Irish Tourism: A Complex Tale of Growth and Challenges
As peak summer arrives, the state of Irish tourism is a question on everyone’s minds. After the devastating impact of the pandemic, there is a prevailing narrative of a resurgent industry, with expensive hotel rooms, an influx of American tourists, and busy airports. However, a deeper analysis reveals a more complex picture.
Let’s start with the issue of hotel room rates, a topic that regularly grabs public and media attention. While it is true that rates have increased substantially, they have actually risen at a slower pace compared to the rising costs faced by accommodation providers. The situation is further complicated by the government’s reliance on tourism accommodation to house Ukrainian refugees and international asylum seekers, resulting in one in five visitor bedrooms no longer being available to the tourism economy. With increased costs and limited availability, it is no surprise that hotel room rates have increased. The solution, similar to the housing crisis, lies in increasing the supply of hotels. Ireland needs more hotels to moderate prices and meet the projected demand. The government may need to introduce incentives and allowances for developers to encourage new supply.
Another important factor in Irish tourism is the North American market. Fortunately, this market is performing strongly this year, and the rapid reinstatement of transatlantic flights by Aer Lingus has been a significant boost. American and Canadian visitors tend to stay longer, spend more, and explore regional Ireland more extensively compared to other tourists. However, there are concerns about the British and German markets, which are key sources of visitors. Brexit has negatively impacted the British economy, leading to a recession, while air connectivity between Germany and Ireland has seen a significant drop. The lack of national data on international visitor numbers is a frustration for the industry, as it hampers informed decision-making by the government.
Shannon and Cork airports are performing well, which is crucial for regional Ireland. Dublin Airport, the largest airport in the country, is also having a strong year. However, industry intelligence indicates a noticeable shift in Irish outbound travel compared to inbound international visitors. Outbound travel from Dublin has increased its share of airport traffic significantly. Recent issues faced by Dublin Airport, such as night-time flying restrictions and limited car parking capacity, highlight a mismatch between the airport’s ambitions and the country’s planning framework. For tourism, foreign investment, and exports to grow, Dublin must be allowed to expand. The current cap on flights, as articulated in the planning legislation, is outdated. Most other European capital cities operate based on the impact of noise on the locality, and a similar policy should be implemented in Dublin. Both Daa (Dublin Airport Authority) and Fingal County Council agree on this matter and await a decision from An Bord Pleanála, the national planning authority.
The Central Statistics Office (CSO) recently released a comprehensive report on the importance of the tourism sector to the national economy. Using 2019 data, the report estimated that the sector contributes over €10 billion annually and accounts for 4.4% of the national economy. There are approximately 46,000 tourism enterprises, and an impressive 13% of the national workforce is employed in the tourism and hospitality industry. This data definitively proves that tourism is Ireland’s largest indigenous industry and the biggest employer in regional areas.
The sector has also embraced the sustainability agenda, with the Midlands securing €68 million of tourism investment over the next three years from the EU’s Just Transition Fund as the region transitions away from peat production. Despite global challenges, the Irish economy remains in good health. However, the over-reliance on a few multinational corporations for corporation tax receipts highlights the need for the government to support and nurture indigenous industries like tourism. Large parts of regional Ireland depend on a thriving tourism industry. While revenue may have returned to pre-pandemic levels, much of this growth is driven by inflation, and businesses are facing significant profitability pressures. The government must prioritize and strengthen Ireland’s tourism industry, starting with deferring the upcoming VAT hike on the sector.
In conclusion, Irish tourism is experiencing growth, but it also faces challenges that require strategic planning and support from the government. The industry needs increased hotel supply, improved data collection, and investment in infrastructure. By nurturing and sustaining the tourism sector, Ireland can continue to benefit from its status as a premier global destination.
Eoghan O’Mara Walsh is the Chief Executive of the Irish Tourism Industry Confederation (ITIC).