Tourism may be hampered by Brexit and VAT increases

CEO Eoghan O’Mara Walsh, new Chairperson of ITIC, Ruth Andrews and Deputy Chair Cormac O’Connell. Picture: Maxwells

Growth in 2019 could be half of official estimates as the effects of the recent VAT hike and the possibility of a hard Brexit may cost Irish tourism close to €1 billion.

The new chairperson of the Irish Tourism Industry Confederation, Ruth Andrews, has warned that a demonstrable lack of Government focus will negatively impact Ireland’s largest indigenous industry and biggest regional employer.

“We are fearful that a hard Brexit, coupled with the VAT hike in the last budget, will cost Irish tourism close to €1 billion. We’re at a key junction in Irish tourism and the Government must take a lead to help restore the industry’s competitiveness at this uncertain time.”

ITIC estimates that growth in 2019 at 3% will only be half of official estimates, citing Government inaction on tourism, the soaring costs of business, inadequate overseas marketing budgets, new regulations curbing self-catering tourism accommodation, and increased taxation and labour regulations.

ITIC’s Tourism: An Industry Strategy for Growth to 2025 estimates that revenue can grow by 65% and that 80,000 jobs will be created across tourism and hospitality in the coming years.

However, this is predicated on the policy recommendations within the strategy being implemented by industry, tourism agencies and Government.

Andrews, who has just commenced a two-year term, said that pro-tourism policies were vital and urged the speedy lifting of the planning restrictions for the new runway at Dublin Airport, which is the key gateway for tourism to the island.

In its progress update, Eoghan O’Mara Walsh, CEO of ITIC, noted that, of the 51 recommendations within the strategy, 13 had been implemented, 28 are a work-in-progress and warrant increased focus, while 10 are heading in the wrong direction.

He highlighted that although tourism was at a record high, 2019 would be tougher than anticipated with hotel occupancy in decline for the year to date.

“Brexit is already having a material impact with Britain, our biggest market, down 3% in March. British visitors have the best seasonal and regional spread, so this will inevitably effect the regions most,” he said.

O’Mara Walsh urged more investment by the Government in tourism, stating “the modest increase this year only brings tourism funding back to 2008 levels — that is a long decade of under investment. If the Government is serious about doubling Ireland’s global footprint it needs to prove its commitment to the tourism sector,” he added.

He also pointed out that the tourism industry has committed approximately €2.5 billion over the next three years with more than 5,000 new hotel bedrooms currently on-site across the country.

Mr O’Mara Walsh added: “The hospitality industry’s competitiveness has been seriously weakened by the Government’s decision to hike the tourism VAT rate by 50% and unsustainable business cost increases for SMEs which are the backbone of the sector”.

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