Eoghan O'Mara Walsh: Tourism safety net can't be removed
The return of St Patrick's Day events (in this case in London) seemed to offer hope for a return to normality but further challenges face Ireland's tourism sector. Picture: Stephen Chung/LNP/Shutterstock
St Patrick’s Day traditionally heralds the start of the Irish tourism season.
Very few countries worldwide can claim a day or own a colour as their own but Ireland certainly does both as our national holiday is celebrated worldwide.
For the last two years, the pandemic put paid to festivities but this year thankfully the parades and parties recommenced — both at home and abroad — and images and footage of all things Irish were once again global.
Covid-19 still reared its head with our unfortunate Taoiseach not able to present the bowl of shamrock in person to US president Joe Biden at the White House.
The pandemic has been particularly bruising for the Irish tourism and hospitality industry, and businesses enjoyed a huge sigh of relief as Covid-19 finally looked to be in retreat. But, barely a couple of weeks later, war erupted in Ukraine and if there’s one thing nearly as unconducive to tourism’s recovery than a pandemic, it is conflict.
Indeed, St Patrick’s Day had slightly less impact this year as the 10-year tradition of greening hundreds of iconic buildings globally took a pause as — understandably — blue and yellow, rather than green, are the colours to highlight at this particular time.
The pandemic, according to the Irish Tourism Industry Confederation (ITIC), cost tourism businesses over €12bn as airlines, accommodation-providers, tour operators, attractions, restaurants and vintners saw no international tourists for the last two years.
However, society and the economy do now seem to be learning to live alongside Covid, and the outlook is much more positive for inbound tourism to Ireland.
ITIC estimates that 2022 could see the industry recover to 60% of its 2019 levels — no mean feat given the trauma of the last two years. This matters greatly for the country’s economy with, pre-pandemic, one in nine jobs nationally belonging to the tourism and hospitality sector. Indeed, for the likes of Cork and Kerry, this ratio becomes one in eight. No other industry can provide such regional economic balance and it is vital that tourism recovers lost ground as quickly as possible.
Much of this recovery is predicated on a return of American visitors where savings, pent-up demand, and ongoing positive affiliation with the Emerald Isle all serve us very well.
Aer Lingus has restored the vast majority of its pre-pandemic transatlantic routes which is a great boon to tourism where direct air access counts above all else.
The continued requirement by the US government for their citizens to test negative 24 hours before their return home is an obstacle but, generally, bookings were flowing in for the crucial summer months of the Irish tourism season.
However, this is where Ukraine is now causing a serious concern. On US television networks it is being portrayed as a war in Europe and Americans’ sense of geography is sketchy at best. In recent weeks the pace of bookings has slowed, and the momentum from earlier in the year has not been maintained. On a humanitarian front, above all else, let’s hope the Russian aggression ends soon but a ceasefire is also important in a business context.
Two burning issues at home for tourism and hospitality businesses are labour shortages and inflation.
• Fáilte Ireland estimates there are 40,000 job vacancies. Due to the pandemic-related stop/start nature of tourism in recent times, many employees left the sector to find more secure employment elsewhere.
With the country now more or less at full employment, job vacancies in tourism and hospitality will largely have to be filled by people from abroad. Industry and state agencies will need to recruit aggressively beyond Ireland’s shores and the Government has a vital role to play in fast-tracking work visas.
• On the inflation front, the cost of running a tourism business in Ireland increased dramatically due to high insurance, energy, and labour costs among others.
Only so much of these increases can be borne by businesses whose margins are already tight, meaning that cost hikes will materialise into price jumps, running the risks of Ireland losing competitiveness, and becoming less value for money for the domestic and international tourist alike.
The Government has a key role to play and must defer the scheduled 50% hike in the tourism Vat rate due to come into effect in September.
The Government and Tourism Minister Catherine Martin listened to tourism industry concerns during the pandemic and supported beleaguered enterprises, most notably via the wage subsidy scheme and business continuity grants. Even the extra bank holiday that the country has just enjoyed — due to change to St Brigid’s Day from next year — was an industry ask to extend the tourism season beyond the summer months.
For the Government to undo much of that good work by increasing the Vat rate on the tourism industry would be folly. Instead, ministers should be supporting the competitiveness of the sector and ensuring it can navigate through next winter when Covid, a respiratory disease, is likely to re-emerge in some shape or form.
A new national tourism policy is due to be unveiled by the Government next year and sustainability will be at its core.
Industry is up for this and will play its full role in ensuring that the existential environmental sustainability challenge is addressed, while also being mindful of the need for businesses to be economically sustainable.
• Eoghan O’Mara Walsh is the CEO of the Irish Tourism Industry Confederation (ITIC)
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