Speech
22/06/2010
Speech by Mary Hanafin, TD
Minister for Tourism,
Culture and Sport
Dáil Éireann –Tuesday 22nd
June, 2010
Private Members' Business
A Cheann Comhairle
I welcome the opportunity
to address the House today on the subject of Irish tourism and to propose the
Government's Counter Motion.
In 2009, the tourism and
hospitality sector represented almost 4% of GNP, provided up to 200,000 jobs,
helped to generate €4 billion in foreign revenue earnings and generated in the
order of €1.3 billion in tax earnings.
While 2009 proved to be a
very challenging year and official CSO figures for the first quarter of this
year are disappointing, tourism is a very resilient industry and has proven its
ability in the past to bounce back faster than other sectors after a downturn.
Tourism is recognised as a
vital export-oriented service industry in the Government's Framework for
Economic Renewal, “Building Ireland’s
Smart Economy”. In further
recognition of its important contribution to the economy, tourism was also
among the areas focused on during the Global Irish Economic Forum in September
2009 and was the subject of some imaginative and challenging suggestions from
the Forum. Tourism was included also in
the Taoiseach's recent speech on employment policy as one of the ten areas
where the Government's economic renewal plan will ensure we generate the jobs
we need.
One of the strengths of
Irish Tourism has been the robust policy framework that has been developed for
the sector since 2003, when the New
Horizons Report of the Tourism Review Group was published. This includes clearly defined implementation
arrangements through the Tourism State Agencies and a strong partnership
approach with the industry. In December 2008, to ensure that the strategic
framework for tourism development was able to respond to the rapidly changing
economic and social environment, the then Minister for Arts, Sport and Tourism,
Mr Martin Cullen TD, established the Tourism Renewal Group. The Minister asked it to review and, where
appropriate, to renew the existing tourism strategy contained in the New Horizons Report.
Building on the Framework for Action, Budget 2010 recognised
the tourism and hospitality sector as a critical, labour-intensive sector and
incorporated a range of measures to renew Irish tourism.
The overall tourism services budget was increased by 3% to
over €153 million, including the maintenance in real terms of funding for the
Tourism Marketing Fund (as recommended by the Renewal Group) and a trebling of
the funds for tourism product development.
Tourism was included in a range of cross-cutting measures to support
enterprises and jobs, including the Employment Subsidy Scheme and the Credit
Review System. Additional specific
measures, such as changes in alcohol excise duties and VAT and the imaginative
free rail travel initiative for senior citizens visiting Ireland, will also
help the sector to recover. In relation
to the free travel initiative, I am pleased to advise the House that since its
launch on 16th March last, over 4,500 Golden Trekker passes have
been issued to overseas visitors.
As the House is aware, we
have been experiencing the impact of an international recession of unsurpassed
severity. Every major economy –
including our key source tourism markets – is suffering. In our own case, the situation was
exacerbated by the challenges in our domestic economy and adverse exchange
rates, although recent currency movements will operate to our advantage in the
case of attracting visitors from the GB and US markets.
Tourism worldwide saw a
significant downturn in the second half of 2008, which continued into 2009, due
to the global economic slowdown and loss of consumer confidence. There were just under 7 million overseas
visitors to Ireland during the year.
This figure represented a drop of just under 12% compared to 2008. Outbound trips from Great Britain were
particularly affected, with the Euro/Sterling exchange rate making it extremely
challenging to attract visitors to Ireland and indeed Eurozone destinations generally. I understand that the number of people from
GB travelling abroad is back to 2001 levels. However, to put our performance in
context, OECD figures suggest that there was a higher reduction in visitor
numbers to Malta, Hungary, Cyprus, Greece and Finland, while the drop reported
in France, Portugal and Spain was between 8 and 12%.
In common with many other businesses in Ireland, tourism
businesses are at present experiencing difficulties with regard to capacity,
costs, and credit supply, exacerbated by lower visitor numbers. Some of these problems will need to be
addressed by the tourist industry itself.
Others are being addressed generally by the Government – for example
through NAMA and issues around the supply of credit to businesses generally. The Government will continue to work with the industry to help the
sector manage its way through these difficulties - whether in stimulating
demand, helping to address costs and productivity, or securing access to
credit.
Clearly, tackling the
overcapacity that undoubtedly exists in the hotel sector at present is complex
and, ideally, requires a market led response over time. 2010 is likely to be another tough year in
the hotel sector, with further adjustments taking place as the market responds
to excess room supply. This process will
gain further momentum in the coming months as more banks seek to clean up their
balance sheets and dispose of underperforming loans. These market-led adjustments are, however,
necessary in order to restore some level of equilibrium in the hotel market.
NAMA will become a key
player in the hotel sector as more hotel-related loans migrate to the Agency. Through the Minister for Finance, I will be encouraging NAMA to take a strategic
approach to the sector, to build up their expertise in this area and to consult
with sectoral interests, including the Irish Hotels Federation.
Credit availability also remains a real difficulty
across the economy, including for the hotel sector. The Government's strategy for NAMA is centred
on the goal of restoring a stable and functioning banking system.
As part of this process a credit appeals system has
been established - which allows SMEs, including those from the tourism
industry, to appeal when a credit application has been refused. This will
provide a valuable independent recourse for businesses in their dealings with
banks.
With
regard to concerns in relation to costs such as labour, local authority rates
and charges, and energy, the Government is taking initiatives to improve matters
- for example by securing a reduction in electricity and energy prices that has
improved our relative competitive position in this area. The fact that consumer prices in Ireland have
now fallen back to 2006 levels shows that we are responding flexibly to the
crisis. This has been recognised by the
European Commission and on international markets - helping to restore
confidence in the Irish economy. Of
course, I must also acknowledge that the tourism industry itself has made great
strides to reduce costs and increase productivity over the past year or
two. These are certainly difficult
adjustments, but if we get our costs right, while also using the crisis to
restructure and reinvent ourselves, we will return to a sustainable growth
path. The offers currently available from accommodation and food providers have
never been as attractive and go a long way to addressing concerns expressed on
this front from overseas and domestic holiday makers in recent years.
In
terms of Ireland's ability to compete in the international arena in the future,
maintaining and enhancing competitiveness is a major issue for Irish tourism as
it is for the economy as a whole. In
addressing that issue, it is important to bear in mind that competitiveness is
about more than price and costs. The
tourism agencies continue to monitor Ireland's competitiveness as a tourism
destination and I am encouraging them to assist the industry in responding to
changing conditions as appropriate.
Although
there is little doubt that 2010 will be another challenging year for tourism,
it is nonetheless important to remember that, despite the downturn, millions of
people across the world will still take holidays this year. It is also worth noting that, while the bad
weather and volcanic ash led to significant reductions in visitor numbers in
the early months of this year, 60% of annual business is accounted for between
the months of May and September. I know that the industry and the tourism
agencies are fighting hard for every bit of business for the summer and
remainder of the year.
A number of euro zone
economies are coming out of recession and these, of course, are important
source markets for Irish tourism.
Tourism Ireland will be focusing on those major markets that are likely
to deliver immediate returns this year including Great Britain, Germany and the
US, as research has shown these markets as our best prospects.
Tourism Ireland is the North-South body responsible for marketing the island of Ireland
overseas as a holiday destination. The objectives of Tourism Ireland's marketing
strategy are to convince overseas consumers that now is the best time ever to
visit, to show them the tremendous value available from industry partners and
to demonstrate how easy it is to get here by air and sea. We must position Ireland to take advantage of
opportunities that will arise as the global economy stabilises. Tourism Ireland's commitment is to market
through the challenges, work closely with industry partners and fight for every
bit of business that is out there to be won.
I intend personally to support the marketing effort. Last week I was in Frankfurt, at the
invitation of Tourism Ireland and had a number of trade and media engagements
to support the push for business from what is the largest outbound tourism
market in the world. I intend going to
Britain and the US before the summer break for short intensive engagements with
the industry, tourism providers and media and also to launch the 1901 Census
returns online to these important roots markets. It is important too to plan for the future
and I had the pleasure of addressing over 100 tourism industry representatives
who were in Dublin today to participate in the Tourism Ireland Innovation
Summit taking place in Farmleigh. This summit is designed to help Tourism
Ireland to develop its Corporate Plan, covering the period 2011 – 2013, and to
identify key themes that will be at the heart of our future marketing
strategies.
Tourism Ireland is engaged
in a huge tactical marketing programme right now across all major markets,
communicating strong reasons to visit together with clear, price-led
messages. Specifically, we have provided over €44 million of Exchequer
funding to overseas marketing this year, which already included the biggest
ever promotional programme of activities to showcase Ireland during the St.
Patrick's Day period and a recently launched €20million summer promotion
campaign.
On the domestic front,
Fáilte Ireland is engaged in a new intensive campaign to promote holidaying at
home this year, with a budget of €4 million.
The new marketing campaign is rooted in extensive consumer research and
consultation with the tourism industry and involves saturation coverage on TV,
radio, the print media and online. We
are supporting festivals and events around the country on the tourism and
culture side. A major B&B
revitalisation programme is being rolled out by Failte Ireland, including a
special new domestic publicity campaign highlighting a new classification
system, the introduction of dedicated training courses and business supports
and investment for development opportunities through Local Action Groups.
Fáilte Ireland is also
boosting its promotion of business tourism and the opening in September of the
new national conference centre in Dublin, to be known as the Convention Centre
Dublin, will further enhance our capacity to attract international events, as
will the recently-opened Aviva Stadium at Lansdowne Road as a venue for sporting events.
The quality and value of
the tourism product has improved dramatically over the past few years. Accommodation quality, particularly in the
case of hotels, is among the highest in Europe.
There are many more things to see and do and we have managed to maintain
and build on our natural assets and resources.
Visitors constantly express satisfaction rates of well over 90% for
their stay here and almost all say that they would recommend Ireland as a
holiday location to their friends or relatives.
Fáilte Ireland is
significantly boosting investment under its Capital Investment Programme to
improve and broaden the appeal of Ireland's portfolio of tourist attractions,
activities and tourism-related infrastructure.
There has been a particular emphasis over the past two years in
improving our eco-friendly linear and looped walking and cycling routes, with
the Discover Ireland websites highlighting those amenities through online
resources, including maps. Just yesterday, I announced capital grant funding of
€6.6m for three tourism projects in Dublin, Kerry and Wexford. Funding of €9million has also been approved
for the Viking Triangle project in Waterford and I want to take the opportunity
of congratulating all those involved in the reopening today of a House of
Waterford Crystal Visitor Experience in the city.
The Air Travel Tax was
introduced in the context of a very difficult budgetary situation when cuts had
to be made in areas such as social welfare, health and education. The tax is clearly an important source of
revenue for the Exchequer. As Minister with responsibility for Tourism, I would
obviously be concerned about anything that might lead to a significant
reduction in visitor numbers and since taking up my new office, I have been
meeting a number of airlines to discuss their research and views on this issue
in advance of the 2011 Budgetary process. As regards visa arrangements, I am most
anxious to ensure that we capitalise on opportunities in new emerging tourism
markets such as India and China and I know that
competitive visa arrangement are an important element of winning
business from these sources. I have
already been in contact with my colleague, the Minister for Justice and Law
Reform, to see how arrangements might be improved.
The Private Members’
motion tabled by the Labour Party also
refers to the downward review of commercial rents. As Deputies will be aware,
the Department of Justice and Law Reform has already overseen the enactment of
legislation which prohibits upward only rent reviews in leases entered into on
or after 28 February 2010. However, I understand that the advice received by
the Minister for Justice and Law Reform from the Office of the Attorney General
is that, from a constitutional perspective, it would be very problematic, if
not impossible, to interfere with existing lease agreements. Nonetheless, it should be noted that there is
nothing to stop the parties to existing business leases from varying the terms
of their contract and from agreeing to reduce the applicable rent, having
regard to their individual circumstances and the realities of the market.
Personally, I think it is very foolish for a landlord to jeopardise their
future rental income from a valued tenant by charging that tenant an inflated
rental price in the current environment when many businesses are finding it
difficult to meet their costs.
As regards broadband, I would simply say that the National
Broadband Scheme is bringing broadband access to all areas of the country, with
major benefits for the tourism industry.
As I conclude, I wish to
say that Fáilte Ireland is working closely with
tourism businesses all over Ireland, supporting enterprises and helping them to
achieve real cost savings and efficiencies.
Business supports are aimed at assisting key tourism businesses to
increase their international customer base, to better manage their cost base,
to improve overall performance and marketing, particularly on the web, and to sustain employment
levels.
During 2009, Fáilte
Ireland provided a range of training and business supports directly to almost
3,000 individual tourism businesses and, in 2010, will be investing over €11
million in the form of direct supports and advice for tourism enterprises.
We all recognise that
these are extraordinarily challenging and difficult times for every economic
sector – and tourism is not immune. But
drawing on the Report of the Tourism Renewal Group and with the correct foundations,
including:
· a robust – and recently
renewed – strategic and policy framework,
· increased competitiveness
and better value for money tourism product offerings
· strong partnership between
the public and private sectors,
· effective State agencies,
· appropriate investment in
marketing, product development and business supports, and
· tourism enterprises which
are now on a par with those anywhere in the world in terms of management
capacity and quality,
I am confident that Ireland's tourism
industry will rise to this challenge and that it can position itself to come
out of this downturn even stronger than before.
Thank you.