The new government should put tourism front and centre by Cyril McAree
A new government is now a reality. Elections will take place November 29 and the make-up of the government will unfold hopefully quickly after this. This should be an opportunity for politicians to re-evaluate the role of tourism. The surprising U.S. presidential election result sent shockwaves around the world. Despite the polite messages of congratulations to the soon-to-be president, there is disquiet behind the scenes. Ireland, despite the rhetoric of ministers and business leaders, is in a precarious position.
Given our dependence on the corporation tax take, a wringing of hands is likely to be going on behind the scenes. Will Trump stick to his promises and return some of those companies to the USA via a punitive tax regime? Some commentators believe this scenario will be unlikely. Election promises change when people get elected. But it reinforces the need for the new government to focus on our inherent strengths in Ireland.
A number of industries are integral to the country’s continued success and growth. Tourism is one such area. The Exchequer receives substantial and increasing tax returns from tourism. Recent indicators from the CSO show that, year on year, the tourism barometer is in a good state. Activity within the sector shows increased growth to the tune of around 15% (CSO June 2024) with an increase of 22% in spend from foreign investment. The domestic market, while indicating growth for the same period of around 11%, did not have the same spend attached. This reinforces the need for government to recognise the value of tourism in economic terms and give it the support and structures it requires to flourish.
Escalating costs around employment, new terms of pay entitlements and the increase in VAT are a concern. The number of restaurant closures is a stark indicator of the sector’s volatility. Recent reports (CSO July 2024) gave an insight of the price inflation that hospitality must navigate: it is running at 4.3%, well above the 2.2% average experienced by other sectors. Fine Gael’s pledge to cut the VAT rate for hospitality to 11%, weeks after no change was implemented in Budget 2025, is a move in the right direction. Let’s wait and see what a new government will do.
There are thankfully positives on the horizon. There has been reduction, albeit slight in numbers, in bed stock allocated to humanitarian purposes. An increase in the number of new hotels in the Dublin market, meanwhile, will help ensure visitors can get reasonably priced accommodation and ensure the sector remains competitive and attractive.
At the recent World Travel Market in London, the mood was positive and encouraging. Irish stakeholders were happy with the engagement and feedback from attendees. The event confirmed two of the main reasons why Ireland remains a popular tourism destination: its people and its landscape. The recent Halloween programme reinforced the continual work undertaken by Tourism and Fálite Ireland in ensuring we utilise the opportunities that seasonal initiatives offer in creating attraction to the island of Ireland.
Let’s hope the new government will take this opportunity to position tourism at the cabinet table in a positive way. Hospitality is a key component in ensuring our economy is sustained and continues to grow. Nobody can relocate the Wild Atlantic Way, the Lakes of Killarney, and other key destinations, so let’s play to our strengths.
