Implications of Brexit for Tourism Sector: Fáilte Ireland and Tourism Ireland

Apologies have been received from our Chairman, Deputy Fergus O'Dowd, and Deputy Catherine Murphy. Before we begin, I remind members to turn their mobile telephones off completely, as they interfere with the recording equipment.

The joint committee went into private session at 10.40 a.m. and resumed in public session at 10.45 a.m.

Before we begin, I invite members to turn off their mobile telephones completely, as they interfere with the recording equipment. The purpose of today's meeting is consideration of the impact of Brexit on the tourism sector in Ireland. In this regard, I welcome Mr. Niall Gibbons, CEO of Tourism Ireland; Mr. Paul Kelly, CEO of Fáilte Ireland; Ms Deborah Nolan, operational director of Fáilte Ireland; and Mr. Caeman Wall, head of research and evaluation at Fáilte Ireland.

I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they 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 with the subject matter of these proceedings is to be given and they 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.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

Mr. Niall Gibbons

I thank the Chairman and members for the opportunity to address the committee today. My name is Niall Gibbons. I am chief executive of Tourism Ireland. As members will know, Tourism Ireland is the organisation responsible for marketing the island of Ireland overseas. It was established as one of the six areas of co-operation under the framework of the Belfast Agreement of Good Friday 1998. We undertake marketing campaigns in more than 20 locations across the world and work very closely with our colleagues in Fáilte Ireland and the Northern Ireland Tourist Board.

Tourism is a vital industry for the island of Ireland. It is a significant driver of economic growth and helps to support more than 300,000 jobs in communities right across the island.

Overseas tourism has recorded seven consecutive years of growth. All previous records were surpassed in 2017 when we welcomed 10.6 million overseas visitors who spent more than €5.6 billion while here. Northern Ireland has shared in that record growth. In fact, last year it welcomed almost 2.2 million overseas visitors, whose visits generated more than £566 million in revenue for the Northern Ireland economy, an increase of 4%.

Growth continues in 2018. The latest Central Statistics Office, CSO, figures for Ireland show strong visitor and revenue performances in the first half of the year. For Northern Ireland, there were almost 400,000 overseas visitors in the first three months, generating revenue of more than £100 million, an increase of 3%.

While tourism performance overall is strong, beneath the surface a number of vulnerabilities are evident. For example, while we welcome the small increase in visitor numbers from Britain in recent months, it is too soon to say if this represents a real turnaround in the longer term. CSO data show a worrying fall of 9% in the month of September alone. Exchange rate movements have made Ireland more expensive for British visitors, and we have observed our competitors, VisitBritain, VisitScotland and VisitWales, intensifying their operations across all of Ireland's major tourism markets.

Brexit dominates all other uncertainties. Since the UK voted to leave the EU, Tourism Ireland has taken a number of steps to monitor the situation, maintain confidence among our partners in Britain and at home, and ensure we are ready to deal with the implications. Our activities have included: ongoing research among British consumers to evaluate sentiment on holidaying in Ireland; ongoing market assessment of economic trends by Oxford Economics; liaison with key tourism industry partners here on the island to assess implications and gauge reaction; and liaison with key international partners and bodies such as the European Tour Operators Association, ETOA, UKinbound and the Tourism Alliance in the UK for the same reasons.

This work continues. I thank the Minister of State with responsibility for tourism and sport, Deputy Griffin, and his officials, for their participation in our Brexit task force meetings in London over recent years. We were also delighted to work with the Taoiseach, the Tánaiste, Ministers, Fáilte Ireland and officials from the Department of Foreign Affairs and Trade and the Department of Transport, Tourism and Sport on a series of Get Brexit Ready events around the country.

Tourism Ireland has also commissioned a wide-ranging review of the British market. The review is independently chaired and is led by a steering group of top Irish and UK-based industry partners. It will conclude shortly and will inform planning for 2019 and beyond.

In parallel with this, Tourism Ireland continues to pursue its strategy of market diversification. This strategy, which commenced in 2014, focuses more effort on markets with a longer stay and higher spend and will increasingly focus on the regional and seasonal extension of tourism. Our market diversification has seen mainland Europe become the largest contributor of overseas tourism revenue, delivering almost €1.9 billion in 2017, up from €1.4 billion in 2014, an increase of 36%, and North America has overtaken Britain as number two, delivering €1.6 billion, up from €1 billion in 2014, an increase of 60%.

In the spring, our national television and digital campaigns in the US were seen by 85 million people, and television and digital campaigns in Germany and France reached a combined 39 million potential visitors.

Opportunities in the fast-growing emerging markets of the east continue to grow, especially in China following the launch this year of the first ever direct air services from Beijing and Hong Kong with Hainan Airlines and Cathay Pacific, respectively.

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 is vitally important, especially for overseas tourism to Northern Ireland and Border counties. On average, 75% of visitors from North America to Northern Ireland and 63% of visitors from Europe arrive via the Republic of Ireland. In addition, approximately 950 international tour operators now programme the island of Ireland. Any impediment or perceived impediment to free movement between the two jurisdictions and any delays at Border checkpoints would 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, announced by the UK and Irish Governments in October 2014, and the short-stay visa waiver programme, introduced by the Irish Government in 2011 and extended until October 2021, have provided a significant boost to international promotional efforts in these markets. The lifting of the visa requirement for citizens of the United Arab Emirates, UAE, travelling to Ireland in January 2018 was welcomed by the industry, which has seen an increase in business from that market since the relaxation.

We are pleased that the World Economic Forum's global Travel and Tourism Competitiveness Index 2017 ranks Ireland at number three in the world, out of 136 countries, for "effectiveness of marketing and branding to attract tourists". 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, with 4.3 million fans. The creation of award-winning digital campaigns has capitalised on our connections with "Game of Thrones" and "Star Wars" and allowed us to reach new audiences 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, encouraged also by investment by Irish Ferries and Stena Line in recent years. Our annual overseas publicity programme and our relationships with 22,000 media outlets around the world generate positive exposure for the island of Ireland worth an estimated €330 million each year and greatly influence perceptions of Ireland overseas.

Favourable winds, such as a 39% increase in air access since 2010, particularly on the transatlantic side, supportive economic conditions in key markets, the fashionability of the island of Ireland as a location for the likes of "Star Wars" and "Game of Thrones", and our capacity to shift to new lower-cost digital and social marketing have helped to deliver record performances the island of Ireland.

Few, if any, of those factors will continue in our favour indefinitely. We have seen how economic uncertainty and fluctuating exchange rates have impacted on visitor numbers 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 two years, we have seen major competitors intensify their marketing. Also, a 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 resolution is not found. In addition to this, the price of oil poses a risk to the sustainability of air routes.

Tourism Ireland is working with industry partners to grow overseas tourism revenue by 5% in 2018. Moving into 2019, we expect to place a more significant emphasis on season extension, regional performance and sustainability. I am delighted to say that the Government's decision to increase the tourism marketing fund in budget 2019 will allow Tourism Ireland to begin implementing new growth strategies in a number of key markets, including the US, Germany, and Britain, and in emerging markets such as China, in line with the Government's Global Ireland 2025 Strategy.

Tourism has endured many crises over 20 years, such as 9/11, the global financial crisis and terrorist attacks in North America and Europe. However, it also serves as an example of how compromise and goodwill between people can build a stronger future for us all. At a recent conference, the former United Nations World Tourism Organisation Secretary General, Dr. Taleb Rifai, stated:

We face a deficit of tolerance. Tourism brings people together; it opens our minds and hearts.

We must continue to build on the achievements of the Good Friday Agreement and continue to build hope for the future across the island of Ireland, and a growing and sustainable tourism industry is key to this.

I thank the committee for the opportunity to present to the meeting today. I will be happy to take any questions afterwards.

I thank Mr. Gibbons. We will now hear from Mr. Paul Kelly of Fáilte Ireland.

Mr. Paul Kelly

As chief executive of Fáilte Ireland, I also thank the committee for its invitation to present to the meeting on the potential implications of Brexit for the Irish tourism industry.

As members may be aware, Fáilte Ireland is the national tourism development authority that works across a wide range of areas to grow the economic and social contribution from tourism to Ireland. Fáilte Ireland has played a critical role in the success of Irish tourism in recent years with initiatives such as The Gathering, the repositioning of Dublin as an attractive tourism destination, and the development of our suite of regional experience brands such as the Wild Atlantic Way, Ireland's Ancient East and, most recently, Ireland's Hidden Heartlands.

Fáilte Ireland works to ensure that the Government's capital investment in developing tourism attractions generates the highest economic return for the State. In doing this, we work closely with industry, our own Department, the Department of Rural and Community Development, the Office of Public Works, Coillte, the National Parks and Wildlife Service, Waterways Ireland, local authorities and many others to seek to maximise the economic contribution from tourism assets.

Fáilte Ireland also administers in excess of €4 million in festival grant aid annually to support the development of festivals that improve the visitor experience in Ireland and make Ireland a more internationally appealing destination. We promote Ireland as a holiday destination through domestic and Northern Ireland marketing campaigns and manage a network of tourist information centres that provide help and advice for visitors while in Ireland.

We also have responsibility for product and regional marketing. We support and work with the industry via the convention bureaux in Dublin, Cork, Galway, Limerick and Kerry under the "Meet in Ireland" brand platform to attract international meetings, incentives, conferences and events. We also work closely with our colleagues in Tourism Ireland in the leisure holidaymaker international product category and regional sales and marketing.

We provide a wide range of practical business supports to help tourism businesses manage and market their products and services better through increasing industry capacity, capability, competitiveness and quality.

Irish tourism has already begun to feel the impact of Brexit with the devaluation of sterling being a significant factor in a 5% reduction of visitors from Great Britain and a 3% reduction of visitors from Northern Ireland in 2017. The scale of potential for further impacts from Brexit will depend on the details of the deal, the currency movements that result and the general UK economic conditions that follow Brexit. The relationship between Ireland and the UK in the tourism sector is both extremely important and extremely complex. The UK is our biggest volume market and it is also our largest and closest competitor. Northern Ireland is both a competitor for domestic tourism but an important part of our overall tourism offering for overseas holidaymakers. Many visitors also come to Ireland through UK tour operators on joint UK and Ireland tours, so in this regard the UK is an important route to market for long-haul visitors for many Irish businesses.

Since the announcement of Brexit, Fáilte Ireland has developed and continually updated a customised suite of supports that businesses in the sector can avail of through our Get Brexit Ready programme. This focuses on four key areas, including training and supports, market diversification, competitiveness and retaining market share in Great Britain and Northern Ireland. In addition, we also provide industry support in the areas of driving business performance, building sales capability and being quality assured. Since this programme launched, more than 1,500 businesses, or 5,000 individuals, have availed of our supports.

In addition to these business training supports, we have also invested €1.2 million in business development and sales support initiatives. These are particularly targeted at northern regions which are most exposed to Brexit due to reliance on Northern Ireland business.

We project this investment will deliver an economic return of €22 million to help tourism businesses in these regions mitigate against the effects of Brexit. We have also participated fully in the recent series of Get Brexit Ready workshops in Cork, Galway, Monaghan and Dublin. We are currently finalising our plans for 2019 to support the industry through the Brexit challenge. As we know, there is tremendous uncertainty surrounding Brexit and negotiations on the UK’s exit are continuing. Until these negotiations are complete, it is difficult to quantify the range and scope of impacts that Brexit will have. It is, however, important for all stakeholders to be aware that a no deal Brexit scenario is very likely to have significant negative impacts on Irish tourism because of significant loses in economic revenue, employment and Exchequer revenue.

These losses will impact Ireland as a whole but will be particularly felt in some regional areas where there are few alternatives to replace the economic benefits generated by tourism. Fáilte Ireland has submitted to Government a response proposal to a no deal Brexit. It would require a significant increase in both current and capital investment to protect the employment in, and economic contribution from, the tourism sector in the event of a no deal Brexit. Fáilte Ireland is aware of the many complex issues that will result from Brexit and the impacts it will have on the Irish tourism industry. We are here to assist the sector and we have already implemented a series of programmes to help the sector diversify. It will look to grow core markets and also to attract others including China and the Middle East. We will continue to provide upskilling and expertise to the industry through our suite of business supports.

I will mention, finally, the Government’s decision to increase funding for the tourism agencies in the recent budget. It is a welcome development and will allow us to provide even more expertise, assistance and solutions for the Irish tourism sector as we work towards sustaining the contribution the tourism sector can make to Ireland. I thank the committee and I am happy to answer any further questions.

I thank Mr. Kelly. I call Senator O'Mahony.

I thank Tourism Ireland and Fáilte Ireland for those extensive presentations. I compliment them as well on their targeting and effective marketing in recent years, in Ireland through Fáilte Ireland as well as abroad through Tourism Ireland. It has been fresh and has worked together with the policies such as The Gathering a number of years ago. When the Brexit game is entering crunch time it is also comforting to see that work is going on behind the scenes. That is very important and I am glad to see it happening.

On the competitiveness of tourism in Ireland and attracting tourists from abroad, Mr. Kelly and Mr. Gibbons mentioned that weaker sterling is affecting the British market. The increase of VAT in the recent budget from 9% to 13.5% is also an issue. How do the witnesses believe that will affect the system and work through it? Working with industry was also mentioned in the presentations. The fact Dublin is such a popular venue was mentioned. From an industry perspective, however, over the last number of years, one would have to say that, on the face of it, competitiveness, particularly in respect of accommodation, is just is not there anymore.

The danger is that the industry in certain areas seems to be killing the goose that laid the golden egg. I would like to hear the views of Mr. Kelly and Mr. Gibbons on this because that can be an advantage for the regions. It is widely accepted that there is still great value in the regions throughout Ireland. How do the witnesses feel marketing can take advantage of the fact that, even though competitiveness seems to be a problem in urban areas and Dublin in particular, there is still great value around the country? Is it part of the policies of Tourism Ireland and Fáilte Ireland to take advantage of that situation or to make people abroad aware of value in the regions?

I return to the increase in VAT from 9% to 13.5%. I feel it was justified because the industry in certain areas did not respond. I know all the issues regarding shortages of hotel beds and that hotels can nearly charge what they want at the moment. That will, hopefully, be alleviated with the number of rooms coming on stream in the years ahead. It is an underlying issue of competitiveness and it is not a Brexit issue. It is a competitiveness issue within the industry itself.

Who would like to go first?

Mr. Paul Kelly

In respect of our competitiveness and value for money rating, we track the value for money rating that people give when they are leaving the country. We have seen a very noticeable decline in that over the last couple of years. In 2015, the net "good" and "very good" scores was up around 62%, which was an all-time high. It has dropped back to 52%, which is towards the lower end of the norms when we look back over the last ten to 15 years. We are concerned and it is a point we consistently make to industry regarding the need to retain a good value for money reputation. It is very important.

There are also other factors. Senator O'Mahony mentioned accommodation capacity and that is definitely a significant issue for us. We had 145 "compression nights" in Dublin last year. That is an industry term for when occupancy is at such a level that the city is effectively full. For a city to be at that level for 145 nights is way above international norms. We are pleased to say there is a significant pipeline of development coming along in the hotel sector. About 5,000 hotel rooms as well as significant expansion in serviced apartments are due to come on stream in the next three years.

However, what is in the pipeline will not be enough. We estimate that, by the end of 2020, we will still be 1,000 rooms short of the ideal number to cater for projected growth. We are working to encourage further investment in the accommodation sector in Dublin. In some other areas like Cork, Kilkenny and Galway, there is a need for accommodation increases.

It is an opportunity for the regions. In recent years, Fáilte Ireland has been trying to spread the benefit of tourism into developing regional areas. For example, the Wild Atlantic Way initiative is meant to spread the benefit along the entire west coast as opposed to just the hot spots that are the Kerrys and Clares of this world. Likewise with our Ireland's Ancient East and Ireland's Hidden Heartlands brands. We focus our energies and efforts on developing the business in developing regions and on seasonal extension in the hot spots, where businesses struggle for significant parts of the year. We work with industry on a range of elements to drive the seasonal extension, for example, developing business tourism to counter the summer peak of leisure tourism, festivals and events, and product cluster groups that attract visitors and keep towns open for an extra week or two. A range of initiatives try to drive the seasonal extension and regional benefits. With Tourism Ireland, we are working on getting the regional and seasonal dispersion into our international marketing.

Regarding Airbnb, will the suggested restrictions affect competitiveness?

Mr. Paul Kelly

That shared economy - Airbnb is just one among a range of operators in that space - has been a welcome addition to the tourism offering. It is a preference for a number of visitors. Ireland has a strong tradition of bed and breakfast offerings and it is important that, as that evolves and broadens, we are able to compete internationally and provide that offering in a high-quality way. Due to our capacity pinch, our value for money ratings would have been worse had we not had Airbnb. Pricing would probably be higher without those extra accommodation sources to meet demand. It has been a welcome addition.

We are still working through the implications of what the recent announcements might be for the tourism accommodation stock and whether they will have a material impact. We do not know the answer yet.

Mr. Niall Gibbons

I will address the international side of the points raised. The currency issue is important. When sterling effectively devalued by between 15% and 20%, not only did it make the eurozone more expensive for British visitors, but it made Britain an attractive destination for countries that were competing with us, so to speak. There was a large increase in the number of tourists into Britain, particularly in the first year. That seems to have tapered off and might be falling a little. It has a large distorting effect on the marketplace.

Regarding VAT in the budget, there has been an element of hurt in the industry in my overseas conversations in recent weeks. On the international side, two operators already had business contracted into 2019 with the expectation of a rate of 9%. Someone will have to take the hit on that. Conversations are being held within the industry on this matter.

To supplement Mr. Kelly's point on competitiveness, it is important that we learn the lessons of a decade ago. Our industry in Dublin does not compete with London, Paris and Rome, but with a secondary set of cities like Barcelona, Amsterdam and Copenhagen. In recent years, prices for accommodation in particular have got out of line, which will have implications for future demand. We are cushioned by the fact that there is good value in how people get here, given that there are many more flights now than there used to be. Approximately 170,000 extra seats fly into Ireland every week during the summer months, which makes getting here more affordable. However, we are getting international feedback on the availability and price of accommodation not just in Dublin, but also in the main hubs of Galway, Cork and Killarney, particularly in the peak season.

I welcome our guests and compliment them on the work they have been doing on promoting Ireland in recent years. Without question, this industry has been a success story and helped Ireland during our dramatic downturn. It was the only industry that flowed counter to the downturn. It showed dramatic increases. Some of that resulted from policy decisions. For example, the abolition of the travel tax and the reduction to a 9% VAT rate were welcome. However, we have to be careful not to become complacent and take for granted that these tourism figures will continue on their upward trajectory.

The Irish Tourism Industry Confederation, ITIC, published a document this year and has ambitious targets for what it wants to achieve by 2025. It is the responsibility of the Government and, subsequently, the witnesses' agencies to promote policies that help the industry achieve those targets.

It is somewhat disappointing that the industry does not get the credit it deserves for job creation and what it adds to the economy. It is our largest indigenous industry, but compared with what we do for agriculture, it does not get the same coverage. That is unfortunate.

I will ask a number of questions and I hope the witnesses' answers will enable us to introduce policies that will support the identified targets. I believe that the change from a 9% VAT rate was the wrong move. It was based primarily on hotel rates in Dublin, but outside the capital is a different kettle of fish. Mr. Kelly alluded to how Airbnb was a release valve. Had we not had it in recent years, hotel rates would have been even higher. This is a question of supply and demand, and we do not have the supply to meet demand. I am concerned that the proposed Airbnb regulations will have a greater impact on the cost of hotel rates for the next number of years until such time as supply meets demand. I would welcome the witnesses' views on this point.

The Irish Hotels Federation suggested to the Government a specific subhead to capture on an annual basis exactly how much was contributed by the 9% VAT rate. My understanding is that it is not specifically captured. Were that done, it may prove to this or any future Government undertaking an annual review or preview of the VAT rate in advance of a budget whether a proposed measure is counterproductive. I would welcome the witnesses' views on this suggestion.

Enterprise Ireland and Bord Bia have established specific funds to mitigate against Brexit and help industries within their remits to diversify. Having spoken to stakeholders and others involved in the hospitality and tourism sector, they feel that neither Fáilte Ireland nor Tourism Ireland has a fund to help in that regard. Is there an opportunity within the increased €35 million to establish such a fund?

Mr. Kelly said that in the event of a no-deal Brexit or a hard Brexit, Fáilte Ireland had identified and made recommendations, or submitted to Government a response proposal to a no-deal Brexit or a hard Brexit. Can Mr. Kelly quantify to the committee today what a hard Brexit or a no-deal Brexit would cost the economy from a tourism perspective? Mr. Gibbons alluded to the British-Irish visa. In 2014 the Irish and British Governments launched their co-operation around the British-Irish visa for Chinese visitors. Given that Britain is more attractive for international visitors because of the devaluation of sterling, when we get people to come the whole way from China and the Far East it should be easy to get them to visit both of the islands. I met representatives of the Chinese community recently and they claimed that while the visa was welcome in 2014, it is very restrictive compared to the visa for travel between Australia and New Zealand, for example. Do the witnesses believe there is an opportunity to relax this visa or to look at all of our visa arrangements with regard to ascending countries and what could be done to make it easier to bring people to Ireland from emerging markets?

There is a slight contradiction in what we say in respect of seeking increased funding for marketing. Despite the fact that funding has been decreased every year since 2008, the visitor numbers have increased. A big element of why people come to Ireland is favourable exchange rates, the GDP in the sending countries and so on. How do Fáilte Ireland and Tourism Ireland evaluate how their money and their marketing budget is spent? Have they a method to evaluate this so that if we go into a particular market, it is not just coincidental and that the money is driving people to come here? How do the tourism bodies here know it is not other factors that are driving people? How are we confident about this and how is it evaluated? Tourism Ireland's responsibility is to market Ireland on an all-island basis, internationally. A recent Red C poll conducted showed that some 13% of people were familiar with the Dublin brand, 10% recognised the Wild Atlantic Way and 7% were aware of Ireland's Ancient East. With regard to the evaluation of the marketing budgets, how can we be confident that the budget is driving visitors?

Do the witnesses believe that Tourism Ireland and Fáilte Ireland are complementary to each other or do they believe there is a crossover at any time with both organisations vying for the same responsibilities? How would the organisations feel that they work together?

On tourism numbers and sustainability and how we are going to keep this building over the next years, what are we doing when we get people here? It seems to me that Fáilte Ireland has abandoned training - this took place before Mr. Kelly's time. As a national tourism development authority, training is key. It is key that when people get to Ireland they should go away with a very positive experience. We have massive skills shortages in chefs and front of house staff. We also have a situation - the tail end of which I caught on the radio this morning - where even the coffee shops are not able to attract people to work in them. Do the witnesses feel there is a perception that this is a poor industry in which to work and does not have good career prospects? What can we do to change that perception to incentivise people to work in the industry and to ensure that when they come into the sector they have career prospects? What specifically can Fáilte Ireland, as the national tourism development authority, do to ensure it works with the relevant education and training boards, institutes of technology and universities to ensure we promote the availability of an adequately skilled workforce?

All travel is now probably booked through technology. When people travelled a decade ago; they went into their local travel agent and the agent promoted where to go on holidays and promoted particular regions. It is now online for everybody with various websites and blogs. If a person is wondering about travelling to a destination or a country it is easy to go on to TripAdvisor to find out what is going on there. With regard to sustainability, the future and adequate training, are we investing enough in technology to ensure that Ireland is ahead of the curve in order that people working in the industry have the requisite skills to promote Ireland internationally through technology?

Has the Deputy asked enough questions there? Would Mr. Kelly like to come in first?

Mr. Paul Kelly

Yes. I thank Deputy Troy. There were a lot of points there. Let me try to pick up on some of them. I will leave some of the points, including perhaps the visas, for Mr. Gibbons to pick up on.

Deputy Troy asked about the implications of a no-deal Brexit on the Irish tourism sector. The Irish Tourism Industry Confederation, ITIC, has published one scenario that specifically looks at the impact with regard to UK visitors in that market. The ITIC estimated a potential revenue impact of €260 million on the industry in that scenario. Fáilte Ireland has looked at some alternative scenarios. They are only scenarios but in one of them we would see an impact of €390 million, based on modelling from other instances that had an impact on the sector such as the ash cloud and the foot and mouth outbreak. The Brexit scenarios are only scenarios currently, and of course it will depend on many of the factors that Mr. Gibbons has alluded to such as what happens with the aviation policy on open skies and what happens around visas and so on. That is just one scenario but there is no doubt but that it would have a significant impact.

Deputy Troy asked about the effectiveness of marketing spend. There are two areas of marketing. There is marketing to the domestic market here at home and the Northern Ireland visitors, which Fáilte Ireland looks after, and there is marketing to the international visitors which Tourism Ireland looks after on an all-island basis. We conduct significant, ongoing evaluation and we benchmark all of our marketing activity to look at its impact on peoples' intention to travel. A very robust value-for-money review was conducted by the economic evaluations unit within the Department some six months ago, which once again found that there was very good value for money returned from that. We measured via all the various measurements for measuring different elements of marketing such as how to benchmark the advertising spend and how to ensure we are getting value for money for the media spend versus what rate one buys at versus the rate other people buy media for. We also evaluate the value we are getting out of public relations and digital spend by looking at a range of metrics and benchmarking those against industry norms and best practice to make sure that in each of those elements we are delivering value for money and achieving the desired impact.

What kind of metrics is Fáilte Ireland using? That is the key.

Mr. Paul Kelly

Could the Deputy repeat the question?

Mr. Kelly said Fáilte Ireland uses a range of metrics. Could he give us a flavour of them?

Mr. Paul Kelly

When we evaluate a TV advertisement, we look at the memorability of that advertisement and the intention to purchase coming out of that advertisement. It involves people saying that having watched that TV advertisement, they intend to take a holiday in Ireland in, for example, Ireland's Ancient East or along the Wild Atlantic Way. That would be benchmarked against people saying they would intend to buy a particular washing powder or to bank with a particular bank having watched advertisements for them. We benchmark across sectors and within the travel and leisure sector.

Mr. Caeman Wall

There also are some measures around whether people understood the advertisement and knew it was an advertisement for a holiday. They pass all those tests that one would expect them to pass but they are also motivational in that they drive changes in behaviour - not just that people understood the advertisement but that it caused them to change how they felt about a holiday.

Mr. Paul Kelly

When we look at digital activity, we look at benchmarking things like how much it cost to get someone to visit one of our websites or engage with one of our industry partner sites in terms of moving them towards making a holiday purchase. There is a range of measures depending on how the investment is being made that are tracked very robustly to make sure we deliver "best in class" all the time. Ultimately, the proof is in holiday behaviour. We have seen significant increases in growth in areas we have been marketing. Our domestic and Northern Ireland marketing in Fáilte Ireland is very much focused on season extension and activity outside of hot spots. For example, this year, our Wild Atlantic Way and Ireland's Ancient East advertising ran in the spring and autumn seasons to drive season extension in both areas. We have not marketed Dublin domestically because it is at capacity, as we mentioned earlier. Our marketing for Ireland's Hidden Heartlands took place in the summer because there was capacity and opportunity to grow in that region during the summer months.

A question was asked about how the agencies work together. Mr. Gibbons will speak from his respective but from my perspective, the agencies work together exceptionally well. A tri-agency steering group has been operating for the past 18 months or so. This group consists of the executive team of Tourism Ireland, Fáilte Ireland and Tourism Northern Ireland and oversees all the areas of co-operation and synergy between the agencies. There is also a range of joint working groups that work on different elements of the plan together. It is really important that we have that close co-operation. There is a number of areas where we get significant synergies. Obviously, we all share the same content pool so any material that is generated from marketing Ireland is available to all the agencies and our partners. A really good example is the international publicity about which Mr. Gibbons spoke earlier concerning the fantastic relationships his team has with journalists in markets and getting the right journalists to come to Ireland. When those journalists come to Ireland based on their relationship with Tourism Ireland, they are hosted in Ireland by Fáilte Ireland staff who are really familiar with the kind of product and experiences on the ground that will meet those journalists' needs based on the brief we get from Tourism Ireland. We then deliver that so it is a really good example of where the international relationship is leveraged brilliantly by Tourism Ireland, and the on-the-ground product knowledge and where we can grow regionally and seasonally, is understood really well by the on-the-ground team in Fáilte Ireland. Those two sides of the equation combine to give the fantastic publicity Ireland gets for free through those journalists. There are lots of other areas of co-ordination. There are no significant areas of overlap or duplication. We work hand in glove on the basis that it is important that we work together because we need to make sure we are developing the right product on the ground for international visitors that will be attractive and appealing to them. It is important that as we develop that and as new product comes on stream and we work to support that new product through Fáilte Ireland, we bring that information to Tourism Ireland in order that when it is marketing it internationally, it is up to date with new developments. There is significant innovation and development in the tourism sector. New product is coming on stream all the time. We can bundle and package that in ways primarily through our experience brands such as the Wild Atlantic Way, Ireland's Ancient East and Ireland's Hidden Heartlands to bring that to Tourism Ireland in order that it can market that effectively internationally. We have very strong ways of working and are really synergistic in that regard.

Training was also mentioned. Fáilte Ireland provides significant support for industry in terms of training and development through a range of training and development courses through our business supports team across a wide range. One area that was rightly mentioned is the importance of digital technology and this involves enhancing the digital skills of industry and the ability to sell internationally and to sell through digital channels internationally. We provide significant training supports for industry in that area. We also provide support in a wide range of other areas from customer service to market diversification to cost and revenue management. There is a wide range of training supports for people in the industry. In addition, we have been actively involved in the hospitality and skills oversight group, which is made up of all the key industry players and all the key educational institutions. The Deputy mentioned the education and training boards, ETBs. They are fully involved in that, as are SOLAS and the Department of Education and Skills. We have been an active member in terms of trying to ensure that the education provided by the State's education sector meets the needs of industry. We are stepping up our involvement in this area. We are taking over the chairmanship of that board in the future to improve further the effectiveness of the great work the oversight committee has done in recent years. We are very keen to take that on and build on it. Fáilte Ireland does not want to duplicate what is the responsibility of educational institutions, ETBs, SOLAS, the Department of Education and Skills and all of the third-level institutions, including institutes of technology, which we have supported significantly. It is important that we do not duplicate any of that work. We want to make sure that we have the best connection between what industry needs and what those educational institutions produce in terms of getting that out.

We also work with industry to make it as attractive as possible. We support a number of initiatives around the promotion of careers in tourism. Once again, this is a further area where we will look to improve and enhance the supports we can provide with the recent budget increase. We can and are very keen to support and work with industry but, fundamentally, making the industry attractive is down to the industry. Obviously, we employ our own people but we do not employ people in the industry. There is an significant onus on the industry to take the lead in terms of making the industry an attractive one in which people want to work and we will support and work with it in this regard. This will be a challenge for the tourism industry along with most industries. IBEC has identified that the most significant challenge to growth across pretty much every sector in Ireland will be the availability of people.

This is going to be a battle for every sector going forward and the tourism industry needs to get in and fight to make the industry attractive.

One of the areas we are working on, and this has been a real issue within the industry, is the ability to retain staff, particularly in the culinary space. In the past, when there was significant State involvement in training of culinary staff through CERT, as many as 80% of those people were not retained within the hospitality sector after five years, and it was not a very efficient use of taxpayers' investment to put people into a bucket they were effectively falling out the other end of. Retention of staff is one of the areas where we are working with industry to try to help it to upskill in regard to trying to develop and retain staff, in order that they develop, grow and have long-term, fruitful careers in the tourism industry. That is our approach. It is very much about trying to join industry needs and the output of the educational institutions into one.

The Deputy made a point around the continued growth in tourism despite the reduction in the budgets of both tourism agencies. There are a number of factors. Although it was before my time, and I cannot claim any credit for it, both agencies did a remarkable job in working to minimise the impact of budget cuts. This forced some really good thinking and good initiatives, with two particular examples I would cite. First, the Global Greening initiative by Tourism Ireland was a fantastic low cost initiative that got significant coverage for Ireland on an ongoing basis. Second, the Wild Atlantic Way from Fáilte Ireland was effectively a response to the fact we cannot market all of these regions separately anymore as we do not have the budget to do it, so out of that necessity came the fantastic development my predecessor Mr. Quinn was instrumental in delivering. That is part of it.

The Deputy mentioned the abolition of air passenger duty and the reduction in the VAT rate, which were significant factors that led to the growth of the industry and significant expansion of air access into the country. Obviously, continuing to grow air access is essential and is one of the key factors, in addition to marketing to drive tourism growth in Ireland.

From looking at the programmes within Fáilte Ireland and also from my involvement with Tourism Ireland, I have no doubt the programmes we have not been able to fund because we do not have the money would all add significant incremental growth to the business. The lack of budget in recent years can be measured not in underperformance in the sector but in missed opportunity. I believe we would have had greater growth had those budgets been in place, and now that some of those budgets have been restored, this will enable us to support strong future growth. As I said, there are economic tailwinds and economic headwinds we can bump into, and it will all be in the mix. There is no doubt the moneys being invested are delivering a lot more than would have been there without them.

Mr. Niall Gibbons

I want to comment on some of the international issues raised. The British-Irish visa scheme was introduced in 2014 and means visitors who come from China and India can come to the UK and Ireland as if it is one country for tourism purposes. This has made it an awful lot easier for us, particularly in China, where we have put in a lot of effort. We saw numbers last year being revised upwards to 90,000 so it is entirely possible that in 2018 we could end up seeing 100,000 Chinese people visiting Ireland, which is a significant step forward from the position a number of years ago.

The visa has been a big step forward in that respect because people are not coming to Ireland as a destination in its own right and, typically, are coming as part of a UK and Ireland tour. We work with a group called UKinbound, which is the representative body for UK inbound operators. We have been encouraging it to add Ireland to its UK itinerary in the last decade, which has been very successful. For example, one of the most popular tours Chinese people take arrives into London, goes up to Scotland, then into Belfast, down to Dublin and out of Ireland. There are a couple of reasons for that, for example, they do not pay travel tax when they leave Ireland, which is an advantage in terms of keeping the cost down.

There are many dynamics at play. Our big challenge in a market like China is that awareness of Ireland is very low. We have a lot of work to get done in that regard and we need more time and resources to do that. On the visa side, there are opportunities and we are just completing a report in that respect which we will be submitting to our parent Department very shortly. For example, there are opportunities for liberalisation in that we have to be able to process our visas faster and cheaper. To take the example of the United States, it offers a ten-year visa for China whereas ours are limited to a couple of years. The capacity for multi-entry visas would mean that people who have children being educated in our universities could keep travelling over and back. However, they currently have to hand in their passport to get the visa and, therefore, they are missing the passport for three to five weeks. It could be possible to simply send in a photocopy and bring in the passport at the final stage, which would make it easier for the customer. There are a number of recommendations we will be making in that respect.

We have to remember we are the most peripheral country of mainland Europe. Out of the 150 million Chinese who will travel abroad this year, only 5 million will come to Europe, and we are furthest away, so we have to make it easy to get here in every respect we possibly can. The visa scheme is a welcome development. In the context of Brexit, we would be hopeful it will continue into the future.

The short stay visa waiver programme is different. It operates in approximately 15 countries around Asia and means people who come into the UK on a certain type of visa and clear UK immigration can then travel on to Ireland with no further visa requirements. That liberalisation also gives hope in regard to opening us up to those countries. Overall, our view is that speed and efficiency of processing and cost are the big factors, and the length of the visa is also very important.

With regard to the evaluation, Tourism Ireland is required by North-South regulations to produce a three-year corporate plan and a business plan every year that set out key targets in regard to everything we have to do, and those are in the public domain. We also undertake a major study every three years, called "Return on Marketing Investment", with an internationally recognised model that other agencies, such as competitors of ours in Britain and New Zealand, would use. We would score more strongly than those other international peer agencies in that for every €1 we spend on marketing, we generate a €34 return, which is very strong. Every single campaign in our organisation has campaign metrics, or KPIs, which are evaluated afterwards to assess performance.

I echo Mr. Kelly's words in regard to how complementary our work is. We have a tripartite meeting, with Tourism Northern Ireland, Fáilte Ireland and Tourism Ireland all working together. The management teams meet approximately quarterly to make sure the message we are delivering in the marketplace is delivered here at home and to make sure the staff we have, who are based in 20 countries around the world, with a host of nationalities and different languages, understand exactly what development issues Tourism Ireland, Fáilte Ireland and Tourism Northern Ireland are facing, so we can start to market and sell those in due course.

We probably do not talk enough about sustainability. We have to remember we are a clean, green destination and recognised as such internationally. As more people come here, and we expect to welcome over 11 million visitors to the island of Ireland this year, we have to keep the focus on revenue, that is, on longer staying, higher spending markets. We will be unveiling six new sustainability principles in the launches of our marketing plans in the next three weeks, which will put the focus on more rural areas and away from urban destinations, with greater season extension, in 2019 and beyond.

To again echo Mr. Kelly, one of the reasons we have seen such success, even on reduced funding, is that we probably have not recognised the innovation of our tourism boards. Mr. Kelly mentioned the Global Greening project, with which we are very glad to be associated. There is also screen tourism, with "Star Wars" and "Game of Thrones " meaning Ireland is associated with the biggest project on the big screen and the biggest project on the small screen. Our campaigns have been seen by 250 million people around the world in recent years and there is also the digital agenda. Between Facebook, Twitter, YouTube and Pinterest, we have a global audience of 1 billion people only one click away, and this was not there a decade ago. The whole world has changed with regard to marketing. The most important issue is probably the air access agenda, with some 85% of people coming here travelling by air. In the summer of 2010 there were about 424,000 seats every single week and next summer it will tip over 600,000 every single week, so it is a significant step forward.

Can Mr. Gibbons repeat that point? I missed it.

Mr. Niall Gibbons

In the summer of 2010, there were approximately 424,000 journeys every single week to the island of Ireland, north, south, east and west. By the summer of 2019, that figure will exceed 600,000 every week. That is a significant increase and a large part of it is due to our relationship with all the airports. It is very much based on a business development agenda that looks for the best possibilities for new routes and ensures we get behind them, particularly those into regional airports, to make sure the inbound leg is as full as possible. That covers all the international dimensions.

What specific pressure points are developing in tourism over the next two years to December 2020, particularly arising from Brexit? What financial or legislative responses does Mr. Gibbons feel may be needed to address those issues?

I wish to ask Mr. Kelly what Fáilte Ireland's current funding is and whether he believes it is sufficient. I know he acknowledged the additional €35 million but what funding increase is required to do all that Fáilte Ireland wants or needs to do, particularly in light of Brexit?

I would like the witnesses' thoughts on the Minister for Finance's decision to increase the VAT rate across the entire tourism sector regardless of the size or type of business involved. How will this affect the sector in the year Brexit is due to happen? What work is Fáilte Ireland carrying out on the ground? The organisation is marketing existing amenities but, beyond that, what work is it doing on the ground, particularly in the Border area?

Deputy Troy alluded to my other question. The news this morning mentioned coffee shops having trouble recruiting. Is low pay a reason for that difficulty?

Mr. Niall Gibbons

There are several pressure points regarding Brexit. First, in planning for 2019, Tourism Ireland is working on the basis that there will be a deal, including a transition period. Tied into that deal are bilateral agreements on air transport, which have significant implications for our industry. Assuming a deal gets done and the air access picture remains the same, we will carry out research in the British marketplace from time to time to assess the mood of the British consumer and whether Brexit impacts on their intentions of travelling abroad. The impact on the British economy may mean that people feel less well off, inflation or interest rates pick up and purchasing is lower. If the British decide to travel in smaller numbers, that will have an impact on Ireland.

The other pressure point it is important to bear in mind is that although Northern Ireland is constitutionally a part of the UK, we are marketing the island of Ireland. A large number of people come to Northern Ireland from mainland Europe and North America and travel as part of an all-island tour. They come via the Republic of Ireland. We have to ensure the common travel area, that is no hard border or border of any kind that might affect our own industry.

We also welcome the additional funding for 2019, because we are just completing a review of the British market at the moment. That will be launched in 2019. It is important that we are in a position to fund that. The key issue relating to Brexit at the moment is the uncertainty it creates. The questions we hear most in the international marketplace are about where everything is going and what will happen. In planning for 2019, we are working, for now, on the basis of a deal being done. That would have to change if this is not the case.

Can Mr. Gibbons expand on the additional funding Tourism Ireland has been promised for 2019?

Mr. Niall Gibbons

I am waiting on a letter on it, so I cannot expand for now. The Minister will launch our marketing plans on 26 November. We are shooting a new campaign at the moment, which will launch in late December in all our key markets abroad, and we expect to complete a redevelopment of our website,, across all our main market areas next year. We also expect to continue on the path to market diversification which we have been on for the last several years. We will focus on the markets where visitors stay for longer and have a higher spend. For example, a North American will stay twice as long as a British visitor, as will a European, and they are delivering significant increases in revenue. We are also looking to where air access grants us the greatest opportunities, including markets in North America. There will be 25 gateways between Canada and the US alone next year, which is phenomenal. Ten years ago, there were only ten. We are also looking to markets like China, where we now have new Cathay Pacific routes from Hainan into Beijing and Hong Kong.

Mr. Paul Kelly: I thank Deputy Munster for her questions. Our total funding is €105 million. That breaks down to €24 million in capital expenditure and €79 million in current expenditure. Current expenditure includes pay and general current funding.

Is it enough? Of course not. We appreciate that the Government faces lots of financial pressure and we are grateful for whatever we get, but we could always do with more. We track the economic return on of any investment we get, and our overall sums show that we can deliver a roughly 3:1 return on Exchequer revenue. There is an average return of approximately 12:1 in economic revenue on our funding over long-term ten-year time horizons. We believe we will return money that is given to Fáilte Ireland by the Exchequer three times. That is about being able to balance the short and long term. We are grateful for the budget increase that we have just received but we could certainly do with more. In the context of a no-deal Brexit, we would need significant additional funding. Our response plan for a no-deal scenario calls for approximately €20 million in incremental funding per annum to protect the industry as well as possible.

Regarding the VAT rate, everyone involved in the tourism sector, ourselves included, was grateful for the 9% VAT rate. We would have loved for it to be continued. That would have helped to continue to fuel the growth in the sector. Much of our work is done at the margins. We are trying to expand tourism into less well-developed regions and get people to extend the season. An extra hit of 4.5% off the revenue line will make it much more difficult for businesses at the margins. We will work to support them as well as we can but that will make it more difficult for them. We appreciate that the Government has many competing needs to manage and we work within the policy framework that is set out. We are very happy to work within that and support the industry as well as we can to get through those challenges.

Regarding the Deputy's question on careers and pay, pay is certainly a factor as it is with any career, but it is not the only factor. There can be challenging hours in the hospitality sector. Improvements could be made to working conditions, hours and career progression opportunities.

We need to bear in mind that employment in the sector has grown to 240,000. As Deputy Troy said, it is now the largest indigenous sector in terms of employment. We have seen significant growth in employment in the sector. Many people have fulfilling and rewarding careers in tourism and are doing well for themselves. To promote this, is we are working with the industry to help people understand and recognise the opportunities that exist. There are challenges in respect of employment and helping the industry to become as attractive as it can be, but when we speak about them, we need to keep them in the context of the rate of employment growth there has been in the sector.

It is also important for the sector to remain competitive and this is always a challenge. In addition to the VAT rate, the sector is experiencing significant cost pressure increases in wages, as there is in most sectors, insurance and utilities. We are trying to help the industry as much as we can with these and policymakers need to be aware of them to try to ensure we remain internationally competitive. Tourism is the ultimate internationally traded service. As Mr. Gibbons stated earlier, our closest competitor in our type of product offering is the UK, and with the devaluation in sterling, the UK is becoming a more competitive destination than Ireland. This puts extra pressure on us to ensure we remain competitive.

I asked Mr. Kelly this particular question because there are serious concerns about low pay in the tourism industry. He flagged many issues regarding low pay and working conditions. Does Fáilte Ireland raise this particular issue with its members and employers given that it is known as a low pay working environment? I do not say this is the case throughout the industry but it certainly is in certain sectors of the industry.

There are always cost factors and the sector must be competitive. Mr. Kenny raised the issue of the VAT increase but that has just happened. For all the years when there was a booming hotel industry, there were pay and working conditions issues. What has Fáilte Ireland done to deal with this scenario? It is damaging to the tourism sector that it has a reputation for low pay and poor working conditions. Given that Fáilte Ireland is tasked with promoting tourism and protecting, ensuring and enhancing the industry, what has it done as a body to correct this? How does it deal with employers?

Mr. Paul Kelly

It would be unfair to state the tourism industry has that reputation. There has been significant employment growth in the tourism industry. An awful lot of people do very well and progress in the tourism and hospitality sector.

I know this, and Mr. Kenny has said it, but many people do not and this is the issue I am raising. I am not putting down anything else.

Is the sector not subject to the minimum wage?

I am asking a question. The Chairman is not representing Fáilte Ireland.

I am not but the Deputy is implying something that-----

No, I am not implying; I am asking a question and that is what we are here for. The Chairman is chairing the meeting and not representing Fáilte Ireland.

I am trying to keep it impartial.

What is Fáilte Ireland doing about this? We know the reputation is there so what is Fáilte Ireland doing to correct it?

Mr. Paul Kelly

We are working with the industry providers to help them promote careers in tourism and help people see the full picture of the many significant excellent opportunities in the sector. We also work with them on a business-by-business basis to help those businesses that engage with us in whatever challenges they have. If staff retention is one of these issues, then we work with the business to help provide training and supports on how it can take the actions needed to attract and retain staff.

That does not answer my question.

Mr. Paul Kelly

That is what we do.

I am looking for specifics but Mr. Kelly does not have anything specific.

Mr. Paul Kelly

In fairness, there are a number of specifics that are appropriate for us to engage in.

Specifically with regard to low pay, does Fáilte Ireland do anything? Perhaps it is not under its remit. It can be damaging to the tourism industry that it has this reputation. What steps, if any, does Fáilte Ireland take as the body tasked with promoting tourism and all that is involved in it, particularly with regard to low pay? If it does not take steps, that is okay and Mr. Kelly can just that it does not do anything specific.

Mr. Paul Kelly

We do not do anything specific in this regard.

That is the answer I was looking for.

What work, particularly in the Border region, does Fáilte Ireland carry out on the ground as opposed to marketing existing amenities, which the organisation does quite well?

Mr. Paul Kelly

We carry out a wide range of work. One area is capital investment. We have a wide range of capital investment projects whereby we provide capital grants to local authorities, our strategic partners in the OPW, the National Parks and Wildlife Service, Coillte and Waterways Ireland and to industry partners throughout the country. This has a particular focus on those regions that need the development. We have a number of ongoing projects in various areas. Recently, we announced funding for the development of a pontoon in Sligo. We have done a masterplan with the National Parks and Wildlife Service for the development of national parks, which will include Glenveagh National Park. Recently we announced funding for Wild Nephin Ballycroy National Park. We are working with Strokestown House on the development of a national famine museum. These are a small sample of the initiatives on which we work with local partners to develop new tourism attractions on the ground.

We also support the development of festivals throughout the country through our festival grant aid. A number of festivals in all the Border counties apply for, and receive, festival grants from us. We work with them to help them maximise the impact and success of these festivals. We also work with all of our industry partners. We provide training supports and international sales platforms that are available to all. A recent example, particularly for the Border counties, is where we funded a competition for local destination management companies and tour operators to develop new itineraries that would take in both Northern Ireland and the Republic of Ireland. We worked in collaboration with our colleagues in Tourism Ireland to develop new itineraries that we could take to market to bring tours to Border county areas. The support we were able to provide de-risked the development costs and initial marketing costs of these new itineraries.

They are leading to significant increases in visitor numbers in those areas and delivering a positive return.

Will Mr. Kelly give me an example of one of those itineraries, for my own information, say in my own area of the County Louth-Armagh Border area?

Mr. Paul Kelly

I do not have those exact details with me but we can send them on.

Thank you. They would be interesting.

I have some questions arising from the replies. One relates to marketing. I referred to a survey by Red C specifically on French holidaymakers. Some 13% were familiar with the Dublin brand, 10% recognised the Wild Atlantic Way and 7% were aware of Ireland's Ancient East. There was a discussion about marketing and evaluation that the body undertakes annually but we must be careful that some of the numbers and movements are not merely coincidental. There may be other factors driving these. We were told that for every €1 spent on marketing there is a €34 return. What guarantee is there that the money on advertising is driving footfall? Mr. Kelly spoke about Fáilte Ireland's advertising and the parameters and metrics it uses. He referred to the advertisements memorability and whether people who see them know that they relate to a holiday. Are there any metrics that would ensure that the brands are hitting home and that the marketing is driving footfall and does not arise from other factors?

I refer to Fáilte Ireland's role in education and training. I wish Fáilte Ireland and Mr. Kelly the best of luck his new role as chair of the hospitality skills oversight group, and working with Skillsnet Ireland. We still have a chronic problem. Mr. Kelly says he does not want to interfere in the role of ETBs and institutes of technology, but something must happen because there is a chronic shortage of key staff in the industry, which, if allowed to continue, will have consequences. Do we need to reintroduce a body such as CERT so that there is a specific training board for the hospitality sector?

I welcome Mr. Gibbons remarks about tourist visas and support everything he said. I have highlighted the need to be more liberal in the issuing of visas with the Minister as it is something that would help in emerging markets. On visas for workers coming to Ireland, when we are almost at full employment, have either of the two organisations represented here lobbied or made representations to the Minister for Employment Affairs and Social Protection? The current visa eligibility requirements are for highly skilled and highly paid roles and it prevents needed workers from coming here.

Air access is very important. The legislation on an independent noise regulator is yet to come before the House. Dublin Airport is at capacity. If certain decisions are not taken and improvements made soon, it is possible that we will be unable to cater for any more passengers. Has Fáilte Ireland worked with the Dublin Airport Authority, DAA, on how we can ensure that does not happen?

Mr. Niall Gibbons

Many factors impact on who comes to Ireland. We work on around 20 different markets overseas. We have a three year corporate plan and a one year business plan, with targets attached to both. There is a plan for marketing in every market in which we operate. We carry out strategic reviews of markets every three years, particularly in our main market areas, to see what factors are driving outbound travel. Marketing is only one element of that but work in marketing really impacts the agenda. The Red C poll to which Deputy Troy referred is the brand tracking which we undertake every year. It is not only for France but also for the US - there are seven or eight countries altogether. That gives us an insight into where Ireland ranks among consumers. We have done tracking over the last ten years on Ireland's image abroad, our share of voice, who we are competing against and who is doing better than us, because it is also a question of watching what competitors are doing. That informs what marketing investment will be for the following year because we need a strategy and a set of objectives. I mentioned a ratio of 34:1 in the return on the marketing investment model which is the culmination of measuring whether the decisions we have made are having an impact. Take air access, which has been growing strongly in recent years, the price of oil is a big risk at the moment. Were it to start to decline, no marketing will arrest that trend. All those factors must be weighed up before making marketing investment decisions. When one evaluates the marketing, then the question is whether it got people from the awareness stage to the purchase stage, which is the critical goal.

We will continue pushing the liberalisation of visas but we did not make representations on workers' visas as our concern is on the tourist part of the equation.

On air access, we have a very good, close-working relationship with all the airports as well as DAA. In excess of 85% of air access to the whole island of Ireland comes into Dublin. It has increased from 19 million passengers annually to more than 31 million this year. It is important that a runway is built as soon as possible and that we continue to work on air access developments. We will continue to support our colleagues in DAA in what they are trying to achieve. Customer experience is also very important. When people arrive into Ireland it is often the first image they get. The DAA has done excellent work on that in recent years and hopefully we will continue to work closely with it in years to come, particularly on air-access demand.

Mr. Paul Kelly

We are very aware of skills shortage within the industry. We are undertaking a range of initiatives to develop skills. The apprenticeship model is a key model in this. We are working with industry on a culinary apprenticeship scheme and have done a great deal to support its development and get it off the ground. It is now beginning to bring material numbers of new chefs into the industry. The apprenticeship model also helps with retention which was a problem with the old model, as I noted earlier. The joy of apprenticeship is that the industry is fully involved, as are the educational institutions. We ensure that the quality standards, curriculums and so on are all at the appropriate standard. The mechanism is there to meet the need, but the issue is getting participation of sufficient numbers within the industry and then for it to get enough potential employees to participate. We are working with them on how to further promote that.

We have had some success in expanding worker visas, which is the area of visas on which we are focused, but we would like to see worker visas further expanded as it would help to alleviate the skills shortage issue. Our focus on this area is ongoing.

We also engage in a number of careers promotion initiatives. For example, in second level schools during transition year, we run tourism insights and apprenticeship programmes where we try to expose transition year students to the opportunities and possibilities in tourism careers. They are proving popular and, with the extra investment we will have, we will roll those out based on the success of the pilots to a wider range of schools in the coming years.

We conducted large-scale research last year into the appeal of our international brands. The regional experience brands in Ireland now, the Wild Atlantic Way, Ireland's Ancient East, Dublin and Ireland's Hidden Heartlands, are all powerful in the breadth of their appeal and in the ability to drive as being a primary motivator to travel. They benchmark well against international standards. For example, the Great Ocean Road in Australia was one of the benchmarks we tested against and found that our brands were right up there in their ability to attract people.

It is important to say that our brands are young and have only been around a short number of years whereas many of these significant regional experience brands have been known about for decades. Ours are still very young. We believe we are only scratching the surface in terms of the potential of those brands. It takes a while to build the awareness of them, but that it is a key area. One of the parts of the work Tourism Ireland and Fáilte Ireland do jointly in understanding visitor perceptions of Ireland is that there is a need to explain to people, in a brief way, what Ireland has to offer as opposed to just rolling green hills. There is a perception that there is just Dublin and rolling green hills. The experience brands of the Wild Atlantic Way, Ireland's Ancient East and Ireland's Hidden Heartlands are key and powerful mechanisms to explain to people Ireland's key offerings. The brands are young and it will take a while to build awareness. We believe the faster that awareness can be built and the increased marketing investment that both agencies now have will help us accelerate that. That is something we would like to happen.

Dublin Airport is the most important tourism infrastructure in the country and it is nearing capacity. The main contribution we can make to that debate is to point out the economic contribution of the tourists that Dublin Airport brings in, and can bring in, and the need for that capacity to grow. We certainly would like the barriers to the second runway to be worked through as quickly as possible and for that critical infrastructure to come on-stream in order that we do not end up in a scenario where revenue is lost and jobs are not available to the country because people cannot get in due to the lack of the runway capacity at Dublin Airport.

It is important that people understand that Dublin Airport is not a Dublin problem. Dublin Airport, and its capacity, is a national problem and if we are not able to land tourists who want to come here because we do not have the landing capacity, that will cost jobs in Leitrim, Longford, Donegal, Mayo, Offaly and Laois. It will cost jobs all around the country. Those effects will not be as obvious because they will hit many family business and small and medium-sized enterprises that tend to operate in the tourism sector. There is still a need in rural and regional Ireland to continue to drive economic growth. Tourism is a powerful driver of that economic growth in regional Ireland and it is important for regional Ireland that bottlenecks are not created at key gateways that prevent that growth from happening.

I will make a few comments. The committee acknowledges the tremendous work Tourism Ireland and Fáilte Ireland are doing, evidenced by the increase in the workforce to 300,000.

I was also disappointed with the increase in VAT. The urban areas, like Dublin and Killarney, and the rural areas got the same hit with the VAT increase and there should be a way around that. Small restaurants and hotels in the countryside do not have the same income as the big businesses in Dublin, for example. In saying that, these people have taken on more staff and are working on a lesser margin. The minimum wage has increased, although only by 10 or 20 cent, but it is increasing every year and some Deputies seem not to be aware of that.

I have a few nuts and bolts questions or comments on the issue of Brexit and the tourism sector. The witnesses are talking about tourists coming into the country. We talk about Brexit hitting every sector of the economy. We talk about goods going up via the boat and there is customs and all these excise taxes. Tourists coming from America to Ireland have had to go through security checks and so forth for the past 20 years. Be it Brexit, no Brexit, soft Brexit or whatever, the same access will be in place. Are we not ringing alarm bells for some tourists? If I travel from France, I still have to go through customs and be checked out when I arrive in the country and that depends on how much is in my purse.

I have a concern relating to Mr. Gibbons' submission about people who come to Dublin to get to the North of Ireland. It is then we will see the impact of a hard border. Are many people coming to Belfast who come south to share the 32-county experience? Bord Fáilte and Tourism Ireland are good at collating figures and putting statistics together on the demographics, whether it is old people, young people, or rich people who come to this country. We are worried about the impact of Brexit on the British tourist. If the British tourist is badly impacted by Brexit, what parts of the country do the witnesses anticipate will be mainly hit? Will it be the urban area of Dublin and Temple Bar, the lakes of Killarney or across the board? Will it involve old, retired people, young people, or enthusiasts who want to use the Wild Atlantic Way, or travel around the Glens of Antrim? When the witnesses speak about a vacuum arising from the loss of tourists from one community, will that impact the entire country or just the Ancient East? Will it have a broad impact, or who will be most impacted by the loss of tourists from Britain? The figures are down 5% at the moment. If they went down another 10%, where would the witnesses see the vacuum in the tourist sector here?

Mr. Niall Gibbons

Tourism Ireland has prepared its business plan for 2019 on the basis that there will be a deal but the access picture is important because the bilateral air transport agreements are tied to access. If there was a hard Brexit, no flight could take off or land in the UK from March next year, which has implications for us all. That is an important issue.

Two thirds of visitors to Northern Ireland from mainland Europe and North America come via the Republic of Ireland.

The numbers coming through Belfast are negligible because many visitors start their tours in Dublin. That is where the significant issue can arise.

The currency issue has implications for all markets. When we saw sterling fall in value by between 15% and 20%, for example, against the euro, it made the United Kingdom a very competitive destination for Americans and Europeans. It also had the capacity to impact on the number of visitors coming to Ireland.

On the area that will be impacted on most, while visitor numbers from Britain are significant, at over 40%, their spend is down by around 20%. However, it impacts much more on the rural economy than in any other market. It has an impact in the Border region and also in Dublin. It has an impact across the west and the south west and is felt, in particular, out of season. The summer season tends to be reasonably busy. Therefore, the most significant impact is felt in quarters 1 and 2. They are the areas most risk from a hard Brexit.

Are there other comments?

Mr. Paul Kelly

Mr. Gibbons summarised everything, but I will add one data point. We were asked how many people came to the Republic of Ireland through Belfast. Approximately 3% of visitors come into the Republic via Northern Ireland.

I stress the regional dispersion and, in particular, the seasonal importance of British visitors. According to the current visitor profile, they are much more likely to visit outside the peak season, unlike visitors from other markets. Like domestic visitors, they are relied on more for business in the shoulder and off-seasons.

I thank Mr. Gibbons, Mr. Kelly and their colleagues for attending. I make them aware that they are also being watched on television and should not feel isolated. It has been an informative meeting. I hope the information provided can be put to good use in government circles.

The joint committee adjourned at 12.35 p.m. until 1.30 p.m. on Wednesday, 14 November 2018.