Engagement with Tourism Ireland

We are now back in public session. After a morning discussing health and social issues we are moving back to one of our all-island bodies that was unable to join us at the previous session. We are delighted, however, that they could come in today to talk about an issue that got a lot of headline coverage yesterday from some of our speakers so we look forward to further engagement. I am delighted to welcome both of our guests from Tourism Ireland. Before I invite them to make their opening remarks I will read out the standard note on privilege.

Members are reminded of the longstanding parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the houses or an official, either by name or in such a way as to make them identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. If they are directed by the committee to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected to the subject matter of these proceedings is to be given, and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

With that out of the way, I invite Mr. Niall Gibbons to make his remarks.

Mr. Niall Gibbons

I thank the Chairman and the Senators. My name is Niall Gibbons and I am the Chief Executive of Tourism Ireland. I thank the committee for the opportunity to address it here today. As members will know, Tourism Ireland is the organisation responsible for marketing the island of Ireland overseas. We undertake marketing campaigns in 23 key source markets around the globe.

Tourism is a vital industry for the island of Ireland. It is a significant driver of economic growth and helps to support more than 281,000 jobs in communities right across the whole island. Overseas tourism has recorded six consecutive years of growth. Last year, 2016, surpassed all previous records, where we welcomed some 10.3 million overseas visitors, spending more than €5.3 billion. Northern Ireland has shared in that record growth. In fact, last year it welcomed more than 2.1 million overseas visitors, an increase of 9% over 2015, generating more than £543 million for the Northern Ireland economy. That is an increase of 12%.

This year, 2017, represents a mixed picture. The latest CSO figures show continued strong performances in the first four months of the year. North America is up 27%, Australia and developing markets are up 18% and mainland Europe is up 3% overall. Visitor numbers from Great Britain to the Republic of Ireland, however, declined by 8% in the first four months of 2017. Of greater concern is the fact that British visitors to Europe increased as a whole in the same period. This means that the island of Ireland has lost market share. In fact, we have seen the annual rate of growth in British visitors go from a rise of 8% in 2016 to a drop of 12.4% in the month of April 2017 alone. This is quite a change.

The UK voted to exit the EU last June and Tourism Ireland took immediate steps to deal with that new situation. These included: market research undertaken by RedC in Britain to evaluate consumer sentiment on holidaying in Ireland; market assessment of economic trends by Oxford Economics; liaison with key tourism industry partners to assess implications; and liaison with key international partners and bodies such as the European Tourism Association, ETOA, and UKinbound, to gauge reaction and implications.

According to Oxford Economics, outbound holidays from the UK will decline by 1.5 million trips this year. It estimates that travel to the island of Ireland from the UK will decline by 4% in 2017. This means we are likely to welcome 141,000 fewer British visitors this year and experience a shortfall in tourism revenue of €43 million - and this is before any withdrawal from the EU or any attendant changes.

In addition, our Red C survey found that of those Britons who will holiday overseas, 50% are likely to spend less on holidays, 26% will change their accommodation type, 25% will reduce their length of stay, 18% say the Brexit vote will influence their holiday choice in the next year and 17% will think about postponing a trip outside the UK.

The other major issue identified relates to currency and competition. Ireland's competitiveness as a destination is also under pressure. The movement of sterling versus the euro and dollar since the referendum makes Great Britain a more competitive destination for visitors from mainland Europe and the United States. We have observed our competitors, VisitBritain, VisitScotland and VisitWales, intensifying their operations across all of Ireland's major tourism markets to capitalise on this.

According to Britain's Office for National Statistics, inbound tourism to the UK was up by 7% in the early months of 2017. Bookings for flights to the UK for spring and summer are up by 19%. Staycation searches within the UK are up by 25%. In terms of Ireland's competitiveness, searches on Booking.com for hotel accommodation across a basket of European cities - Amsterdam, Barcelona, Copenhagen, London and Paris - show Dublin to be the second most expensive. Our value for money message is more important than ever in 2017.

The challenge of Brexit is very real. As outlined earlier, we are beginning to see the impact in the latest CSO results for visitors from Britain to Ireland. Working closely with our tourism industry partners, and with the Department of Transport, Tourism and Sport and the Department for the Economy in Northern Ireland, Tourism Ireland has identified and is implementing a number of strategic actions to mitigate the adverse impact. First, we are pursuing a strategy of market diversification. This strategy commenced in 2014 and focuses more effort on markets with longer staying and higher spending visitors. This saw mainland Europe become the largest contributor of overseas tourism revenue with €1.8 billion spent in 2016 and if current trends continue, North America will overtake Britain as the number two market in 2017. This spring, our national TV campaign in the United States of America reached an estimated 255 million potential visitors and our TV and digital campaigns in Germany and France reached 36 million potential visitors. Second, Britain will continue to be an important market for the island of Ireland. As mentioned earlier, competitiveness and value for money are more important than ever. Tourism Ireland is placing greater emphasis on the consumer segment that we call the culturally curious, who are generally less affected by currency fluctuations than other groups of travellers. In Britain, we have a year-long marketing programme in place with greater focus on digital marketing, cinema and online advertising and publicity. Our expanded partnership programme with airlines, ferry operators and tour operators, is communicating strong price-led messages to drive home the value-for-money message. One example is the partnerships we have developed this year with Stena Line, Irish Ferries, Rosslare Europort and Waterford, Wexford and Kilkenny county councils to attract British visitors to Ireland's Ancient East.

Great Britain is a vital market for tourism to the island of Ireland. To the island as a whole it delivers 47% of all overseas visitors and around 30% of all overseas tourism revenue. The British market is even more important for Northern Ireland. Britain accounts for 65% of all visitors and 58% of all tourism revenue there. We simply must continue to defend our share of this highly competitive market. Against this backdrop, the tourism marketing budget has seen a 34% reduction over the past nine years.

We have also identified a number of key priorities from an overseas tourism perspective arising out of Brexit. Retention of the common travel area and free movement of overseas visitors across the Border are both vitally important for the continued development of tourism to the island but especially for overseas tourism to Northern Ireland and to Border counties. On average, 75% of visitors from North America to Northern Ireland and 66% of visitors from Europe arrive via the Republic of Ireland. In addition, about 950 international tour operators now programme Northern Ireland, predominantly as part of an island of Ireland tour. Any impediment or perceived impediment to free movement between the two jurisdictions and delays at Border checkpoints could discourage tour operators from continuing to programme Northern Ireland and Border counties and holiday visitors from travelling between the two jurisdictions.

With regard to developing markets such as China, India and the Middle East, the British-Irish visa scheme, introduced in 2014, and the short stay visa waiver programme, introduced in 2011, have provided a significant boost to our promotional efforts in these markets. Tourism Ireland and VisitBritain signed a memorandum of understanding in April 2014, with the aim of working more closely together - particularly in long-haul markets outside of Europe and North America - to promote the island of Ireland and Great Britain as destinations to be visited as part of a single holiday. Over the past three years, the two organisations have worked together to highlight the British-Irish visa scheme in India and China. We welcome the recent announcement that the short stay visa waiver programme is to be extended for a further five years to 2021. The ongoing status of the British-Irish visa scheme requires clarification.

On a more positive note, we were very pleased that the World Economic Forum's global travel and tourism competitiveness index now ranks Ireland at number three in the world, out of 136 countries, for effectiveness of marketing and branding to attract tourists. This has been achieved despite, diminishing resources, through the development of world-class marketing programmes, including a significant digital footprint. Ireland.com now attracts close to 20 million visits a year and is available in 11 languages. Tourism Ireland is the fourth most popular tourism board in the world on Facebook, the fourth on Twitter and the third largest on the globe on YouTube. The creation of award-winning digital campaigns has capitalised on our connections with "Game of Thrones" and "Star Wars" and has allowed us to reach new audiences and millions of active fans across the world. Campaigns with the major air and sea carriers serving the island of Ireland and with traditional and online tour operators leverage significant funding each year from the commercial sector. This is encouraged also with investment by Irish Ferries and Stena Line in the past few years.

Our annual overseas publicity programme and our relationships with 22,000 international media around the world, generate positive exposure for the island of Ireland worth an estimated €326.7 million each year and greatly influences perceptions of Ireland overseas. It is, however, not just about marketing. Favourable winds such as a 42% increase in air access since 2010, particularly on transatlantic routes, supportive currency exchange levels, the current fashion status of the island of Ireland as a location for "Star Wars" and "Game of Thrones" and our capacity to shift to new, lower cost, digital and social media marketing have helped to deliver record performances to the island of Ireland over the past six years, despite diminishing budgets. Few, if any, of those factors will continue indefinitely. This spring, we will see the impact of exchange rates on the market from Britain. Research is also showing a significant and worrying diminution in what we call Ireland's share of voice, or visibility, in our top markets. Over the past year, we have seen major competitors intensify their marketing - not just in Britain where there is a major push for domestic holidays but also in North America, mainland Europe and Australia - in Ireland's most important tourism source markets.

It is not just about tourism boards. For example, last year Ryanair announced 15 new routes into Scotland from mainland Europe, including Germany, France, Italy, the Netherlands and Spain. Another critical component is the future of the EU-UK open skies agreement, which has the potential to have significant downside risks for Ireland if a successful solution is not found. In addition to this, a range of practical issues have been flagged by ferry operators in respect of the impact of Brexit.

The challenges are very real. We all know the world is a very turbulent place. I convey my condolences to the people of Manchester and London on the recent tragic events there. Issues of safety and stability, consumer confidence, exchange rates, energy and oil prices all play a role in the global tourism market.

Notwithstanding that, Tourism Ireland is working with industry partners to grow overseas tourism spend this year by 4.5%. We also aspire to deliver on the Irish Government and Northern Ireland Executive's long-term targets, the success of which will be dependent on the external factors I have already mentioned and the resources to implement world-class marketing campaigns in our overseas markets. I thank the committee for the opportunity to present today and I am happy to discuss these matters in further detail in the question and answer session.

I thank Mr. Gibbons. I have some questions but I will first go to my colleagues if they would like to come in at this point.

I thank Mr. Gibbons and Mr. Clarke for their attendance today and for the presentation. I want to hone in on the figure that has been given of an 8% decline in people visiting from Great Britain. Is this to the whole of the island of Ireland or just to the Republic?

Mr. Niall Gibbons

That decline relates to the Republic of Ireland for the first four months.

Equally, I note from Mr. Gibbons's presentation that while people are travelling, they are making a different choice to go to mainland Europe. I wonder why this is. I see the figures in the Red C survey on Britons' attitudes to travel but we must ask why those who travel are not opting for Ireland? The way Ireland is marketed is very impressive and even being Irish we get a certain pride from the images that come at us about what it means to be Irish. I am not saying this is what it is to be Irish but the whole promotion definitely has a very positive feel about it.

If we are to be ahead of the curve and looking forward into markets and trends, we know that people will not keep doing the same thing all the time and that people get older. Mr. Gibbons can tell me more about this than I can tell him. What do we need to do to avoid sliding? Mr. Gibbons has identified areas where flags are being raised. What do we need to do?

In the neck of the woods where I am from - they are sick of listening to me talking about it - in the west of Ireland, I believe that the Wild Atlantic Way has been fantastic in that it has shifted focus northwards. Traditionally perhaps it stopped at Galway and went south. There are towns and villages where people with bed and breakfast accommodation rarely had guests but now are at capacity. It has brought a new vibrancy. In terms of the marketing, what more can we do? To me, there is way more potential. Notwithstanding the numbers, we are talking from a very low base. I am excluding on the western seaboard Westport because that was already in formation as being a strong performer in both domestic and international tourism. I am wondering about north of there. Naturally we do not want to sit on our laurels and want to press on. What advice would Tourism Ireland give to community groups, councils and different bodies involved in these areas? They are trying to promote their areas and are doing their best at every opportunity. I noted with interest a blog by a North American tourist that was posted widely on Facebook. For some reason, he went off the main track and went north of Galway and ended up in County Mayo and around counties Sligo and Donegal. He was blown away and could not get over how people do not know about it. I know this is an individual with a blog but it reinforces what I am saying, which is that there is an awful lot there. It is wild and it is not very commercialised. What advice would Tourism Ireland give the people there? There are limited resources to market. What is the best way to do it?

Coincidentally I wanted to take Mr. Gibbons up on that point as well, because I was taken aback by the drop in UK visitors here. I said straight away to myself that it was the effect of the sterling-euro rates. He carried on to state, however, that the number of UK citizens travelling to the EU had not changed but that involves the same exchange rate. I would like to hear the answer on that one.

With the Brexit scenario, could there be a silver lining? If we manage to negotiate and maintain our common travel area but it is more difficult for UK citizens to travel to the Continent, could that potentially open up a bigger market for us due to the ease of access? Have we any plans in place to sell along those lines depending on the outcome of the negotiations? Has there been any thought been put into that? Are there other worldwide options that we should be exploring? We would be the only English speaking area in the EU etc. Could there be potential here down the line?

I compliment Mr. Gibbons on the figures he has given over the years. Thanks to the great work of Tourism Ireland, tourism in Ireland is a real success story. It is a success story to date. I know there is the little blip that is Brexit in every sector. As the Chairman pointed out earlier, this is our 38th or 39th hour here interviewing and meeting people from all the different sectors. There are no, or not many, positives in any sector or area. Tourism will be no different. Can we turn it around to a positive? At the end of the day that is the question I am asking.

The great thing about allowing colleagues to go first is that that was one of my questions but I have two other ones. We heard in general economic terms in other sessions about the need - for obvious reasons - for capital infrastructure. Many of those feed into the transport sector, which I can only imagine will have a major impact on the tourism sector. These include the development of our ports, not just for commercial reasons but also for tourism and leisure reasons, as well as the development of metro north, the DART underground and the M20 among so many other projects. Are there other key capital infrastructural programmes Tourism Ireland would identify as being vital for promoting and maximising the tourism product that the island of Ireland could offer? Excuse me if this is a little blunt, but what additional resources has Tourism Ireland received post-Brexit, what has it asked for and what more does it need?

Mr. Niall Gibbons

I will start at the top and give some detail on the figures. When the referendum was held last year and the result turned out the way it did, we went immediately into action mode. We visited the UK to interview some key players in the marketplace there. We asked Red C to carry out a survey on consumer sentiment, which is critical in our business. Economic sentiment has a huge impact on people's intention to travel. Some of the figures I referred to were similar. We did the Red C survey twice. We did it in July and then again in January and there was little change in sentiment. Essentially, what it reflected is that people feel they are going to be poorer and that then they are going to spend less on their holidays.

We also wanted to watch how the British market would perform. To date what we have seen is that the British take approximately 65 million trips abroad every year in total. That is the size of the market. Oxford Economics, which advise us, initially reckoned that they would take 1.5 million trips less - a 2% reduction. We are now looking at travel into Ireland this year being down by perhaps 4%. The forecasts are starting to get worse rather than better. We only got the information in from the Office for National Statistics in the UK last week. This showed that the number of British people travelling into mainland Europe has slightly increased, which is interesting. We do not have all the information or the answer as to why. However, competitiveness is a key issue for us at the moment. It is there in the eurozone. However, we know, for example, from looking at booking engines such as Booking.com that Ireland's hotel prices are among the most expensive in Europe at the moment. We just took Dublin by way of example and benchmarked it against Copenhagen, Amsterdam, London and Paris. We were ahead of London and Paris. Only Amsterdam was more expensive. That was across a range of dates as we headed into the summer season. We have seen, according to STR data, average room rates in hotels increase by 8% again during 2017. We need to be mindful of this because we cannot expect to walk into 2017 increasing prices on last year when we have already had approximately 10% to 15% depreciation on currency. Competitiveness is absolutely and utterly crucial.

On the regional question, we are also at a point where at peak times of the year we have capacity constraints within our industry, both in terms of hotel accommodation and visitor attractions. It is vital that we start to work to develop season extension and our regional proposition. We have worked closely with our colleagues in Fáilte Ireland and Tourism Northern Ireland on products such as the Wild Atlantic Way and how it gets projected into the marketplace. The advice that I would give to community groups is to work with the people on the ground in Fáilte Ireland. We need to see and find out if there are ways we can bring the stories of all these small places to life in the overseas marketplace. People are coming to Ireland to look for an experience that stands out and about which they can brag. There are many places off the beaten track that offer that. It is important that people offer these experiences longer into the season than they currently do. It is very hard when in a rural area. Sometimes the season only goes from perhaps May to September. In our most recent meeting with our colleagues in Fáilte Ireland, we were encouraged to see them try to work with clusters of the industry to push the opening of the season out longer. Unless there are things to do and restaurants and visitor attractions stay open a little longer, it will be very hard to deliver that season extension.

The Wild Atlantic Way has been a great success. It has been really well received overseas. I always keep reminding people that our clock goes back to zero on 1 January and that we have to do it all again. The in excess of 10 million people it is hoped will come in 2017 are not the people that came last year. When we speak of a spend of a 4.5% increase, it is really a 104.5% because all the people that come this year are not be coming back again. We have to keep on working with the industry on the ground. The northern part of the Wild Atlantic Way offers an awful lot of opportunity because there is a lot of congestion on the southern part of the Wild Atlantic Way. I know that our colleagues in Fáilte Ireland are looking at places such as Sliabh Liag in County Donegal and towns such as Sligo that offer additional capacity for us to sell into the international marketplace.

Is there a silver lining to Brexit? Last year 1.2 billion people took trips around the globe spending approximately $1.5 trillion. That is the size and scope of the global travel industry. Forecasts from the United Nations World Tourism Organization are that it will continue to grow by approximately 4% to 5% per year and that there will be approximately 1.8 billion people taking trips around the world by 2030.

Brexit will come and go, and I do not know how it will unfold, but people are still going to travel and we have to make sure that we have sufficient visibility in the international marketplace to grow our fair share of that. Everybody in the political and business world would like the common travel area to remain but our market diversification strategy, which we started on way before Brexit came into existence, has seen some amazing results. Our growth in places like France and Germany has been really spectacular. Spain is now our fifth largest tourism market and has seen business quadruple in the past 15 years, to the point were we have 400,000 people visiting Ireland every year. Italy has grown very strong. Operators from China are reporting very strong double digit growth on the back of the British-Irish visa scheme and some of the promotions that are on offer. The silver lining that will come out of it is our capacity to diversify and grow as much business as we can from other markets, but we must get the message out there that we are not giving up on Britain. It is still a really important market for us, but when one's budget is down by 35% one has to make tough choices. We cannot be out there with the same level of visibility that we had five or six years ago. That is a big risk for us.

The responsibility for capital infrastructure largely falls to our colleagues in Fáilte Ireland. They have spending proposals but I cannot elaborate on the detail of what those are. Some of the projects mentioned there are important. As our main tourism sites get busier and busier it is really important that we develop a second tier of visitor attractions, and Fáilte Ireland have submitted capital proposals to that effect. I do not have the details of those today, but I am very supportive of that.

We have made the point that we cannot continue to grow at this rate while our share of voice starts to shrink. It has been shrinking in the last number of years. Our visibility in all our key main markets has been falling at quite a rapid rate over the last number of years, and Ireland's ranking compared to competitor destinations has been falling as well. That is a concern for us. As part of the tourism action group established by Deputy Paschal Donohoe when he was Minister for Transport, Tourism and Sport there was a commitment to restore the tourism marketing budget, although it was silent on the timescale. We saw our budget stabilise in 2017, although as a result of the collapse in the value of sterling versus the dollar we were left nursing a wound of over €1 million in exchange rate losses. We get a grant of £11 million from the Department of the Economy in Northern Ireland which more than covers our spend in sterling in the UK, but we have to then convert that to US dollars. We lost over €1 million last year on the currency exchange because of the collapse of sterling against the dollar. These things have had unintended consequences for us. We sought restoration of budget in discussions as part of the development of our corporate plan over a four year period. We have not been successful in that yet but we will keep hammering away at it. However, we have seen great successes and we are delighted with them. I thank the committee for the compliments. It was nice that the World Economic Forum gave us a good accolade as well. That is only sustainable for so long. We are in the business of generating economic growth here. We intend to generate spend this year in excess of €5.5 billion. The summer season still appears to be very positive, because the exceptionally strong growth that we have in North America, the very strong growth we have had in long haul markets and the modest growth in Europe is certainly painting over the mixed picture that we are seeing. That 8% fall in Britain is quite a worrying trend.

I thank the witnesses for their contributions. I am proud to say that I am staycationing this year and doing my bit for the cause. Perhaps it is because I had to pay for a Seanad election last year, but that is neither here nor there.

The Chairman can staycation and go abroad on holiday.

I thank the witnesses sincerely for their contributions and for the detailed answers to our questions. We are now going to suspend the meeting as time has caught up on us.

Sitting suspended at 1.15 p.m. and resumed at 2.35 p.m.