I welcome the representatives of Tourism Ireland, the Irish Tourist Industry Confederation and the Irish Tour Operators Association. Tá fáilte romhaibh go léir. Beidh seans agaibh bhur gcás a chur roimh na comhaltaí atá anseo inniu. Ina dhiadh sin, beidh deis againn ceisteanna a chur oraibh. I welcome Mr. Paul O'Toole, who is the chief executive of Tourism Ireland, and Mr. Mark Henry, who is the body's director of central marketing. I also welcome Mr. Eamonn McKeon, who is the chief executive of the Irish Tourist Industry Confederation, and Mr. Dick Bourke, who is the confederation's chairman. I also welcome Ms Jane Magnier, who is the president of the Irish Tour Operators Association. I presume Mr. O'Toole will make the first presentation, on behalf of Tourism Ireland. We will then receive a presentation from the representatives of the Irish Tourist Industry Confederation.
Future of Tourism Industry: Discussion with Industry Representatives.
Mr. Paul O’Toole
I thank the Chairman and the members of the committee for the opportunity to outline the role and function of Tourism Ireland and discuss some of the issues facing the tourism industry. As members are aware, Tourism Ireland is responsible for marketing the island of Ireland overseas. The organisation was established as one of six areas of co-operation under the framework of the Good Friday Agreement in 1998. The company was incorporated in December 2000 and came into operation in January 2002. It took responsibility for promoting Northern Ireland and the Republic overseas from the Northern Ireland Tourist Board and Bord Fáilte, respectively, on that date. While many forms of co-operation were taking place in the tourism sectors North and South, the establishment of Tourism Ireland facilitated the development of a cohesive and well-targeted approach to publicising the appeal of the island of Ireland. This structure, which has been used to maximum effect, has proven successful in a highly competitive global marketplace. Tourism Ireland's team devises and delivers world-class marketing programmes in over 24 markets across the world. In encouraging consumers to discover the island of Ireland, it co-operates closely with industry partners on the island of Ireland, as well as the overseas travel trade, on-line operators, the media and air and sea carriers. Our dynamic and flexible people, systems and processes have demonstrated the capacity to change and respond to the current fast-moving business environment.
It might be helpful to reflect on the recent performance of tourism on the island of Ireland. Following the geopolitical and health-related upheavals of the early years of this decade, overseas tourism has enjoyed six consecutive years of growth. Despite increasing challenges in the marketplace, some 48 million overseas tourists came to this island over that period. They spent almost €23.6 billion while they were here. Ireland is out-performing its peers. Since 2001, inbound tourism to Europe has grown at an average annual rate of 3.6%, whereas inbound tourism to the island of Ireland has grown by 4.4%.
A record year for overseas tourism was 2007, with over 9 million overseas visitors coming to the island of Ireland. They generated almost €4.5 billion in revenue and contributed an estimated €2.3 billion in tax revenues to the Exchequers on both sides of the Border. While certain pressures emerged in late 2007, no one could have foreseen the depth and speed at which the global economic downturn gathered pace. Its consequent impact on businesses in every sector, including international travel, could not have been predicted.
Despite the tough market conditions of 2008, we have optimised our marketing investment throughout the year to maintain a strong presence in all our markets. We have adapted our approach in Great Britain and the United States to emphasise the affordability of getting and staying here. We are running a range of tailored regional promotions in conjunction with the Fáilte Ireland regions, Dublin Tourism, Shannon Development and industry interests on the ground. Those involved in the campaigns are working hard to secure improved regional distribution of tourism. We are doing everything we can to ensure that the island of Ireland is to the front of consumers' minds when they are deciding where to go. Maintaining investment in tough times has paid off in the past. By 2007, Ireland was one of the few European destinations to have recovered fully from the downturn in travel from the US that followed the events of 11 September 2001. Our strategy, which involves maintaining our levels of promotion and presence, will ensure that the island of Ireland is well positioned for recovery when consumer confidence recovers.
The latest figures from the Central Statistics Office, which relate to the first eight months of the year, highlight the challenges faced by the tourism sector this year. They show that there has been a marginal decrease of 0.8% in visitor numbers, when compared to the same period last year, but that figure does not convey the full picture. Many tourism enterprises are finding that trading conditions are challenging. It is a tough time across all our key markets. As we know from our industry colleagues, the period from now until next March looks like it will be equally, if not more, challenging. Despite the continuing credit crunch and the economic volatility throughout the world, there is business to be won. Tourism Ireland is running a wide range of marketing programmes across its key markets.
I will summarise some of Tourism Ireland's key priority areas. As I have mentioned, we are trying to increase the distribution of overseas visitors to all the regions of Ireland. Changing trends in the marketplace, such as the growth in popularity of shorter, urban-based breaks among time-poor consumers, shifts in behaviour such as last-minute booking and purchase decisions and the decrease in car touring, are having a particularly strong impact on tourism businesses in rural areas. Improving the distribution of tourism to the regions has been a key priority for Tourism Ireland for many years. We have been implementing special, tailored campaigns for the regions in addition to our core marketing programme. In co-operation with Fáilte Ireland and the various regions, we are emphasising regional themes, reasons to visit and ease of access. In 2008, we launched a new €3 million marketing campaign, Discover Ireland's Wonderful West, which is designed to boost business to the Shannon Airport catchment area in the aftermath of the open skies agreement. The marketing plan was devised by Tourism Ireland in consultation with local tourism industry representatives, Fáilte Ireland and Shannon Development. It highlights the attractions of the western region from Kerry to Donegal. It points out that the region is easily accessed from many gateway cities. It emphasises that good value fares and inclusive packages are available. It showcases a range of compelling offers from local industry.
As Ireland is an island, direct, convenient and competitive access services will continue to be critical if it is to achieve overall tourism growth and strategic targets. The significantly increased air access that we have enjoyed in recent years has underpinned the strong growth in overseas tourism. A number of factors are having an impact on the sustainability of air and sea services. It remains to be seen how services to Ireland will be affected in the coming months and into next year. Tourism Ireland will continue to work hard to undertake significant co-operative marketing campaigns with airlines, ferry companies and air and sea ports to generate demand and secure our mutual economic goals.
Tourism Ireland has just finished shooting its new global advertising campaign as part of its complete new suite of marketing communications. This work is the culmination of the major review of the Ireland brand that was undertaken last year. The review involved considerable input from industry interests across the island. When I use the term "brand", I am talking about the central ideas relating to the island that we promote to encourage people to consider visiting here. The review has ensured we can have confidence in our brand proposition, which continues to resonate strongly with overseas consumers. The warmth of the welcome offered by Irish people and the beauty of our island differentiate Ireland from other destinations. They are the primary factors that inspire visitors to choose the island of Ireland as a holiday destination. We are focusing on them in our new marketing campaign, which emphasises Ireland as the island of character and characters. We will launch the new marketing communication materials to the tourism industry in late November and roll out the campaign in all our markets from January 2009.
I wish to speak about e-marketing. Tourism Ireland invests approximately 25% of its total marketing budget on-line. It is concentrating on building capability across our operations. It maintains 41 websites in 19 languages, serving markets across the world. Visits to the www.discoverireland.com suite of websites increased by 56% between January and October 2008. That increase was driven by mature and developing markets. The websites are designed to ensure that potential and repeat customers receive world-class information and can be easily directed to on-line and other purchasing opportunities for holidays, packages and access transport.
Business tourism, which is another important market segment, offers strong potential. Conference and incentive travel is worth in excess of €475 million per annum to the economy. While great strides have been made in developing business tourism, new opportunities will be opened up once the national convention centre comes on stream.
Equally important for future success is to broaden our horizons and look at the opportunities that new and developing markets present, in addition to our traditional core markets. Tourism Ireland has undertaken significant ground work in China, India and the Gulf states where we have carried out considerable travel trade and media activities. We intend sustaining this activity with a view to realising the excellent, medium to long-term prospects.
As members will be aware, over the past decade the tourism industry has worked its way through local and global upheavals. I have no doubt we will work our way through current difficulties. Tourism Ireland will continue to work closely with industry in Ireland and overseas through its representative bodies, including ITIC, our co-presenters today, and our commercial partners. While it is unlikely to be easy, I am confident that together we have the required experience and expertise. We are resilient and with a focused, cohesive effort, we will ride out the storm and be well positioned for recovery and a return to growth.
I thank Mr. O' Toole. I ask the Irish Tourist Industry Confederation to make its presentation, after which we will have questions.
Mr. Dick Bourke
I thank the Chairman and members for inviting the Irish Tourist Industry Confederation to appear before the joint committee and showing an interest in and support for our sector. The ITIC is the representative body of the Irish tourism industry. I will provide an overview of the importance and value of the industry to the economy, while Mr. McKeon, our chief executive, and Ms Magnier, the president o the Irish Tour Operators Association, a valued member of ITIC, will discuss the current circumstances and what needs to be done in future.
As Deputy Olivia Mitchell pointed out at an earlier meeting of the joint committee, tourism is the country's largest indigenous industry, contributing more than 7% to services exports and accounting for €1 in every €20 spent on goods and services in Ireland. Tourism supports in excess of 250,000 jobs across a range of sub-sectors and is a major source of employment in many remote areas. It provides a balanced spread of economic activity across regions, including in areas where there are few alternative economic and employment opportunities. Tourism contributes nearly €3 billion per annum in tax revenue to the Exchequer through expenditure on tourism related goods and services and income tax earned from related jobs.
We are pleased to acknowledge that, through their support, successive Governments have been key contributors to the success of the tourism industry in the past 20 years. We express sincere gratitude for this support, which I qualify only by noting that the sector gives back almost €3 billion per annum in taxes. By even the most hard-nosed measurements, this figure constitutes an excellent return on investment for the State. Last year, Ireland had almost 9 million out-of-State visitors, more than twice the population of the State, which is a remarkable achievement. These visitors produced revenues in excess of €5 billion. In addition, a further 8 million visits by Irish residents in the home holiday business produced €1.5 billion revenue, giving an overall industry worth in excess of €6.5 billion. The reason the value of the industry is not always clearly visible is that the sector is made up of more than 18,000 businesses, principally small enterprises.
Having outlined the background and historical performance of the tourism industry, I ask Mr. McKeon and Ms Magnier to discuss present conditions and future developments.
Mr. Eamonn McKeon
That was the difficult part. As Mr. Bourke indicated, the tourism industry has had a good run, enjoying 12 or 13 years of growth, with the exception of a brief period during 2001 and 2002 when we had to deal with the consequences of the attacks of 11 September 2001 and the outbreak of foot-and-mouth disease. However, Ireland recovered quickly from this double setback, better than any of our competitor destinations. For instance, the United Kingdom and France have not yet achieved the visitor numbers they recorded prior to 2001, whereas we had fully recovered by 2005. The principal reason was that we maintained a strong marketing presence overseas while other destinations pulled back. We must be mindful of this fact in today's circumstances.
While Ireland is not in a good place in terms of growth prospects for the next couple of years, in the medium and longer term we are optimistic that the present financial and economic conditions will bottom out and recovery will follow. We believe, however, that it will be a more gradual recovery, as we do not underestimate the level of destruction which has been visited on the personal wealth of consumers in our main markets, namely, the United Kingdom, the United States, Germany, France, Italy and the important domestic market. Nevertheless, the desire to travel will not diminish and international travel and tourism will eventually resume a growth pattern of between 3% and 4% annually. The question is when this will occur.
In the meantime, Ireland must maintain a high profile in all of our key markets to quickly exploit the upside economic recovery will bring. Above all, we must fight in the next couple of years to retain our market share. There is, however, another critical reason for maintaining a high level of marketing investment. Even in these difficult times, many millions of people will travel despite the prevailing circumstances. Next year, for example, close to 11 million visitors will travel from North America to Europe, Germans will take more than 70 million trips abroad and British travellers will make more than 60 million foreign visits. There is, therefore, a significant market, even if it is not growing in the short term. We must ensure we fight for and secure a share of these markets. This will not be easy and the industry is not sanguine about the size of the challenge.
Realistically, it is unwise to expect growth from any of our main markets in 2009. The best that can be hoped for at this remove is that any decline in visitor numbers will be kept to low single digits and we maintain market share. In recent years, the domestic market has grown at a fantastic rate, with revenue up by 60% in the past five years. We are, however, experiencing a rapid deceleration in this growth and expect some further contraction as the recession bites harder later this year and through most of 2009.
On the brighter side — without looking at the bright side one would give up which would not serve any purpose — we remain positive about the medium and longer-term position. Even now, we may be beginning to see some promising signs emerge. For instance, the fall in oil prices is a positive development and if the price stabilises close to its present level, it will have a positive impact on air fares and ease energy inflation. The strengthening dollar should help consumer confidence in the important US market. In 2002, 92 US cent would have bought one euro, whereas earlier this year one euro cost $1.60. This change makes selling in the US market particularly difficult, which is the reason the recent strengthening in the value of the dollar is encouraging.
There is also a quiet feeling that the concerted efforts of central banks and governments may finally be bringing some semblance of order and liquidity to world banking. In addition, interest rates are falling as central banks attempt to curb recessionary pressures. Provided banks pass on these lower rates to businesses and consumers — the Oireachtas has a role to play in this regard — we should see a general increase in consumer confidence. While I do not intend to make accusations, we are worried that as banks rebuild their balance sheets, they may be reluctant to pass on some or all of the interest rate reductions being made by the European Central Bank. When consumer confidence starts to recover, consumer expenditure will increase. We need to drive this process on the domestic market and overseas. However, I sound a note of caution because the recovery will be gradual rather than instant.
Before Ms Magnier commences, we will shortly suspend to allow members to attend a vote in the Dáil.
Ms Jane Magnier
While we cannot do much to influence major economic developments, we must take certain steps and address certain issues if we are to speed up recovery from the serious downturn in which we find ourselves. We must protect the massive tourism investment made to date, both public and private, and we must ensure that we are well positioned to exploit the upturn which will follow this down cycle. We must remain competitive as a destination, and in this regard the Government must move rapidly and decisively to address the issue of cost, value, and effectiveness in all areas of the public sector. The bottom line is that Ireland has a public sector that the country could ill afford even in times of economic prosperity. That must be addressed and reformed without delay.
We must avoid any fiscal or regulatory measures that adversely affect tourism. The €10 departure tax imposed in the budget is, to say the least, most unfortunate. The committee will be aware that Ryanair has responded by heavily reducing its presence in Shannon, and British Airways has cancelled its Dublin to Gatwick service. We would like to see the tax abandoned at this time, as it hits hard at a sector that is struggling through an extremely difficult period. The manner in which the tax is currently structured is ludicrous as it heavily discriminates against all airports in the west, Shannon, Cork, Knock and Galway. It is planned to charge €10 on all journeys over 300 km and €2 for journeys under 300 km. That means return flights from the west of Ireland to Britain will be €8 more expensive than flights from Dublin. That anomaly should be changed.
Tourism is one of the few industries that can bring economic prosperity and jobs to the most remote regions of Ireland, areas where alternative opportunities are fairly limited. That must be recognised, and no effort spared to protect those precious jobs.
New Horizons for Irish Tourism is a ten-year programme, published in 2003, which outlined a new strategy and action plan for Irish tourism for the period up to 2012. A mid-term review of the programme is now overdue, and the ITIC has been pressing the Minister for some time to conduct this important exercise. It should include reviewing performance against targets, the appropriateness of targets, and the implications for strategy as a whole. In addition, the review should extend the timeframe for the strategy to 2013, bringing it in line with the timeframe of the National Development Plan 2007-13.
The half-way stage was 2006 and while the visitor number target of 7 million for that year was met, overseas revenue earnings in 2006 were more than €400 million below target. A number of factors contributed to this poor revenue performance. Those factors include, the global trend towards short breaks, fuelled by increases in low cost access. The growing prominence of short breaks as a holiday choice is also driving a global trend towards shorter lengths of stay, which has a negative impact on total yield per visitor. A common trend is towards increases in travel by visiting friends and relatives, VFRs. As VFRs tend to spend less than holidaymakers or other promotable visitors, this trend adds a further negative impact on yield per visitor. Inflation in Ireland has exceeded inflation in most of our key source markets and, therefore, makes Ireland a more expensive destination to visit. Currency disadvantages arising from the recent strength of the euro, especially against the UK pound and the US dollar, have also made Ireland particularly expensive as a destination for British or US visitors, although the dollar has strengthened greatly in recent weeks.
Other factors include the slower than anticipated progress in delivering on some of the key drivers of future success outlined in New Horizons for Irish Tourism, such as terminal two at Dublin Airport and the national conference centre. Despite these trends, Ireland has managed to maintain its share of all visitor arrivals and receipts, as well as increased its share of visitor arrivals and receipts in Europe. A mid-term review of the new horizons programme would be essential, even if we were not faced with the global challenges of today. It is now critically important that there is no further delay on it being undertaken.
I suggest we adjourn for approximately 15 minutes. I invite witnesses to have a cup of coffee.
I thank all the witnesses for their contributions. I shall give members the opportunity to pose questions. We shall start with the Opposition spokesperson, Deputy Olivia Mitchell.
I welcome the witnesses and apologise that we interrupted their coffee. What impressed and surprised me most was the upbeat nature of the presentations from everybody. I cannot imagine any reason for being upbeat at the moment. There is an assumption that normal growth is going to resume. I know we all hope it is going to resume, but given the global recession, and more importantly the global uncertainty, I am, perhaps, somewhat less upbeat than the witnesses appear to be.
I believe Ms Jane Magnier mentioned the need for a review of the New Horizons report. I was calling for that myself recently, but now matters are so uncertain that one wonders how a strategy may be reviewed based on predictions that are just so ephemeral. It is hard to know what direction anything is going at the moment. However, as Mr. Eamonn McKeon said, one has to assume things will be all right and that we will be back on track.
Looking at the factors that influence people taking holidays, online information, easy access and cost appear to be the recurring themes in all the presentations. Online information is absolutely crucial, and I am glad to see investment in that, because it is absolutely essential. Easy access and cost I have worries about. I wonder whether there are concerns within the industry, and Tourism Ireland in particular, about the loss of routes into the country — for instance the loss of routes to the Middle East and consequently to Asia. There were great hopes of growing markets in Asia and indeed, the Middle East. We have lost a number of connections. The consolidation and closure of airlines is a worry. Then there is the question of access within Ireland — the closing off of the roads programme, for instance, as regards connections to Galway, Shannon, etc. that are being postponed — which will make an enormous difference to tourism. The capital city will survive, even if it does not prosper in the coming years. However, the real worry I have for tourism is outside Dublin, in the regions, where it is often the only employment in some parts of the country.
I wonder whether the loss of airlines is a worry and the failure of open skies to deliver. Perhaps that was connected to the fact the US dollar lost so much value at the time of the advent of open skies. The other point about costs, specifically the departure tax, is something I raised this morning. I was just talking to the European Commission which is taking up the suggestion that while it might not be contrary to the freedom of movement of people concept, there might be competitive issues that may result in a change. Hopefully, it is not a change that will increase the cost of the tax for everyone, regardless of where one is departing from.
The other matter that occurred to me during the week is the increase in taxi fares. Matters such as this are happening totally against the run of play. They are not happening within the industry per se but are actually being imposed by regulators and other bodies which really should know better at this stage. When the cost of virtually everything is going down worldwide, we are deliberately putting up our costs in an island country that is finding it very difficult. I realise that is not a question and that I am now ranting. However, my question is about the whole issue of access, which is, perhaps, something we have reason to worry about — and of course, about costs.
I thank all the contributors for their presentations. As has been said, they were very upbeat, given the particularly difficult climate. I will follow on from Deputy Mitchell's contribution on the emerging markets and the issue of direct flights. What input do the witnesses' organisations have into establishing direct flights, particularly as regards the Middle East, Africa and the Far East? It is a major issue and is regularly raised by the embassies we speak to as regards access. Mr. Paul O'Toole specifically mentioned this in relation to getting access to the country — the provision of direct flights or the possibility of their introduction. I understand the economics, but given that London, one hour away, has daily flights to the Far East and Middle East, is there any possibility of getting aircraft to land here first and then go on to London, or whatever? In what manner do the organisations feed into that vis-à-vis the Department of Arts, Sport and Tourism and the Department of Transport?
As regards specialist tourism and Ireland's attractions — golf, fishing, rambling, cycling etc. — what efforts are being made to sell that sector abroad and do we need to do more? In a particularly difficult time economically, do we need to specialise and concentrate on the natural assets we have and how to sell those abroad? Fáilte Ireland was recently before the committee and it seems to be concentrating on promoting and developing what we consider to be our natural assets. How do the organisations see that progressing in the future, and should we be concentrating on this?
I thank the witnesses for the excellent presentations. Like Deputy Mitchell, I was impressed by their upbeat nature, but I want to pose a couple of questions. Given that tourism is Ireland's largest indigenous industry, are we pricing ourselves out of the market? Have we reached a point where the cost of coming for a recreational holiday is becoming prohibitive? I pose the question in a particular context. I know of a couple with three children who spent €1,100 renting a three-bedroomed holiday cottage for a week with additional costs for food, entertainment for the children, etc., as against going abroad.
As regards my second question, the cost of doing business in Ireland has not been addressed. I hope local authority managers, at city and county levels, will not increase commercial rates in response to the budget. These affect small businesses, whether coffee shops, restaurants or hotels as well as smaller hotels and bed and breakfast outlets.
Has there been negotiation with the Minister for the Environment, Heritage and Local Government and with the County and City Managers Association on the issue? I hope that we will hold the commercial rate, but I would like us to look at the cost of doing business. Last Saturday night I attended a function at a hotel in Dublin. I ordered a cup of tea and two plain chicken sandwiches. Although I admit that I ordered them at 3 a.m., the cost was €21. I ordered the food at reception, as I did not want room service, but €21 for such food is absolutely farcical.
Ms Magnier referred to the public sector in her presentation. I hope that we will not have a debate on the public sector versus the private sector. I have no problem with reform of the public sector. However, what have the witnesses' organisations done to reduce the cost to the consumer of holidaying in Ireland? While we do need reform of the public service, let us not lampoon public servants in this debate.
Deputy Brady made a very good point about sport. I have a serious concern that we are about to lose the Irish Open in golf. There has been little news about it, although I read Mr. O'Grady's remarks recently in the newspapers. As Deputy Brady said, golf is a great vehicle to promote Ireland, and I believe that we failed to capitalise on the Ryder Cup. Part of the problem is due to the fact that our golf clubs have priced themselves out of the market. Mr. Bourke as a renowned golfer might be able to explain what is going on.
The banks do not have an obligation to the big developers, but to the small operators running small bed and breakfasts, small hotels, restaurants and coffee shops. They need to pass on the interest rate cuts and they need to allow for a bit of liquidity in the market, but they have not done that. We must be serious about the promotion of our tourism industry. The bank executives who said everything was fine a few weeks ago are misleading people and are not helping to promote employment growth, especially in tourism.
Have we lost our sense of Irishness in the tourism industry? I stay in a hotel when I am in Dublin and possibly two of the staff of ten are Irish. People come to this country for the céad míle fáilte, and our Irish language and culture needs to be better marketed. For example, Fleadh Cheoil na hÉireann is a wonderful exhibition of what it means to be Irish. I hope that events like these are promoted. I thank the witnesses for their presentation. I hope the upbeat outlook is justified, but I have some concerns.
I welcome the witnesses and I am glad their report is upbeat. No more than in any other business, they should not sell in a negative mode. When the going gets tough, the tough get going and that is what we expect of them. They pointed out that the euro was worth $1.50 last year, but is now worth $1.20 and will probably drop even further. I congratulate them on their report. I expect them to be upbeat and to be out there to meet the challenges. That is what Ireland Incorporated needs.
When representatives of Fáilte Ireland came before us, I spoke about golf tourism which I believe is completely undersold. When we consider the moderate Irish winter climate, there is no reason we should have not have golfers playing here, especially with the range of renowned links courses in Ireland. We are falling behind and do not seem to have capitalised on hosting the Ryder Cup. Factors like the weakness of the US dollar and US elections all impact on Americans when deciding whether to leave their country. However, golf tourism is an area that can grow. I do not say this because I play the occasional game of golf. Many Irish golfers head to Spain and Portugal, but there are also people who are happy to see the odd shower of rain and who do not get too cold.
Another issue relates to pop concerts. It annoys me when an international star comes over for a one-day event. There is absolutely no other gain made. I will be going to see Tina Turner in concert next April. The stadium in which she plays will be jammed and I believe there is a role for the tourism organisations to package something together. Rather than leave it to promoters to bring over the artist, sell the tickets, take their money and run to London, Birmingham or wherever the next event takes place, the tourism organisations should invite these artists over and bring them around the country. Hotels, restaurants, pubs and so on would benefit. A major opportunity is being lost here.
Traditionally, foreign visitors come here from the US, Britain and Germany. Up to 15% of our workforce is from Poland, Latvia and elsewhere in eastern Europe, so there is an opportunity for us to target the families of those people. If they are happy to come here to avail of jobs, I see no reason we cannot tell their families that this is not a bad place to come on holiday. What are the tourism organisations doing in this respect?
What are the organisations doing to promote the national convention centre? We know that it will be operational in the next two to three years. Are we targeting the rest of the world to let people know that we are open for business, that we have the facilities, and that we have retained the céad míle fáilte?
Following yesterday's election in the US, we will now have President Obama with a great-grandmother from Offaly.
Joe Biden has Mayo connections.
That is a double whammy. I have not yet figured out whether JFK is my 51st cousin, but I am still trying to get back that far. I might find out sooner rather than later, but I am not sure if it is any good at this stage. Barack Obama is obviously the big name in the US. It would be fantastic if we could get him to come here, and I know the Taoiseach will be working on that. It would be fantastic for tourism in this country if we could tell people to come to Ireland and see where Barack Obama came from, as we did with JFK.
In line with practice, I ask the witnesses to respond to a few questions. We will then have the final round of questions.
Mr. Paul O’Toole
The upbeat nature of our presentation reflects three things. As a marketing body, it is our job to accentuate the positive. We look for the silver lining in every cloud, and if we did not do that, we would not be doing our job properly. However, it cannot all be grounded on optimism alone. The overall optimistic beat, certainly from the perspective of Tourism Ireland, is built on the worldwide research which shows that people want to travel. While times might be a little bit tougher right now, there is an underlying desire to visit other places. We believe that the island of Ireland, which has demonstrated its capacity to grow business in that environment, can do so. That is what is underpinning the environment, not just our opinion or innate optimism but looking at global trends and the opportunities within those.
It is important to distinguish between the present, as in the latter part of 2008, and the early part of 2009 at least, if not 2009 as a whole. We will undoubtedly be facing tougher times over that period and we are not alone in that as every other destination will be the same. We are distinguishing clearly between managing the difficult times and positioning the island of Ireland for recovery. Clearly, it is difficult now and will be difficult, but we believe we will get back on track as the world gets back on track in terms of economic conditions. Our fortunes are inevitably tied to the economies of our main trading partners. As they improve, we will position ourselves to improve also.
A number of questions related to the importance of access and some of the issues in regard to its retention in the short term and the development of new opportunities, such as the importance of looking east in the future, which is a critical point. As we have consistently said, direct competitive and convenient access to the island of Ireland by sea and air is fundamental to our business. When that access was increasing both in extent and competitive nature, this helped drive the fortunes of the business. If it retracts in the short term, it will inevitably have an impact.
Our latest research shows that there will be a fall-off of capacity over the winter period and we expect this to have an impact. However, in the short to medium term we will be working hard to promote the inbound portion of whatever seats are available by sea and air. Those flights and ferries take people out as well as bringing them in but we work on inbound promotion. We would have an extensive and increased focus on this in 2009 while absolutely recognising that the environment has changed.
In terms of looking to new markets and longer haul, a couple of points were raised in regard to how services from the Middle East have expanded and contracted and what this means for the future, and also about the potential to open up new cities and opportunities for Ireland. If one considers the recent past, our first route from the Middle East was from Bahrain with Gulf Air and Aer Lingus quickly followed and opened a Dubai route. Both of those services have fallen off the radar but a new carrier, Etihad, has opened a route from Abu Dhabi and has had probably one of its most successful launches to any destination, by its own testament. It began earlier this year with four services a week and rapidly grew this to seven services. The benefit of a daily service is that it opens new opportunities for us but it also underpins the fact direct services from new points help expand opportunities.
Within Tourism Ireland, we have reviewed all the possibilities for long haul development into the future and we believe they exist. The one bright light in this difficult year is that any growth we are having is not from our traditional markets but from those newer markets. I must add a caveat that it is still a very small portion of our business but, looking forward, there are opportunities and access will be critical to their development.
A point was made in regard to specialist tourism such as festivals, golf and so on. I will pass over to my colleague shortly on that issue. Some key points were also made in regard to cost, namely, the cost of doing business for the tourism enterprises and the cost of visiting Ireland, and the impact of cost on our ability to grow. Again, it is important to distinguish the position of the island of Ireland in international terms. We are not a cheap and cheerful destination — that is not what we do and is not how we position ourselves. If we try to win a battle on price, we will lose. We emphasise affordability and excellent experiences, and our consumers tell us that Ireland in many ways exceeds their expectation in terms of delivery but is under pressure in terms of value for money. That is a competitive issue for everybody in the business and we are acutely conscious of it.
Is the Chairman under time pressure?
There is a vote in the House so we have about five minutes to finish dealing with questions. Do other members of the delegation wish to respond to the questions raised?
Mr. Eamonn McKeon
Reference was made to thinking positively. We are positive, but what we actually said was that visitor numbers will be down this year for the first time since 2001. The reason they will only be down by probably a couple of percentage points is that there was a strong first half of the year when most of our visitors came in the peak season. We also talked about 2009 and said we saw no reason to believe there would be any growth. That is code from us for saying that we will be down again. We realistically expect there will be a decrease. We said we hope this will be in single figures, and we believe that.
It must be borne in mind that we had 8 million visitors, which seems to contradict the figure of 9 million given by another speaker. The figure of 9 million is for the island of Ireland and that of 8 million is the number of visitors to the Republic last year. At the end of 2009 it is not inconceivable that we could be down somewhere around 7 million visitors, which is a big drop and not one we are making light of. However, we suggest the industry is managing its way through it, which it must do. We are not going around with our heads in the sky saying God is good, and things will be okay on the day. We are in a serious downturn and, like the incoming President of the United States, we do not know for sure how deep this problem is and how long it will take to recover.
In the past six months many US airlines have gone out of business and they are predicted to lose approximately $5 billion this year. However, they claim they will be making a lot of money next year, perhaps $3 to $4 billion. This is because they have responded to their business by grounding older aircraft that were fuel inefficient and cancelling services that were not doing very well. They have taken out cost. They now see oil coming down in price, and all of this is contingent on oil staying down at $70 to $75. They suggest that with the savings they have made and the services they have taken out — they will also increase air fares because they have less capacity — they see themselves getting back to profit next year.
The industry here must do the same. It must look at itself and must take out cost while retaining services. We must be ready to take off when the next upturn comes. We do not see this happening in 2009 but we are hopeful we will see it in 2010, or at least we hope that at some time in 2009 we will see we have reached the bottom. We will claw our way back in 2010 and 2011.
We remain optimistic because we have to — we must keep our businesses going and successful. Many things must also happen to allow us to do that but there is no point in us wringing our hands and saying we are done for because we are not. It will rebound. Regardless of how bad things may seem to us today, there are one or two of us — I will not name names, but I am one of them — who are old enough to remember beating the streets of North America looking for business. That was a time when we had extreme violence in a part of this island and violence here in Dublin for a period in the 1970s, and a time when we had a very poor product. We did not have a lot to offer other than the old smile and the fact we would be nice to you when you came over. We now have a superb product. The investment has been fantastic. The industry will fight for recovery, which will come, although, like the committee, we have concerns. We believe the recovery will not come next year but we hope to see it in 2010.
Are there any further points?
Mr. Paul O’Toole
A key point when considering the area of cost is that there is the cost to enterprise of doing business and the cost to the consumer. The balance that has to be struck is based on excellent value for money, affordability and great experience. We do not do cheap and we will not win cheap. My colleague might make a point in regard to the specialist areas.
Mr. Mark Henry
Deputy O'Kennedy raised the issue of our promotion of golf, fishing and cycling. We make a distinction between those who come here specifically for those purposes, such as the specialist golfer and angler, and the generalist who——
We must suspend for a short period. We will be back as soon as we can. I apologise for the inconvenience.
I offer our apologies to the witnesses again. We will resume with questions from Deputy O'Mahony, to be followed by Senator Labhrás Ó Murchú.
I thank both delegations for their presentations and upbeat clarification. I noted the determination to keep as upbeat as possible. I refer to the point in the first presentation on encouraging the spread of overseas visitors to all the regions of Ireland. As I come from the west and am a former geography teacher, I am aware of the need to provide tourists to the areas most in need of them. While I welcome the funding of the marketing campaign with Shannon Airport as a way of developing such tourism, there are other regional airports in the west. What funding or marketing is available for those airports? Obviously I personally am concerned about Ireland West Airport Knock, from which a daily flight to Boston operated last year that had a take-up of seats that was in the high 80s in percentage terms. However, a difficulty arose with Globespan, the service provider. In other words, Mr. O'Toole's point in his presentation was proved to be true and a market exists in this regard.
My references to Ireland West Airport Knock do not simply pertain to County Mayo. The Chairman and spokespersons from other areas of the north west will suggest a huge market exists in the north-western region for access to amenities such as those mentioned by Deputy Áine Brady, like fishing and golfing. For example, Mayo County Council has an extensive walks programme, there is a pilgrimage centre in Knock, as well as the attractions of Croagh Patrick. I do not suggest that any marketing money should be taken away from Shannon. However, if it is true that great potential exists there, I believe passionately that one should spread the efforts to take account of what Tourism Ireland has stated is required.
Mr. McKeon mentioned that 20 or 30 years ago, we could offer tourists little but a smile. While I understand what he meant, we should try to provide access to areas that are comparable to anywhere in the world, together with the smile. While travelling to Leinster House, I met a group from Erris, County Mayo that tonight will launch a marketing drive for tourism in that area here in Dublin. All kinds of potential exist. How does Tourism Ireland spread its marketing to solve the problem it acknowledges must be solved? Are our regional airports taken into account in this regard? I refer to the case of Ireland West Airport Knock, which has demonstrated that such potential exists.
I completely agree with Ms Magnier with regard to the travel tax, which leaped out of the Budget Statement to me on the night of the budget. While there may be a need for a travel tax, the manner of its inclusion certainly was inequitable. I have heard soundings to the effect there will be some adjustment. Members on the other side of the House may have better information than me in this regard. Were the proposed tax to be implemented as it is laid out, what effect would that have on tourism numbers in Ireland? How will the inequitable treatment of the regional airports affect entrance to those parts of the country that most need it?
Cuirim fáilte roimh an toscaireacht agus gabhaim buíochas leo as ucht an eolais a chuir siad ar fáil dúinn. Bhí sé an-chabhrach agus an-dearfach freisin. Sin mar ba chóir é a bheith san asmaisféar atá againn an lae inniu. I welcome the representatives from the tourism industry. Everyone remembers how Tourism Ireland came into existence following on from the Good Friday Agreement. Mr. McKeon made reference to the Northern Troubles and those times were difficult for the tourism industry. When I went to the United States during the worst times, people believed the whole island was engulfed in flames and war and wondered why they should visit. Despite these difficulties, the industry came through with flying colours because of its commitment to the task in hand and its optimism, which is vital for any marketing body.
I compliment Tourism Ireland on the work it has done in a short time. It has overcome the historical and political aspects and marketed the island as a single entity, which makes sense given how pointless it is to believe that people will stop at a point on an imaginary line. In this difficult time, we should draw encouragement from that success. The industry is more diversified than it was 20 years ago thanks to current opportunities and the fact that Ireland is known in different ways abroad for sport, horse racing and so on. What lies in store for us is more complex than any single matter, but we should focus on, for example, who is likely to visit Ireland. In the first instance, we should examine our main strength, namely, exclusivity.
I was glad to hear Tourism Ireland has done ground work in China. While I am not ruling out India or elsewhere, I have several years experience of China and know of our business delegations' successes there. One Irish body has invested €1.2 billion and progress is moving at a fast pace. We should bear in mind that China is a friend of Ireland because of Frank Aiken's intervention at the United Nations when he was Minister for External Affairs. It has not been forgotten. When dealing with officials in China, I discovered that Ireland is well known for backing it when other countries would not. In addition, Chinese students in Ireland are like public relations people for us.
China and Asia in general could be large markets for Ireland. Many years ago when Mr. Tom Giblin was in charge of conference work at Bord Fáilte, he brought a delegation from Japan to Ireland for golf. We should not let distance prevent us from considering new markets.
As Senator Buttimer mentioned, our broader culture makes us distinctive. For example, the number of people visiting our national monuments must place them at the top of the list. The same is true of our literature in that, for example, one need only consider how well known James Joyce is. There are bodies devoted to his works throughout Asia and America. Our language is ancient and reflects an ancient civilisation. The number of discerning tourists who want to engage on this basis is amazing. While I will not recite the shopping list, it is important to keep our core market in mind because it and our other opportunities are vital.
The reference to a five-year period of growth in the industry's domestic sector is welcome, but not surprising. When Fáilte Ireland appeared before the committee, Deputy McGinley stated the same number of people leave Ireland on their holidays as enter it. This is a major issue because a close market is at our disposal. Spending money outside is a loss to the State, whereas internal spending would be no different than the money that would enter the country. We should concentrate on what can be offered to that market. Obviously, they are aware of the country, but marketing packages may be necessary.
I have always been a fan of tour operators and I regard them as a strong element of the industry. They may face the same challenges as everyone else, but I will make a suggestion. As Mr. Bourke knows, I come from Cashel. Until today and despite having taught Irish and céilí dancing in Clonoulty, I did not realise that we were almost next door neighbours. I feel strongly about and have argued on behalf of the industry's bed and breakfast sector for a long time. The difficult time it is experiencing may be due to excessive bureaucracy and overheads, but it is an integral part of the industry. As the witnesses may know, Cashel does not have a hotel that can take a coachload of guests, but 250,000 people visit the Rock of Cashel each year. Will Tourism Ireland consider working with bed and breakfasts so that two or three of them could, for example, share a busload? Their association has proposed this locally. In challenging times, it might be the icing on the cake. Some guest houses can take ten, 12 or 13 people in relatively close proximity. Those people would have a specific experience as distinct from the hotel experience.
We sometimes focus too much on whether we are pricing ourselves out of the market without considering what we are offering, namely, a strong, quality product. One cannot discuss value for money without also referring to quality. At worst, we might downgrade quality to satisfy a price situation, which would not be wise or where our best chances lie.
The regional tourism industry has changed in the past decade. It is understandable in my area in that, due to open skies and so on, we do not have the same opportunities as we had when Shannon Airport was at its best. There should be a policy to help people to leave the city. Some only visit for weekend stays having already visited another part of Europe, but the real Ireland is to be found in the regions. We always argued that tourism benefited the entire country because even an attraction in an isolated location would be visited by tourists. Given that the situation has now changed, I hope that a policy will be introduced. The €3 million investment to focus on the west is good news, but we must keep the points I have raised in the back of our minds.
I welcome the delegates and thank them for their presentation and for their patience during the interruptions. I compliment the tourism industry in general. Everyone is aware that a significant investment has been made in the past ten years in everything from visitor attractions to hotels, taking us from leisure centres to famous spas. We have a good product to sell.
Given the proximity of New Ross in County Wexford to Rosslare, people there have become aware in recent years of a decline in the number of European visitors, particularly from the French, German and Dutch markets. Traditionally, those tourists were great supporters of the bed and breakfast sector. Do our guests have figures in this regard and do they know why we are not attracting as many Europeans? Is the short break having an effect or is it a pricing issue?
I was surprised to learn that visiting friends and relatives are seen as a negative element. We lose bed nights but one would imagine they will spend money saved on that in the wider area, in terms of socialising and visiting attractions.
There is a rumour that there is potential for a low cost transatlantic airline to open into the Irish market. Does the delegation meet the air operators, Aer Lingus and the Michael O'Learys of the world? Does the delegation sit down with them and talk about targeting and promoting specific markets?
There is an inflation of rates when concerts or conferences take place. I was quoted a price by a hotel that was holding a conference that was double the original price. I was at a concert by The Police last year and paid €450 to stay overnight in the hotel. That is a negative message we are sending to people. Is there any method to control that and to curtail the inflationary costs associated with this?
Do we have a plan to target the various countries for the Olympic Games in 2012, offering them facilities and dealing with tourists who may avail of the opportunity to stay in Ireland and visit the Olympic Games in the UK?
The delegates now have the opportunity to respond as briefly as possible. I am sure the witnesses have other business. We have further meetings at 2 p.m.
Mr. Paul O’Toole
I will be as brief as possible. We did not finish with Deputy Kennedy's point, which was picked up again, about visiting friends and relatives. It is important to understand the context of visiting friends and relatives. They are an important component of the overall business, they deliver volume and they underpin the sustainability of air routes. Many stay and take a holiday as well. We do not diminish the importance of visiting friends and relatives but, from an industry perspective, they are probably less valuable than a direct and main purpose holiday maker.
In respect of the regional airports and the strategy on that, the fund for the Shannon Airport catchment area embraces many of the regional airports as well. The fund rose in the context of the open skies agreement. While it focuses very much on Shannon from a US point of view, when we look to Britain and Europe, other airports come into play as well. More specifically, we have supported route development at Ireland West Airport Knock, particularly with Flyglobespan. While it was an unhappy experience from a product point of view, it established the demand and if something more sustainable arises, we will sit down with our colleagues at Ireland West Airport Knock to see how we can promote it. I will meet the group chief executive of Ireland West Airport Knock on Friday and we can develop some of the points raised by the Deputy.
I agree with the points raised by members about China and other markets. We believe there are long-term possibilities. A group of Irishmen, Chinese and others are sailing under a Chinese-Ireland banner. The Green Dragon team is a joint venture between Ireland and China and is doing well at the moment. Symbolically, it is an example of what is possible.
Regarding the market share of European visitors, it is correct to say that the nature of holidays that European visitors take has changed. The bed and breakfast sector, which would benefit from longer stay holidays, is changing. However, the overall market from mainland European countries is growing, driven by short breaks. The member is correct in the analysis of that. We seek to grow this. Europe will become more important to Ireland and we see this growing.
Those visiting friends and relatives are not viewed as negative but are put in their overall value and context. We meet all airlines and discuss route development. Short haul business is incredibly volatile and there is no sentiment in the business. My colleague will refer to targeting and then our industry colleagues will comment.
Mr. Mark Henry
Senator Ó Murchú asked about the type of people we target and what is distinct about the island when we promote it overseas. We define our target audience as sightseers and culture seekers. We look across the range of potential audiences for a holiday here. We target those with an interest in seeing the sights of a country, gathering a cultural experience and getting a sense of the culture of the place they are visiting. That is the best fit with what we have to offer. They also tend to be longer stayers, older, tend to have more money and tend to travel around the regions more. There are good reasons to go with them and they are a big chunk of our target market. About one third of Britons and one third of Americans fall into this category.
There is an excellent fit with what we have to offer because we offer the natural attractions of the place, the warmth of the people, the interaction they offer the visitor and the history and culture. In that order, these are the things that the target market of sightseers and culture seekers are interested in. The cultural aspect to which the Senator referred is a focus of our activity and we are bringing that to expression through a new marketing, communications and advertising campaign, the development of which the Department has funded. The Minister for Arts, Sport and Tourism, Deputy Cullen, will launch it at the end of the month. This is the easiest way to see the work we are doing.
Mr. Dick Bourke
A number of the members addressed the issues of cost and pricing. The reality is that prices are at 2002 levels. Occupancy rates in the hotel sector, a major part of the industry, have decreased by 3% or 4%. The achieved rate is down 8% or 9%. The occupancy rate is around 63% and for every thousand hotel bedrooms in the country, almost 400 are empty all year. There are 50,000 hotel bedrooms and I do not know what 40% of that is but that many bedrooms are empty all the time.
That is an issue and on top of that there is the matter of price and expensive rates for an event. A regulation on statutory pricing enforced by Fáilte Ireland means that a maximum published price exists for every property. Hotels are not allowed to charge more than the published price. If the market allows, they will charge the maximum published price but 95% of the time the rate is discounted. That is the simplest way to discuss that.
Regarding cost, tourism is a service industry and is highly labour intensive. There are pressures on cost in this country. The price of gas is increasing significantly at a time when oil prices are going through the floor. We ask why this is happening. Can it not be regulated? One can look at the price of petrol and diesel at the pumps and wonder why it is not decreasing faster. There is a cost to the business of tourism in all of that.
Labour cost is another issue. Ireland has a highly service-oriented, labour intensive economy, particularly the tourism sector. We have the second highest minimum wage in Europe and are allied to Luxembourg, which is a financial services sector economy. It is difficult for us to operate and we compete against countries like Spain and Portugal. In Portugal the minimum wage is three times lower than in Ireland; in Spain it is half. Joint labour committees put increases on top of national wage agreements, meaning compound increases every year. On a Sunday, when it is difficult to operate anyway, the minimum wage is €20 per hour. Our industry cannot sustain those costs.
Will Mr. Bourke address the question of the Olympics?
Mr. Paul O’Toole
I should have addressed this issue and I apologise for not doing so. Last year, the late Séamus Brennan, when he was Minister, instituted a working group within the Department to review opportunities with regard to 2012. This group reported and the Minister for Arts, Sport and Tourism, Deputy Martin Cullen, is progressing this report. Three specific opportunities were identified and these are to bring sports teams here to use our facilities, for Irish companies to develop a slice of the 2012 development works and inbound tourism potential at the time of the Olympics. With regard to inbound tourism, we will put together a special promotion programme for 2012 to examine the tourism potential and we will seek to exploit it.
With regard to the 20,000 unoccupied beds, if Ryanair have a half-full plane, it gives the seats for nothing and only asks people to pay the charges. I do not suggest to the hoteliers that they give away 100% freebies but where they know they will have empty beds, something could be done. I know they give good value with mid-week and discounted rates. Whether staff are paid €20 an hour on Sunday or €11 an hour from Monday to Friday, the beds are still there. It would make sense to provide free beds and ask people to buy breakfast and an evening meal. Surely this would increase turnover.
Mr. Dick Bourke
Schemes are in operation which do exactly this. People pay for dinner and breakfast and they stay for free. There is a marginal cost for laundry and services all of the time and it is difficult. Michael O'Leary's plane seats are probably easier to manage than hotel bedrooms.
I accept that one must clean the linen but it is better than having an empty bed.
Mr. Eamonn McKeon
The principle is the same. Ryanair or any low cost carriers highlight these fares but ultimately their average fare over a year is approximately €100 and were it not this high, they would not be in business. They try to reach an average which makes the business economical and I take the point that they do this more successfully than hotels do. Michael O'Leary is a good man for advertising his product and fair dues to him. However, he would have one believe that every seat on every plane is free. Believe me, this is not the case. He would have been out of business a long time ago if it were.
Not if one changes one's flight.
I know the witnesses are familiar with Donegal Airport, which is the most peripheral airport in the country and would not be there if not for the bottom-up approach of people who thought with their hearts rather than their heads. It provides a tremendous service. Mr. O'Toole is aware that a Dutch company flies in every Saturday and it is doing reasonably well.
I agree that tourism brings jobs to the most peripheral areas of the country, and especially those with no alternative sources of jobs. While 1 million tourists are worth lot more to these areas than they are to urban and city areas, the organisations have a national brief. I have visited a number of cities in the United States representing the Government on St. Patrick's Day. I pay tribute to the officials which the organisations have in various parts of the United States. We do not see them and we do not have the same connection with them as the organisations. I would like to take this opportunity to thank them for what they do. They work in difficult circumstances to represent the country.
I thank the witnesses for their comprehensive contributions and their upbeat approach. It is easy to be negative but they are positive despite the economic circumstances. Their contributions stimulated questions from the members and I thank them for the views they expressed which would be expressed by any Deputy or Senator.
Ba mhaith liom mo bhuíochas a chur in iúl don toscaireact as teacht anseo inniu. Toscaireacht thar cionn agus earnáil iontach tábhachtach de tionscal na turasóireachta atá ann. Chuir sibh tuairisc iontach cuimsitheach i láthair. Mar a dúirt mé i mBéarla, chuir na Teachtaí agus na Seanadóirí ceisteanna fíor-thábhachtacha agus thug sibhse freagraí ar na ceisteanna sin. Tá súil agam go mbeidh deis againn amach anseo teacht le chéile arís agus go dtiocfaidh biseach ar scéal geilleagair an domhain faoin t-am sin.