Emerging from Irish tourism’s greatest ever challenge

16 April 2020

Collaboration and cohesion: how Irish tourism can recover

Last week’s announcement that current restrictions on people and businesses will continue until May 5th means that Ireland’s tourism industry will remain in deep cold storage. And even after May 5th, or whatever revised date may be chosen, it is clear that any relaxation of restrictions will be staggered and Ireland’s tourism businesses – hotels, attractions, B&Bs, tour operators, event organisers, restaurants, venues, vintners and the many others – are likely to be down the list for Government approval as to a greater or lesser extent they depend on the free and unfettered movement of people.

Either way, with 75% of Ireland’s tourism economy based on international visitation, and little if any expected in 2020, the rest of this calendar year is set to be desperately fallow.

A public health issue first and foremost, Covid-19 presents shattering economic challenges and Ireland’s tourism and hospitality industry – the country’s largest indigenous industry and biggest regional employer – has been hit quickest and hardest.

The Irish Tourism Industry Confederation (ITIC), representing the leading tourism stakeholders across the public and private sectors, is part of a Covid-19 emergency tourism taskforce that, along with Department officials and tourism state agency CEOs, met for the 4th time by video conference earlier this week, a meeting chaired by Ministers Ross and Griffin.

One item for discussion was a Tourism Recovery Taskforce, and ITIC welcomes such an initiative and will play its part in full. Although difficult to think beyond the current devastation that is affecting tourism it is appropriate that we look forward and plan for the future. ITIC is of the view a high-level tri-partite taskforce of industry, Department and Agencies will be needed as the vehicle and mechanism to relaunch Irish tourism and provide jobs, economic growth, and exchequer returns.

A €3.52 billion wallop for Ireland’s tourism industry

ITIC has made the first, and to date only, estimate of the cost of Covid-19 to Irish tourism in terms of international visitation. Based on 2019 CSO data – when overseas tourist expenditure in Ireland (excluding air and sea fares) amounted to €5.1 billion – and using the assumptions that Q1 has a -60% impact (March wiped out and no Saint Patrick’s Festival), Q2 sees a -85% impact (when no business of any note happens), and then slow recovery occurs in Q3 (-70%) and Q4 (-50%), the tourism economy for 2020 could amount to as little as €1.58 billion, a Covid-19 cost to Irish tourism of €3.52 billion. Even this may be optimistic as the Covid-19 crisis rages.

Of course the domestic tourism market should respond quicker and there is an onus on industry and Fáilte Ireland to stimulate demand within the Irish market-place as soon as appropriate however any bounce in domestic tourism can never get close to compensating for the devastating fall in overseas earnings.

A regulated industry makes it easier to provide sector-specific supports

ITIC set out a 3-point plan last month outlining the urgent and immediate measures needed by Government to protect Ireland’s tourism businesses. Business Survival, Liquidity Measures and Demand Stimulation remain the only viable blueprint for Ireland’s tourism industry.

The Irish Government’s economic response thus far to Covid-19 is largely centred around a €3.7 billion package including wage subsidy measures, increased unemployment payments and better illness cover. This is an important and welcome first step but the measures are only in place for 12 weeks and Ireland’s tourism industry, largely dependent on overseas earnings, will need a suite of sector specific supports for the rest of 2020.

As Ireland’s tourism industry is highly regulated – all hotels need to be registered by Fáilte Ireland; restaurants, venues and vintners must be licensed; and a range of tourism trade associations are in place with accredited members – it is relatively straightforward for Government and Agencies to identify businesses for support. These must include generous debt forbearance measures on everything from local authority rates to commercial water charges as well as liquidity and cashflow supports such as business continuity vouchers, state backed guarantees, and direct cash supports for smaller firms. Our nearest neighbour, the UK, currently has far more comprehensive supports than on offer to business in Ireland.

ITIC, a member company of IBEC, fully supports the latter’s suite of proposals outlining measures for business liquidity and credit in the economic crisis which, if fully implemented, would increase the total Government support package to 10% of GDP, circa €35 billion, and bring Ireland more in line with other EU countries.

Support from the EU must also find its way to Ireland’s tourism and hospitality industry. Government must ensure that the €500 billion economic aid package negotiated last week amongst EU leaders finds its way to the country’s largest indigenous industry and biggest regional employer. State Aid rules are set to be relaxed across Europe and Ireland must be creative in this context and in particular support ports and carriers as air and sea access are fundamental to Irish tourism.

Tourism must be at centre of new Programme for Government

As Fianna Fáil and Fine Gael bridge 100 years of distrust to negotiate a new political framework, it is vital that tourism be at the centre of any new Programme for Government. The incoming Government must support Ireland’s tourism industry without delay and a Minister with serious economic clout must be given a seat at the Cabinet table with responsibility for tourism.

Aside from the immediate business survival and liquidity measures the Programme for Government and any National Recovery Plan must be explicit on pro-tourism policies including a Vat reduction to 0% for the duration of the crisis and then permanently left 9% once recovery has taken hold and appropriate overseas marketing and industry funding.

Irish tourism, as recently as the 2011 Programme for Government, was looked to as a saviour for jobs and an economic force of good both nationally and regionally and the industry responded in style. Time now to repeat that trick.