Will Tourism get a Look-in This Budget and Election Time?
Winter is coming, the Government are preparing what promises to be delicious early-bird giveaway Budget feast and the General Election will follow as surely as November follows October.
Amongst the many goodies in the FF/FG governing committee’s bag, there have already been some clear hints at click-bait surprises such as more money for sport, the arts and even a nice present for the health sector.
For tourism, however, the picture is far less clear. One thing that is clear is that our largest indigenous industry has been getting increasingly sidelined over the past few decades – ignored and even attacked with a merciless VAT rate increase.
Since Ajai Chopra – former head of the IMF – highlighted the tourist industry as a keystone of our economic recovery in the wake of the economic crash, successive governments seem to have treated our star industry with increasing levels of disdain. In 2010, Tourism was the first name on a bed shared with Transport and Sport. By June 2011, it already found itself demoted to the middle of the Department of Transport, Tourism and Sport. The sidelining continued until September 2020 when Tourism was lumped into a Frankenstein’s Monster of a new ministry containing no fewer than six portfolios. And with no junior ministry.
Added to these woes are the reduction of bed nights in Ireland, the ongoing housing crisis and the retaining of the cap on visitor numbers to Dublin Airport. It’s no wonder, then, that the latest statistical data on the 2024 tourism season show a decrease in visitor numbers to our shores over 2023.
“This year has been less positive than we were all hoping for,” said Fáilte Ireland CEO Paul Kelly on the presentation of figures showing a reduction in visitor numbers across all sections.
Meanwhile, two pharmaceutical companies have announced imminent closures – Cardinal Health in Offaly and Viatris in Cork – which will result in a total of 515 job losses.
“We will galvanize all the state agencies to work to support the workers in terms of securing alternative employment and in supporting their needs,” said Tánaiste Micheál Martin referring to the 200-job blow from Viatris’ announcement, “and we will engage with the company.”
In contrast, there is almost never a similar response to the far greater job losses in the tourism sector. The Government seem incapable of understanding tourism or what it represents.
“I think that when there’s a crisis, they quickly ‘get’ tourism,” says Eoghan O’Mara Walsh, Chief Executive of ITIC (the Irish Tourism Industry Confederation). “If you look back to the financial crash, when they brought in the 9% VAT rate for the first time, the Wild Atlantic Way was created, as was The Gathering. And again, during Covid, there was a lot of support for the sector in terms of wage subsidies or grants. But when the general economy is going okay, as it is now, tourism seems to fall down the agenda. What we’d much prefer is political attention that is ongoing; that doesn’t just look to us in times of crisis.”
“There seem to be mandarins and executives in offices that are dreaming up policy that means absolutely diddley-squat to the person on the ground (in the sector) trying to operate a viable and functioning business,” says Adrian Cummins, CEO of the RAI (Restaurant Association of Ireland).
Brian Foley, Communications & Public Affairs Manager with the VFI (Vintners’ Federation of Ireland), describes the apparent lack of understanding of the Irish hospitality sector more as a lack of ‘joined-up thinking’.
“The current Tourism Minister wouldn’t have much interest in engaging with us about our sectoral requirements and the pressures we’re under,” says Brian. “We feel that, from a pub sector/ hospitality point of view, there is no line minister. Tourism, as such, is more seen as Fáilte Ireland and marketing Ireland, but the hospitality sector is lacking in that regard.
“When you look at the role that hospitality plays in Ireland, from employment to our role of feeding and drinking tourists… Yet, you now have the bizarre situation where towns that you might call ‘tourist towns’ have a lot of their pubs and restaurants closed on a Monday and Tuesday.”
“We’d like to see more movement around the creation of a living wage,” says Brian. “Again, there’s no practical implication for foreign multinationals in Ireland because all their staff are over and above that level anyway, but for us in the hospitality sector, we bear the brunt of that kind of policy thinking because we have a disproportionately higher number of employees on minimum wage… what we do question is Government policy that isn’t thought through with regard to its impact on the SME sector.”
“What is critical and what all parties must consider is that the hospitality and tourism sector employs 13% of the working population in Ireland, or 270,000 jobs,” says Michael Magner, current President of the IHF (Irish Hotels Federation). “So, we’re big players in the employment space. It’s imperative that any government, when they go into an election campaign, that they have tourism as one of their key pillars of their manifesto.
“And that’s about ensuring that there’s the correct framework in place for the industry – and that framework doesn’t involve what we would classify as supports, but a framework that would ensure the sustainability and the viability of so many hospitality and tourism businesses across the country. That is absolutely critical – particularly when we compare the manifestos in the 2020 election and we see the second-largest industry, agriculture, getting such amount of commentary within every party’s manifesto.”
“We’ll be talking to all the political parties,” says Eoghan O’Mara Walsh. “We’d like to see tourism moved to an economic department. Tourism is an engine for economic growth and for regional economic balance. It employs huge numbers, it’s an export industry bringing foreign revenue, so it really needs to be sitting alongside the likes of IDA and Enterprise Ireland and all those other economic agencies.
“We’d also like to see the general competitiveness of the Irish business world improved. We’re a very costly country now in which to run a business, particularly in tourism and hospitality and here, of course, the 9% VAT rate comes into play. We’d also like to see the cap in visitor numbers at Dublin Airport lifted because that’s essential if we’re going to see growth in overseas visitors.”
“I think that the development of Dublin Airport should be a strategic infrastructural development that should stand outside the normal planning permission process,” says Adrian Cummins.
“We’re looking to have the frameworks in place so that the proper environment is there to attract talent and to train talent through the Apprenticeship Action Plan and the National Training Fund, which needs to be more accessible,” says Michael Magner. “We also need to talk about the cost of doing business, particularly when we look at the situation outside of Dublin. 70% of the tourism and hospitality jobs in the country are outside the capital. When we look at our own membership, the majority of our members have 70 guestrooms or less, where food-and-beverage forms 70% or more of their turnover. So those businesses need a proper framework to help their businesses to remain sustainable in the future.”
There is also immense frustration in the hospitality sector over what many would see as the inaction in relation to the damaging influence of the Air BnB market. Not only is it directly competing with other accommodation providers on an unequal footing, it is also taking away from a dwindling stock of long-term accommodation; meaning that workers in the sector cannot find accommodation in many of our towns.
“People come from all over the world to work in our hospitality sector,” says Michael Magner. “They need accommodation and accommodation providers – whether they’re hotels or Air BnB or otherwise – need to be there until there’s enough capacity in the market to meet the demand from tourists of various countries and the domestic market, which is critical to our sector.”
“There’s been no change in the situation with regard to Air BnB regulation,” says Eoghan O’Mara Walsh. “The Government have decided to go lock-step with Europe on this issue. There’s a European regulation coming into force in 2026 and it looks like we’re going to go parallel with the EU… I would much prefer to see a register of Air BnB’s and short-term rentals brought on quickly so that we can at least get a sight of what’s there.
“At the same time, we have to find a balance and that we don’t drastically reduce the self-catering properties around rural Ireland in particular in a quest to get more long-term rentals or to solve the housing crisis. The self-catering properties and short-term rentals have been a staple of the Irish tourism industry for decades, so whatever new regime is brough in needs to protect them and allow them to trade.”
It’s also worth noting that while hotels come in for some headline news whenever a large-scale event is coming, the Air BnB model is not immune from price gouging. According to a recent Irish Independent article, the average price for an Air BnB on August 16th next year (the date of the much-publicised Oasis concert) is €618. For one of the Cardiff dates, the average Air BnB price is €1,897 – figures which are disputed by the owners of Air BnB, but backed up by marketing firm QR Code Generator.
“Obviously, for this Budget and for the next government coming it, getting the VAT rate back down to 9% is one of our ultimate goals,” says CEO of the RAI Adrian Cummins. “The mood music seems to have changed in the last few days in that the politicians seem to want to engage with us – they haven’t ruled it out, so that’s positive as far as we’re concerned.
“As regards the manifesto from the political parties, from our perspective the National Training Fund needs to divvy out the money to all apprenticeships. All the new apprenticeships should be treated the same as the craft apprenticeships in terms of funding.”
For new apprenticeships (such as those concerned with the hospitality industry), employers have to pay for the apprentice’s training. This is not the case with the apprenticeships in traditional crafts such as carpentry or plumbing, where State support covers the cost of training.
“We’d also like to see the Department of Tourism moved into the Department of Trade and Enterprise,” adds Adrian, echoing the ITIC CEO’s call. “We’ve had this issue for the last five years where the pubs and restaurants were not recognised by Fáilte Ireland or by the Department of Tourism as a sector. It was absolute nonsense. There’s a regime in place at the moment that looks down its nose at the hospitality sector.
“Also, we don’t know where Food Tourism has gone on the agenda. In 2020, there was going to be a ‘Taste the Island’ initiative. They were going to be a great food-led touristic initiative. Six months later, it seemed to have completely disappeared.”
After a poor season, the RAI can easily estimate the job losses in their particular sector alone – by simply multiplying the number of restaurant closures (617) by the average number of employees, you get a figure of 13,500. Put another way (and one that might be easier for Government to understand), that’s about 68 Viatrises or 45 Cardinal Healths.
