Leo Varadkar is confident about tourism’s recovery. H&R Times speaks to the Minister for Transport, Tourism and Sport.

Leo Varadkar might have developed a media reputation for gaffes, but today the minister’s foot is not erring too near his mouth. H&R Times is in the minister’s office to talk tourism. Varadkar, 32, the youngest member of the Fine Gael cabinet, is encouraged by recent tourism figures, but he’s not exactly making a song and dance about it. “By nature I’m a pessimist, but I’m optimistic for tourism,” he says, taking a seat. “I’m conscious not to underestimate the challenges. I understand the extent to which a lot of businesses are struggling. For many tourism businesses, another 6%
recovery won’t be enough.”

Varadkar is referring to recent Central Statistics Office figures, which suggest the number of overseas trips to Ireland increased by 6.5 per cent from July to September. These results came on foot of news that visitor numbers rose almost 12% in the first seven months of 2011. Tourism Ireland reckon around 7.4m people visited Ireland last year: an increase of 7% on 2010, valued at an estimated €3.4billion in revenue.

“It’s definitely a recovery for the sector, I’ve no doubt about that,” says the minister. “But there are caveats: the figures were better at the start of 2011 because of the volcanic ash in 2010. I’m happier with the 6.5% than with the 12%. The 6.5% is credible: it matches reports about people visiting attractions and hotel occupancy. It’s a recovery after a very big decline. The challenge is to deliver that level of growth every year for the next couple of years.”

Tourism’s gradual return to form has been partially attributed to last year’s Job’s Initiative, which created a reduced VAT rate of 9% for tourism. In Budget 2012, the higher rate of VAT went up, but tourism’s reduced rate remained static. “I think it’s a help,” admits Varadkar. “A big perception of Ireland, particularly in the UK market, is that we’re high cost. The fact that costs have come down, through the VAT decrease, helps correct that perception.”

“What’s particularly encouraging for me is the increase in the Australia and Developing Markets region [Australia, New Zealand, Japan, South Africa, China, India and the Middle East]. Even though it’s a small number of people, it’s a big increase on the numbers coming in. My fear is, with the world’s economic picture looking shaky, is that a lot of tourism’s success over the year ahead will depend on the European and British economies.”

Tourism’s reduced VAT got off unscathed in Budget 2012; funding did not. Fáilte Ireland’s budget was reduced 5% to €59.4m; a further €3.1 reduction is planned for 2013. The Tourism Marketing Fund, meanwhile, was reduced 5% to €39.3m. Tourism Ireland lost €500k in administration.”There’s a fall in what’s available for product development. We have €80m available for the next five years to develop attractions and products. The only problem about that is €60m is already committed to projects, including the Book of Kellsrefurbishment.”

The Irish Hotels Federation (IHF) criticised the axing of the accelerated capital allowance scheme in Budget 2012, saying it would “erode the ability of hoteliers and their families to service existing borrowings...” However, the industry reacted favourably to the special allocation of funding to 2013’s Gathering initiative.

First announced at last year’s Global Irish Forum, the Gathering will consist of a year long programme of events and festivals, designed to lure an extra 325,000 visitors into the country. The Gathering has been modeled on the Homecoming, a similar initiative in Scotland, explains Varadkar. While the Homecoming tried to manufacture new events, the Gathering will tag onto existing occasions, such as the St Patricks Festival, Guinness Jazz Festival, Wexford Opera. Varadkar hopes local authorities, county associations, the GAA, and others, will get involved in preparations.

Can hotels and restaurants also partake in the Gathering’s preparation? “They definitely can,” remarks Varadkar. The minister adds that hotels and the industry should “make more of an effort to promote and market Dublin on the basis that it will fill every hotel. I think the industry can do a lot more to market itself, particularly in the UK”.

This is more like the Minister we know from media reports. In 2011, while speaking at Dromoland Castle in Clare, he criticised the levels of customer service in Ireland. Varadkar says the comment was blown out of proportion but insists there is truth in the matter. “It’s something I think is undeniable: the level of customer service and interaction is much better in the United States than it is in Ireland and most of Europe.”

Does he think there’s a rural/urban divide in regards to customer service? “In Ireland we talk about our fáilte and friendliness. Definitely in the rural areas, where the staff is more likely to be Irish, the friendliness is excellent. There’s a difference between friendliness and understanding what’s on the menu, or efficiency of check out. Assisting somebody to buy something in a shop is very different to friendly chatter, which is very good in Ireland.”

Hotels and other hospitality outlets are finding it difficult to get funding for training programmes. Varadkar says customer service should not be a matter for training. “I don’t think the government should have to train employees to be polite. We’d really be a nanny state if we needed a government programme to teach people how to be polite.” Perhaps tourism could be incorporated into second level education? “I hadn’t thought about that.

[The Department of Education] is developing a new Junior Cert, which will have about five or six core subjects. Then there will be optional modules. We’ve put forward a road safety module: you learn the rules of the road. We’re also putting forward a sports one. We haven’t a tourism one. Maybe you’ve given me an idea...”

While Varadkar muses on the matter, we raise the thorny issue of employee wages. Despite the High Court deeming the JLC system of setting wages for lower paid workers to be unconstitutional, in 2011, the government recently published legislation to reinstate the system. The Restaurants Association has described the legislation as five steps backwards for the industry. “The legislation will be very different to what was there before. In the meantime, employers are free to hire people for the minimum wage,” he comments.

Last year’s decision to defer work on Metro North to Dublin Airport, and Dublin’s DART underground, hit Varadkar’s tourism and transport brief, but he has learned to live with it. “There was a recent survey that ranked Dublin high in shopping but lowon transport. That’s probably true. Our public transport in Dublin isn’t very good and it’s not integrated. It will be integrated: the LUAS link-up will integrate it, but it won’t be before 2018 when that’s built.

“Metro would have been great, but it would roughly cost every household in Dublin €16,000. If you took €16,000 out of every household in Dublin to build the Metro, that might have serious impacted hotels and restaurants and everything else. If we could afford to build it we would, but we can’t. “Also, the disruption would have been horrendous. You would have been digging up Stephen’s Green, tunnelling under Grafton Street. We’d be taking all the statues off O’Connell Street. If Metro had gone ahead, in the short term, for the next four to five years, it would have been very bad for tourism.”

On the whole, Varadkar is happy with Ireland’s present tourism provision. Our hotels are competitive and the facilities are better than they ever were. Restaurants should produce more value menus, he adds. “I think we over obsess on cost. Ireland never was and never will be a cheap destination. A lot of it is down to quality. I think the quality of our product has improved hugely: restaurants, hotels and attractions.”

For 2012, the minister’s plans are to lay the groundwork for the Gathering, improve airport access to Ireland, and continue investment in tourism product. Varadkar might have developed a reputation for shooting his mouth off. But right now, he means business.