ITIC, in its work to develop and support a professional, sustainable and globally competitive visitor economy, is focusing its research and advocacy on four priority agenda items for 2017:
- BREXIT – addressing immediate and longer term implications for Irish tourism;
- A new industry roadmap for sustainable tourism growth to 2025 and beyond;
- An improvement in the capital budget for tourism from the state exchequer; and
- A new improved support system for tourism businesses comparable to other export sectors.
Rationale for the agenda focus
Tourism is now worth a record €8 billion annually to the Irish economy. Growth in overseas visitors and expenditure has exceeded all forecasts over the past 3 years. Most tourism businesses have enjoyed good trading results from the upsurge in demand while communities across the country have benefitted from more jobs, more economic activity and a vibrancy that visitors bring.
However, the benevolent trading environment of the recent past is now being threatened by a number of headwinds which have the potential to slow or disrupt the growth trajectory. The most immediate trading challenges relate to currency shifts and competitiveness. Many businesses are already feeling the pain of a significantly weaker pound sterling and increased competition from Britain across many source markets.
The, as yet, unknown impacts of Brexit hang over the medium to longer term prospects for the industry and warrant full recognition in the Government’s negotiating stance. The withdrawal of the UK from the EU has the potential to threaten the Common Travel Area (CTA) affecting tourist movements and border controls; limit market access for airlines operating between Britain and Ireland; result in different regulatory regimes and competitive environments for businesses in each part of the island; and undermining the principle of the all-island destination marketing of Ireland.
As a result of the unprecedented growth and changed trading environment ITIC is devising a new industry roadmap for the tourism sector to 2025.
Despite challenges ITIC estimates that overseas earnings from tourism can be worth €7 billion annually by 2025 if the right policies and investment strategies are pursued.
The immediate impact of Brexit – the underlying weakness and volatility of sterling – is already damaging the competitiveness of the Irish tourism offering and can be expected to lead to a reduction in the value of tourists visits from Britain and Northern Ireland – worth just over €1 billion and €350 million respectively in 2016.
It increasingly looks like a ‘hard Brexit’ as the UK Government prepares to press the Article 50 button in March. The UK’s intention to exit the Single Market and the custom’s union is likely to damage Irish tourism.
ITIC’s position, which it will continue to forcefully argue, is that it is incumbent on the Government to protect Irish tourism, the country’s largest indigenous employer. ITIC’s Brexit focus will be on four key areas:
- Retention of the Common Travel Area (CTA) and an invisible border;
- The UK maintaining an open skies agreement with the EU;
- Ensuring that businesses in the Republic are not competitively disadvantaged by EU regulations compared to businesses in Northern Ireland;
- Maintenance of an all-island approach to tourism marketing.
From a tourism perspective the key outcome of the upcoming negotiations will centre primarily on the UK’s demand for control over people movement. It is difficult to envisage the EU ceding immigration control while allowing Britain to retain the other ‘freedoms’ of the single market, including the customs union and movement of goods, finance and services. The outcome would have obvious implications and complications for the land border with Northern Ireland and poses a threat to the flow of tourists across the island and between the UK and Ireland.
ITIC will use its participation in the All-Island Civic Forum and representations to Government to present the views of the industry and argue robustly on the basis of research evidence for the best outcome for the future of tourism.
A NEW road map for sustainable growth to 2025
The trading environment for Irish tourism has changed significantly in recent years. The unprecedented and welcome growth in demand throws up its own set of challenges that need to be factored into a new road map for the industry with more realistic targets set for 2025 and beyond. ITIC was critical of the targets set out in the current Government policy – 10 million overseas visitors spending €5 billion annually by 2025 with employment reaching 250,000 – as lacking in ambition. Overseas earnings from Irish tourism are already worth €4.7 billion annually and it is high time that a more ambitious approach was adopted going forward.
ITIC is advocating that a new tourism strategy be adopted that is industry led and government facilitated. Tourism is in urgent need of a forward looking ambitious programme for the development of the sector.
ITIC proposes to harness the collective wisdom, foresight and knowledge of leading industry stakeholders to set a new cohesive strategic course for the sector of sustainable growth over the next decade, identifying opportunities for expansion in new markets and visitor experiences. ITIC foresees a sector that acts more strategically and achieves a competitive critical mass in the international marketplace while targeting more quality conscious consumers. The goal will be sustainable export growth on global markets to deliver optimum economic value to the country while safeguarding the environment.
The plan to achieve sustainable growth will require a concerted and coordinated approach by businesses and communities, the supply chain intermediaries, Government Departments and state agencies. ITIC is committed to developing this strategy to include a 10 point plan to deliver economic growth from tourism based on a more vibrant and profitable business sector.
Capital expenditure programme for tourism
Tourism warrants increased attention to capacity, infrastructure development, and innovation to ensure Ireland has the facilities needed for sustainable tourism growth in an increasingly competitive global industry.
Adequate investment by the State in infrastructure, including travel facilitators and visitor attractions, are essential to cope with increased demand, and thereby support economic recovery, jobs, and sustainable communities through tourism. After successive and severe cuts to Fáilte Ireland’s capital budget to support product development since 2008, Ireland’s tourism is facing the real risk of a serious loss in competitiveness as a result of under investment in visitor attractions and facilities. Increased investment is required to ensure that Ireland can provide a range of modern, innovative and fit for purpose tourism attractors and facilities to deliver quality visitor experiences.
ITIC will undertake a major evidence based research project to advocate for an increase in the multi-annual capital budgets allocated to tourism. The timing is opportune as the Government reviews its Infrastructure and Capital Investment Programme 2016-2021.
The review will examine the investment requirements to cater for sustainable growth and make a series of recommendations on the level and type of investment needed to support growth through new products and visitor experiences, as well as increasing the carrying capacity and improving the quality of existing attractors and facilities. The report will specify the categories, and regional distribution of investment, including specifically identifying new projects to drive market demand. A key objective will be to ensure that investment is aimed at addressing identified product gaps and supply shortages, together with investing to deliver improvements in seasonal and regional demand patterns. In addition to direct state investment, ITIC will advocate for a suite of investment supports, including new R&D and access to capital programmes, similar to those available to other export businesses, to encourage private sector investment.
It is intended that the output of ITIC’s review of investment will feed into the Government’s new Capital Investment Framework to be published during 2017.
Securing an improved support system for tourism businesses comparable to other export sectors
The current challenge presented by Brexit has once again highlighted the discrepancy that exists between the state sponsored support frameworks available to businesses in the tourism sector compared to other export businesses. In short, tourism is poorly served by support programmes relative to exporters in the agri-food, manufacturing and service industries.
Over recent months the state support system serving other sectors of the economy has responded speedily with expanded services to exporters to counter the impacts of Brexit. For example, Enterprise Ireland immediately responded with a five pillar strategy for supporting affected client businesses including advice, guidance, research, and financial market diversification supports through a dedicated Brexit unit. Similarly Bord Bia – in receipt of additional state funds – has launched a series of supports for the food, drink and horticulture industry including access to the latest global trends, research, and consumer insights through a new state-of-the-art market insight centre. They have also launched a range of programmes, including increased market presence, to bring about a step change in export growth in markets beyond Britain.
By contrast tourism has seen its state resources and funding levels static at best and in light of the recent challenges presented by Brexit an urgent review is necessary. Ireland is experiencing a loss of share of voice in established source markets, while facing the challenge of prioritising market diversification to boost revenue receipts and improve seasonal and regional distribution.
ITIC will lobby to ensure a more comprehensive package of industry supports, comparable to those available to other exporters, is put in place to help businesses meet current and future challenges. Reviews of the range, level and transparency of support systems supplied by the state agencies, together with the regulatory framework, are long overdue. A new approach and greater openness would strengthen public/private sector cooperation and partnership in tourism planning, product and human resource development, and marketing.