Irish Tourist Industry Confederation chairman Paul Gallagher said the boost in overseas tourists was one of the “upsides” of the current climate.
“The terrorist attacks across Europe have driven business to northern Europe from southern Europe, and in northern Europe, Ireland has been one of the main beneficiaries of people feeling insecure because it is very secure here,” said Mr Gallagher.
“That is not something you would go out and sell actively, but you can’t deny that it is not playing into Ireland’s performance at the moment. Obviously, we would wish for no more attacks and for everywhere to be safe, but that is the environment we live in.”
Despite Brexit concerns and capacity constraints, ITIC believes the tourism industry can grow by a further 3% to 5% in overseas visitors next year. Based on a 5%-7% revenue growth for 2017, at least a further 7,000 jobs could be created.
ITIC, however, believes the sector is set to become a victim of its success, with capacity problems restricting growth to an estimated 1% in 2017.
Irish tourism hit a new high this year, with a record number of visitors — the industry is now worth over €8bn annually.
Overseas visitors spent €4.7bn this year, a 9% rise, or almost €600m more, compared to 2015.
The ITIC said Britain’s withdrawal from the EU, poses “a major challenge” for Irish tourism.
“As sterling weakens due to the uncertainty over Brexit, it is more vital than ever that Ireland remains competitive,” said Mr Gallagher.
He welcomed the Government’s decision to retain the tourism Vat rate at 9%, saying this puts Ireland on an even keel with its European neighbours — 17 of the 19 eurozone countries have Vat rates of 10% or less.
ITIC chief executive Eoghan O’Mara Walsh, however, warned that a “hard Brexit” would be damaging to Irish tourism.
“It is vital that in the negotiations between the UK and the EU that Irish tourism’s needs are reflected. This particularly relates to the need to maintain the Common Travel Area and the retention of liberalised air access rights,” he said.
Mr Gallagher said the ITIC expects the British market to “soften” because of Brexit and the issues around the exchange rate.
However, they are still confident that overseas tourism to Ireland from North America and mainland Europe would remain strong.
The ITIC is also concerned about a shortage of hotel capacity in Dublin and other urban areas that could limit Ireland’s ability to attract more overseas visitors.
Mr Gallagher welcomed the 5,000 bedrooms planned for Dublin in the coming years, but said construction and development of the new hotels have to start now.
“If demand and supply are out of sync, there will always be upward pressure on prices and a loss of competitiveness represents the single largest threat to tourism’s future growth,” he warned.
Mr Gallagher said the Government needs to increase capital spending on tourism projects to €350m over the next five years so there is more to see and do for everyone, not just overseas visitors.