The urgent need to support vulnerable but viable tourism businesses

15 July 2020

A Key Moment: Irish tourism industry awaits Government’s July stimulus package

The fast-moving Covid-19 situation shows no sign of slowing down anytime soon. Although the infection rate in Ireland has remained low and stable for some time there is caution in relation to fully opening up the economy. This affects the Irish tourism sector more than anywhere else, an industry that in the pre-pandemic era was worth €9.3 billion annually to the Irish economy and employed 265,000 people. Now, in this annus horribilis, international arrivals have all but ceased, the domestic market is tentatively back but only with strict social distancing rules in place, and tourism enterprises – of all sizes and in all parts of the country – are desperately nervous of what the future holds.

The new Government – a coalition of Fianna Fáil, Fine Gael and the Greens – is set to publish its July stimulus package soon which aims to kick-start the economy. It is of critical importance that the Irish tourism and hospitality sector – the country’s largest indigenous industry and biggest regional employer – is fully supported by Government and that vulnerable but viable businesses see a path out of this crisis.

As well as being a public health crisis, it is apparent to all that Covid-19 has had a devastating economic impact and Irish tourism businesses have been hit quickest and hardest. Closed by Government decree for four months and now only partially open with international arrivals all but non existent, the sector is facing an existential crisis.

The Irish Tourism Industry Confederation (ITIC), representing the leading tourism stakeholders across the public and private sectors, recently published its Tourism Industry Revival Plan which sets out a roadmap for recovery. The plan argues that the July stimulus package must include a €1.5 billion suite of financial support packages for tourism businesses as well as an extension of the wage subsidy scheme through to Q2 in 2021.

A quagmire of a quarantine

It is apparent that the Government’s 14-day quarantine rule relating to international arrivals is blunt, ineffective and flawed with an open border with the UK one of many weaknesses. Any international visitors to Ireland – of which there are very few – seem to be largely unaware of the regulations and its policing is virtually non-existent. As per the recommendation of the Aviation Recovery Taskforce it is time that the quarantine rule for international visitors be replaced by a comprehensive testing regime to ensure international arrivals can enter Ireland freely.

The Government’s “green list” of countries is set to be published soon which will allow for visitation from these countries but a far more important initiative would be a comprehensive testing policy to be developed so that tourists from all countries can enter Ireland freely. Crucially this would assuage public health concerns whist allows international tourism to recommence in earnest.

As long as the quarantine period is in place confusion and uncertainty for visitor, Irish resident, and air or sea carriers reign, which risks destabilising and damaging Irish tourism’s hard-won reputation for a warm hospitable welcome to tourists.

A Revival Plan worth supporting

ITIC’s Tourism Industry Revival Plan outlines 3 growth scenarios for overseas earnings – optimistic, baseline and pessimistic – for Irish tourism between now and 2025. ITIC argues that Ireland’s tourism industry can deliver the optimistic outcome if Covid-19 is contained and Government adopts the recommendations within the Revival Plan.

Such an outcome would be massive beneficial to the economy and could mean 323,000 people employed in the sector by 2025 and €2 billion annually being paid to the exchequer in direct tourism-related taxes.

Among the recommendations within ITIC’s Plan are a new Vat rate of 5% for tourism services, an increase in overseas marketing budgets, a halving of employer PRSI rates, and a creative use of state aid rules to support airports and carriers into the country.

Our UK neighbours: Laggards in public health, Leaders in economic stimulus

The UK’s health response to the pandemic has been ineffective and inconsistent leading to a higher number of deaths and infections than in Ireland. However their economic response to the crisis for their tourism sector has been swift and bold with last week’s announcement of a £4 billion package and a cutting of their Vat rate from 20% to 5%. Ireland must follow suit urgently and support its tourism sector that has been massively damaged and exposed through no fault of its own.

A treatment or vaccine for Covid-19 will emerge in due course and it is vital that Ireland’s tourism and hospitality industry is still standing at that point. The domestic market, and their commitment to staycationing, will paper over some cracks this summer but the autumn and winter months will be desperately fallow for Irish tourism businesses. The Government has no choice but to support the sector at this critical juncture.

Vulnerable but viable businesses need support and assistance now. They will repay such support in droves once the pandemic passes.