Tourism – stop treating it like an insatiable monster and take French lessons
Does the Government in this country consider the tourism industry as an industry or as a monster that just keeps taking funds, no matter how much you put into it? And is there any real political will to learn from the best?
Take the twisted logic of the expected increase in the tourist VAT rate, for example: the great bean-counters in Government looked upon this rate – a key factor in reviving Ireland’s tourism industry in the difficult 2014-15 period and again during and immediately following the Covid Restrictions period – as nothing more than a ‘loss of revenue’ on the balance sheet. The perceived loss was money being poured into a ravenous monster, whose appetite could never be sated and which didn’t give much value back for all the money being pumped into it.
The overall tourism services budget for 2022 was €288,000,000. For our population of 5 million people (in the Republic), that represents a figure of €57.6 per citizen. That might sound like a fine contribution for a little country like ours. If we consider ourselves serious about tourism, however, then it’s surely worth comparing ourselves with the world’s premier tourist nation; the one with the highest number of tourists every year for decades – France.
A year ago, they launched a Destination France Plan to get their tourism industry back on track after two seasons of damaging Covid restrictions. The budget for that plan alone was €1.9 billion euros, representing €28.35 per head. However, that is on top of an overall budget for tourism services estimated to be €21.6 billion, or €3,224 per citizen (according to a governmental report published in October 2021).
In fact, that same report goes on to bemoan the absence of an “additional courageous budget to relaunch Destination France”.
In France, the overall spend by tourists in 2019 is estimated at €170bn in what was a record year for world tourism. The French tourism industry employs over two million people directly and indirectly.
We punch above our weight when it comes to international tourism. Of that, there is little doubt, but it’s also worth remembering that a lot of our success is not only top-heavy with the English-speaking north American market but our record numbers posted in 2019 are simply in parallel with what was a record year for world tourism (164 million tourists on the move in 2019, according to the World Tourism Organisation).
According to the preliminary report by ITIC issued at the end of December 2022 on tourism figures in Ireland for the year, we had a year where visitor numbers were at approximately 73% of pre-Covid (2019) levels. With price inflation becoming an increasingly difficult problem and with the Government still bent on increasing the hospitality VAT rate in February, the tourism industry umbrella organisation predicts a challenging 2023 and doesn’t see our tourism sector returning to pre-pandemic levels until 2026.
“2022 has thankfully been a stronger year than anticipated,” said ITIC chair Elaina Fitzgerald Kane, “with pent-up demand, deferred bookings and accumulated savings all boosting business this year. It is vital that the sector returns to sustainable growth… We obviously hope that we can continue momentum and recovery into next year but Government must enable tourism success by extending the 9% VAT rate and reducing supply bottlenecks.”
Economist Jim Power carried out a report commissioned by ITIC to quantify the impact of increasing the hospitality VAT rate to 13.5% (due to take effect on March 1, 2023). The economist estimated that the increase would add 4.1% inflation to accommodation and food services and cost the economy some 24,000 jobs.
Aside from the VAT issue, the other large elephant of a problem weighing down the tourism industry is that of its role in the refugee accommodation crisis. In keeping with this era of hazy Government information, there is some discrepancy with regard to the numbers of bed nights being devoted to housing people from Ukraine and other countries who are fleeing war. The figures range from 15% to 28% of all bed nights in the country being devoted to housing refugees, with higher percentages seemingly the norm outside of Dublin. In fairness, it is an evolving situation but one that’s having its own impact on the tourism sector.
“While hotels and guesthouses are part of the solution to accommodate refugees, they cannot be the only solution,” says ITIC CEO Eoghan O’Mara Walsh. “If this level of tourism accommodation stock is not available (in 2023) for international visitors, it could cost the broader tourism industry up to €1 billion in lost earnings.”
In France, meanwhile, our big competitor and market leader enjoyed a 2022 that was almost as good as their bumper year of 2019. In spite of a stricter Covid-19 regime at the beginning of the year (when they banned all British visitors for about a month), they had a bounce back from international tourism that saw overseas visitors return to similar levels of 2019. The spend of foreign visitors was even up on 2019 by 7%. Some of this can be explained by inflation, of course, but there’s no arguing with the positive statistics, particularly in the absence of heavy-spenders such as the Russians and Japanese. Hotel nights in the Paris region were back to pre-Covid levels and the summer, in particular, was a very busy one, with French tourists increasing and foreign tourists showing a very slight decrease. For the three main summer months (June, July and August) of 2022, the home market bed-nights increased by 0.6%, 3.9% and 1.7% respectively over the same months in 2019. For overseas visitors, the respective figures posted were -0.9%, -0.3% and -0.1%.
The results illustrate the very simple point of getting out of an industry what you put in over a sustained period of time. If we want to have our tourism industry running well and maintaining its strong position, then we need a government that will take it seriously. We don’t just need Government to “enable tourism success” as the ITIC says, we also need it to create tourism success; to propel tourism and treat it like a real live industry. We need long-term investment to match the stated long-term dreams for our industry and our country. We need to learn from the best in the world at this business and we need to apply those lessons. If we do that, we’ll get the results. If we don’t, we’ll continue in the position we are in – floundering around waiting for the next positive wave to give us a lift.