rates for next year and we may lose out then and possibly in future years.
Another factor at play is that the reduction of the value of sterling relative to the euro is making the United Kingdom a more attractive place for overseas visitors – ourselves included – to holiday in, as it had been seen as expensive destination up until Brexit became part of the equation. The only way to counter this is to continue to sharpen our own competitive edge and let it be known that people can still get value for money in Ireland – that the ‘Rip-off Republic’ tag of the Celtic Tiger era has been truly consigned to the dustbin of history.
The relative value of currencies is an external factor that we cannot really control, but ITIC is adamant that one we can – the reduced 9% VAT rate on tourism products and services – should be retained. The introduction of this lower rate five years ago gave the tourism industry the boost it badly needed and the sector led the way in the creation of new jobs during the economic downturn, helping area such as West Cork to reduce their unemployment rates.
Now is certainly not the time to go increasing the VAT rate. Recently, calculations by civil servants revealed that, by restoring the rate to its previous level, the Exchequer would benefit to the tune of €64 million per annum, but that did not take into account any damage that external factors such as the Brexit decision could have.
Sensibly, Tourism Minister Shane Ross is said to be supporting retention of the 9% rate, so people in the industry are hopeful that Minister for Finance Michael Noonan will see the merits of leaving things as they are in Budget 2017, the details of which will be announced on Tuesday, October 11th.
However, that should only be a first step, as the government needs to ensure that a strategy is put in place to be able to confront any external threats to continuing and sustainable growth in the tourist industry. Chief executive Eoghan O’Mara Walsh, in ITIC’s pre-Budget submission, highlighted that tourism marketing budgets have been cut year after year and are now €20 million below what they used to be: ‘This is having a serious impact on advertising recall and will mean less visitor numbers in future years if not addressed immediately,’ he warned.
ITIC called for State tourism marketing budgets to be restored to pre-recession levels and the organisation is justifiably critical of the lack of ambition shown in the government’s policy for tourism – ‘People, Policy & Place; Growing Tourism to 2025’ – which sets a target of €5 billion annual revenue from 10 million overseas tourists in the next nine years. This would mean an average annual growth rate of less than 2% to reach the revenue target, whereas ITIC maintains that it should be aiming for at least 4% annually, which would create another 50,000 jobs in the sector.