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Dáil Éireann debate -
Tuesday, 22 Oct 2002

Vol. 555 No. 5

Priority Questions. - Tourism Industry.

Jimmy Deenihan

Question:

78 Mr. Deenihan asked the Minister for Arts, Sport and Tourism his proposals to restore the competitiveness of tourism in view of his recent statement that tourism products are over-priced and tourism has lost its competitiveness vis-à-vis our main competitors; and if he will make a statement on the matter. [19322/02]

Kathleen Lynch

Question:

82 Ms Lynch asked the Minister for Arts, Sport and Tourism the actions he proposes to take on foot of the economic study of tourism and the rising prices in the tourist sector published by the Irish Tourist Confederation; his plans to meet the confederation to discuss the report; and if he will make a statement on the matter. [19137/02]

I propose to take Questions Nos. 78 and 82 together.

I welcome the publication last week of the report by the Irish Tourist Industry Confederation on the impact of tourism on the Irish economy. The report is a comprehensive and analytical study of a sector that has enjoyed tremendous success and growth over the past decade but has recently come upon more difficult and challenging times. I look forward to having an early meeting with the Irish Tourist Industry Confederation to discuss the policy implications of the report.

The report highlights in an authoritative way the importance of the tourism sector to the Irish economy. The sector now generates nearly €4 billion in annual foreign revenue earnings and supports in the region of 150,000 jobs. The report also underlines the contribution the sector makes to balanced regional development.

I welcome the emphasis in the report on maintaining industry competitiveness and service quality levels. This reflects my recently expressed concerns about the importance of delivering value for money for the Irish tourism product.

There is also evidence from recent visitor attitude surveys conducted by Bord Fáilte that there is a deterioration in perceptions of value for money among visitors to Ireland, particularly from mainland Europe. Visitor concern with price levels here appears to relate to cost of goods and services consumed by them when they arrive here rather than the price of holiday offers, access or accommodation. This is borne out by the results of recent comparative studies of consumer goods, such as the Forfás study, which indicated that Ireland is the second most expensive country in the euro zone behind Finland. There is simply no refuting the fact that inflation rates in the restaurants, hotels and licensed premises sector and in the recreation and culture category are running considerably ahead of national figures.

While Government and its agencies have a role in supporting the further development of the sector, it is the tourism industry which plays the central role in keeping prices in check. In these more challenging times the industry must do all in its power to control costs, improve productivity, better manage its human resources and utilise modern technologies to best advantage.

The Government will continue to play its part in supporting the industry through a range of pro grammes and measures in the product development, marketing, training and human resource areas. I will look, in particular, to the new National Tourism Development Authority – combining the current functions currently being exercised by Bord Fáilte and CERT – to bring forward new thinking to help the tourism sector to confront the new challenges which they face. In this context, the ITIC report offers some useful guidelines which will be taken into account.

The more modest growth rates in the economy anticipated over the next few years should reinforce downward pressure on prices. The Government will continue to pursue appropriate macro-economic policies that serve to reinforce a favourable business environment. In this connection, Deputies will be aware that the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, has recently announced concerted Government action to address insurance costs.

I am aware of the contention of many of those working in the tourism industry that indirect taxation may be putting upward pressure on prices. Having said that, our VAT rates on tourism services and our excise duties, are not out of line with those obtaining in North European countries. The reality is that the Southern European sun destinations that charge lower rates are not in direct competition with Ireland as a tourist destination.

Much of the debate in Ireland on tourism prices this year has been emotive and anecdotal. There is no doubt that Ireland continues to offer excellent value for money as a tourism destination when account is taken of service and quality. Ireland is not a low-cost mass tourism destination. However, we must be vigilant in ensuring that our price competitiveness is not eroded, in order to enable the sector to respond vigorously and successfully to the changing dynamic of the marketplace. As I have already mentioned, I welcome the publication of the ITIC report as an important contribution to an informed debate on the future direction of the tourism sector which it is my intention to promote. Resolute action on the part of the tourism industry, in partnership with the Government, will do much to safeguard the future prospects of a sector that is so important in economic terms.

I will visit the United States this week to support Tourism Ireland's drive to promote Ireland as an attractive and value-driven tourism destination.

Is the Minister aware that the tourism industry is furious with his statement that it is responsible for hiking up the costs of tourism products here and that it is the reason for the lack of competitiveness in the industry? Will he agree that VAT rates on tourism products here are out of line with those of our main competitors? I disagree with the Minister that Spain, France and Italy are not our main competitors. That is where most Irish tourists go and that is where most German tourists, who came to Ireland, are going now. For example, the VAT rate on hotel accommodation in France is 5.5%, in Spain it is 7%. That makes a major difference. The only northern European country that has a higher VAT rate for hotel accommodation than Ireland is Germany. Will the Minister agree that Government policy during the past four years has driven up the real costs involved in the tourism industry and that it is forcing the operators to increase prices? For example, since 2001 wages have increased by 15%, in many cases insurance has increased by 200%, and ESB costs have increased by 14%. Will the Minister ask his colleague the Minister for Finance, Deputy McCreevy, to bring the VAT rates into line with those of other European countries which average 10%? At present VAT rates on hotel accommodation and other products stand at 12.5%. Will the Minister give an assurance that in the budget the Minister for Finance will reduce VAT rates in order to improve the competitiveness of tourism? Also, will the Minister clarify his statement regarding the accusation he made against the operators – those who built the industry more than any Government – that they are the reason for the loss of competitiveness in the industry?

I was commenting in the wake of a report by the Irish Tourist Industry Confederation. It has outlined the situation clearly and Deputy Deenihan is well aware of it. The position is that in terms of our competitors, people do not come to Ireland for the sun. People go to northern European states for a different reason. It is in that context that I say other north European states are in competition with Ireland in terms of attracting tourism numbers. The information available to me suggests that VAT and excise duty rates are not very much out of line with the rates in those countries. One can ignore the problem and hope it will go away or one can confront the problem and try to do something about it. It is the latter path I have chosen. Surveys conducted by Bord Fáilte show that people coming to this country have a perception that they are not getting the same value for money that they got, say, five years ago. That is due to a number of factors. It is true that if one books a holiday from a foreign destination the Irish package holiday is no dearer on the face of it than other package holidays. Visitors who come here say they have difficulty in two areas in particular. These are related to the question of the price of food and drink. It is true, whether we like it or not, that in recent years the price of food and drink in some restaurants has increased considerably beyond the rate of inflation. That is what the visitors are telling us and I am not prepared to ignore it. This is a wake-up call for the industry and there is a need to confront these issues. That is not to say there is not value for money in Ireland. There is, and many sectors offer very good value for money. However, these other areas have been identified by our visitors and they must be confronted.

Taking on board what the Minister said, especially in relation to the ITIC report, will he agree that the introduction of the single currency has exposed Ireland in areas where we are completely over-priced? The Minister was a member of the last Government, one of whose first actions on coming into office was to remove the ceiling on the price of the pint, yet he is now telling us that these issues are important and that it is not just visitors who are raising them. I agree with the Minister in that regard. The cost of services and—

A question please, Deputy.

As the Minister responsible for this area, what action does the Minister intend to take in regard to these issues? For instance, what action will he take in regard to the cost of travelling to this country, the cost of food and services, etc? What action will he take to ensure that the drop in tourist numbers will not continue into next year? Ireland does not attract tourists on the basis of its weather. Also, what is the status of the tourism development authority Bill, which we were told would be before the House before Christmas? Will we see it this session or will we have to wait until the new year, which will be too late for the next season?

In relation to the euro, there is a feeling abroad that since the introduction of the euro, prices increased considerably in some sectors. There is no question that the fact that continental visitors here use the euro in their own countries means that they are now in a position to make straight comparisons in terms of value for money. As the euro gathers strength against sterling and the dollar, which will happen in the short to medium term, the price question will become ever more stark. It is important to stress the value for money available in Ireland but it is of equal importance to ensure that in the areas where improvements can be made, we should seek to make them.

On the question of access, there is a need for a new quick turn around facility at Dublin Airport. The Minister for Transport, Deputy Brennan, has met a number of people to see if this can be provided because it would improve access and thereby increase the number of visitors to this country.

We must proceed to Question No. 79.

I asked a question about the tourism development authority Bill.

There will be opportunities to pursue those questions when we come to deal with ordinary questions.

There were two questions in this slot.

I am aware of that but the time has been exceeded by 30 seconds. I have called Question No. 79.

I hope to bring forward the tourism authority Bill this session.

Martin Ferris

Question:

79 Mr. Ferris asked the Minister for Arts, Sport and Tourism the steps his Department has taken to prevent the withdrawal of Ireland from the list of recommended tourist destinations due to the failure to maintain environmental standards. [19281/02]

There is no evidence of any perceived decline in environmental standards having had an adverse effect on tourist satisfaction levels as measured in Bord Fáilte's annual visitor attitude surveys. In fact, more than four in every five visitors would unreservedly recommend Ireland to others, and the proportion of people mentioning scenery, relaxation, a natural and unspoilt environment and attractive cities and towns increased in 2001 relative to 2000.

It is well recognised that the unique attraction of Ireland, as a tourist destination, has been the level and depth of contact with the Irish people, in a relaxed and clean environment, characterised by an unhurried pace of life and beautiful landscapes.

The provision of information for enhanced decision-making by those involved in the tourism industry is one of the main priorities of Bord Fáilte. As part of this remit, it has carried out comprehensive visitor attitude surveys since the 1980s. The 2001 survey confirmed that Ireland is still continuing to deliver holidays that match the expectations of overseas visitors. In fact, there was an increase in the number of people who cited scenery and relaxation as extremely important factors in their decision to come to Ireland, with mainland Europeans being particularly interested in beautiful landscapes and a clean environment.

The State tourism agencies and my Department, as well as many in the industry, have acknowledged for some time that with Ireland's economic success, especially in the last decade, have come new challenges, including addressing the pressures on the environment in tourism "honeypot" areas.

Arising from the mid-term review of the last Operational Programme for Tourism, 1994-99, some €3 million was made available for a pilot initiative on tourism and the environment. The overall emphasis was on tourism-led projects that could contribute to knowledge and understanding of best practice in terms of sustainable tourism and the lessons learned have been taken into account in terms of current policy information.

The objective of securing an environmentally sustainable tourism sector was clearly articulated in the strategy statement for the former Department of Tourism, Sport and Recreation published earlier this year. Achievement of this objective is being pursued through the tourism marketing and product development policies agreed with, and implemented by, the tourism agencies. Both Tourism Ireland Limited and Bord Fáilte regard spatially balanced tourism as a key component of their marketing strategies, with an appropriate emphasis on both seasonal and geographical spread of business.

The overall objective of Bord Fáilte's tourism product development scheme is to develop the tourism product in an environmental and sustainable way that widens the spatial spread of tourism, diverts pressure from highly developed areas and increases the Border, Midland and Western region's share of national overseas tourism revenue.

This will be achieved by concentrating support on a limited number of new visitor attractions, marketable clusters of existing day visitor attractions that have yet to achieve their full tourism potential, a series of special interest activities to meet identified niche markets and specific tourism and the environment initiatives in the more established tourism areas.

Given the decline in our tourism industry in recent years, does the Minister agree with the survey carried out by Irish Business Against Litter, IBAL, which set up an all-Ireland anti-litter league, which showed that over a three month period, from Monday to Friday, there was an increase of 15% in cleanliness but that on Saturday and Sunday, that result was totally reversed? Will the Minister agree that litter management should be a seven day task? Will he agree also that some of the resources spent on public awareness would be better utilised in hiring more wardens and empowering them to deal with the growing litter problem? What steps does the Minister intend to take to prevent the withdrawal of Ireland from the list of recommended tourist destinations due to its failure to maintain environmental standards?

Despite an exhaustive search, I could not find any list of the kind referred to by the Deputy. Neither my Department nor Bord Fáilte is aware of the list to which he refers. However, visitor attitude surveys single out the poor standards of our roads, not litter, as the biggest negative difference for Ireland versus other destinations. Sign posting remains on the agenda also, with one in ten expressing concern, and while criticism of negligence with regard to litter has lessened since 2000, one in eight tourists look unfavourably on Ireland in that respect. I propose to explore further with Government colleagues, with whom primary responsibility for these issues lies, the way these shortcomings might be more effectively addressed. It would be better if there was less litter in the countryside. Measures to prevent littering are the responsibility of another Minister but I will certainly discuss this matter with my colleague to see if there are further measures which could be introduced to reduce this problem. In general, people find that the Irish environment is excellent. There is little doubt that visitors to Ireland are consistently impressed by the environment and there is a considerable amount of evidence to suggest that people come because they regard the country as clean, healthy and, to a large extent, pollution free. Yes, there are areas which could be improved and litter is certainly one of them.

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