for
Irish
Tourism
Report
of
the
Tourism
Policy
Review
Group
to
John
O
Donoghue
T.
D.
Minister
for
Arts,
Sport
&
Tourism
An
Agenda
for
Action September 2003
Report of the Tourism Policy Review Group New Horizons for Irish Tourism
9
78075
5
71
7804
ISBN
0-
7557-
1780-
5
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I
Dear Minister
I have the honour to submit to you, on behalf of the Tourism Policy Review Group, our Report on the Review
of Irish Tourism. We have completed the Review under the title New Horizons for Irish Tourism: An Agenda for
Action. The Report has been completed in accordance with the terms of reference you provided to us.
Yours sincerely
JOHN TRAVERS
Chairman
30th September 2003
Report of the Tourism Policy Review Group to
JOHN O DONOGHUE T. D.
Minister for Arts, Sport & Tourism
Tourism Policy Review Group
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II
Irish tourism has been a major success story -perhaps the
most successful sector of Irish-owned enterprise since the
foundation of the State. Its contribution as a major source of
foreign earnings with a low import content, as a powerful
instrument of national and regional development and as a
source of entrepreneurial opportunity has not always been
fully acknowledged and recognised.
The Review Group draws attention to a number of
important facts about the tourism industry in Ireland.
Employment in tourism over the past 10 years, has increased
at a faster pace than even the unprecedented high rates of
employment increase in the economy generally over that
same period. Today the sector employs more people than the
totals employed in either Irish-owned or foreign-owned
manufacturing industry. Tourism is by far the largest, Irish-
owned, internationally-traded services sector in the economy.
It is a sector firmly rooted in the natural and built
environment and in the people and culture of Ireland. As a
product, therefore, it cannot relocate to another country. But,
by the same token, its customers, both domestic and
overseas, can. International analyses indicate that, despite the
post-2001 slowdown, the future prospects for international
tourism over the next 20 years are good and similar to the
high growth rates of the previous 20 years.
It is not certain, however, that despite the strong
opportunities, Irish tourism will, over the next 10 years, enjoy
the same growth and success as it has over the past decade.
The sector is at a significant turning point in its development.
Competitiveness has been lost in recent years. A certain
complacency, the fruit, partly of success, has set in across many
parts of the industry. And this is happening at a time when the
expectations and requirements of the potential customers of
Irish tourism have become more demanding and when the
alternative choices of high visitor attraction and good value
for money available to them have greatly increased.
Preface
John Travers Chairman
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It is, therefore, certain that the policies and actions that
have delivered strong performance in Irish tourism in the past
will not suffice to do so in the future. The way in which the
changes now required are anticipated, managed and put in
place will determine the future success of Irish tourism as a
sector of investment opportunity, innovation and enterprise
and as an instrument of Government development policies.
Regaining the competitiveness lost in recent years is
central to the new strategy for the development of Irish
tourism set out in this Report. This is the fundamental
challenge which the industry itself must face and overcome.
There are also important challenges for the Government
none more so than the recognition through relevant, ,
practical and systematic actions of the central role that the
tourism industry plays as a major instrument of national and
regional development. This will only come about if the scope
of tourism policy formulation and implementation is
extended beyond its traditional ambit to encompass all areas
of Government policy that impact in a significant way on the
development of tourism.
The Report of the Review Group acknowledges and
articulates the constructive and positive role which tourism
policy has played in supporting the significant growth
achieved by the industry over the past decade and more.
It concludes, however, that the major international and
domestic changes affecting Irish tourism at the present time
and those anticipated in the foreseeable future, now require
urgent and fundamental changes in the policies and actions
of both the Government, and of the tourism industry itself,
if the success of the industry over the past decade is to be
replicated in the future.
This Report, therefore, sets out a new strategy for Irish
tourism which is comprehensive, coherent and challenging
for the industry itself and for Government. We believe that if
it is followed through to implementation with conviction,
energy and commitment that it will make a real and lasting
contribution to the development of Irish tourism in the years
ahead and to the complementary objectives of national and
regional development.
I wish to record my appreciation and thanks to my
colleagues on the Review Group for the individual talents,
wisdom and contributions they brought to the work and
deliberations of the Group. I want to express the thanks of
the Group to Mary Jackson for her commitment and
professionalism as Secretary to the Group and to her
colleague Gráinne Ní Néill for her dedication and support. I
also wish to extend our appreciation to Malcolm Connolly,
Deirdre O Keeffe, Brian Maher and Eileen Gallagher of Fáilte
Ireland and to Mark Henry of Tourism Ireland who provided
much of the analytical and administrative support underlying
the work of the Review Group.
Finally, I would like to thank John O Donoghue,
Minister for Arts, Sport and Tourism, for the opportunity
afforded to the Review Group to make a contribution to the
development of such an important sector of national and
regional development and to the Secretary General of the
Department, Philip Furlong, for his support and advice.
John Travers
Chairman
30th September 2003
Tourism Policy Review Group
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IV
Members of the Tourism Policy Review Group John Travers
( Chairman)
former Chief Executive Forfás
Patrick O Donoghue
Managing Director
Gleneagle Hotel
Paul Bates
Assistant Secretary
Department of Arts,
Sport and Tourism
Shaun Quinn
Chief Executive
Fáilte Ireland
Brian Patterson
Chairman
The Irish Times
Peter Cassells
Executive Chairman
National Centre for
Partnership and
Performance
Gillian Bowler
Businesswoman
and Chairman of
Fáilte Ireland
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V
Niall Reddy
former Acting Chief
Executive Bord Fáilte
Paschal Taggart
Financial Advisor
Frank Roche
Academic
Smurfit Graduate School
of Business
Mary Jackson
Secretary to the Group
Tony Kelly
Marketing Director
Irish Ferries
Pat McCann
Chief Executive
Jurys Doyle Hotel Group plc
Paul O Toole
Chief Executive
Tourism Ireland
Tourism Policy Review Group
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VI
Chairman s Letter to the Minister I
Chairman s Preface II
Members of the Tourism Policy Review Group IV
Contents VI
Executive Summary VIII
1 TOURISM WORLDWIDE AN OVERVIEW
Summary of Main Conclusions 4
1.1 A Global Industry 5
1.2 The Underlying Forces Driving Worldwide Tourism 6
1.3 Key Trends in International Tourism and Travel 7
1.4 Recent Performance 7
1.5 Future Prospects and Determinants of Growth 9
1.6 Tourism and Government Policies Internationally 10
1.7 Overview/ Conclusions 10
2 IRELAND S TOURISM INDUSTRY: ECONOMIC CONTRIBUTION,
STRUCTURE AND POLICY
Summary of Main Conclusions 14
2.1 Tourism s Contribution to Economic, Social and Regional Development 15
2.2 The Structure of the Tourism Industry 16
2.3 Tourism Policy 19
2.4 Industry, Government and European Union Expenditure on Tourism 20
2.5 Overview/ Conclusions 22
3 IRELAND S TOURISM INDUSTRY: OVERVIEW OF PERFORMANCE 1990-2002
Summary of Main Conclusions 28
3.1 Tourism Performance Visitor Numbers and Revenue 29
3.2 The Irish Tourism Experience 36
3.3 Overview/ Conclusions 38
4 TOURISM IN IRELAND TODAY -AN ASSESSMENT
Summary of Main Conclusions 42
4.1 Foundations for Future Success 43
4.2 Competitiveness and Value for Money 44
4.3 Product Development 48
4.4 Access Transport 51
4.5 The People in Tourism 54
4.6 Marketing and Promotion 55
4.7 Wider Issues Affecting Tourism Growth 57
4.8 Tourism Policy Formulation and Implementation 58
4.9 Overview/ Conclusions 59
Contents
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5 A STRATEGY FOR IRISH TOURISM 2003-2012
Summary of Main Conclusions 64
5.1 The Components of a New Tourism Strategy 65
5.2 Inter-dependency of Activities -A Defining Characteristic of Irish Tourism 65
5.3 A New Vision for Irish Tourism 65
5.4 Irish Tourism Forces of Change 66
5.5 Strategic Targets for Irish Tourism 2003-2012 67
5.6 Future Drivers of Success 71
5.7 Flexibility/ Agility 79
5.8 Decision-Making Framework 79
5.9 Overview/ Conclusions 80
6 IMPLEMENTING THE STRATEGY THE ACTIONS REQUIRED
6.1 Translating Strategy into Action 83
6.2 Action Plan 2003-2005 84
Actions to Improve the Business Environment for Tourism Operators 85
Actions to Improve Competitiveness and Value for Money 89
Actions to Improve Access Transport 92
Actions to Improve the Use of Information and Communication Technologies 95
Actions to Support Product Development and Innovation 97
Actions to Support Marketing and Promotion 101
Actions to Support Human Resource ( People) Capability 104
Actions to Support More Effective Government Leadership and
Interventions in Promoting Tourism 106
Actions to Improve the Quality of Information, Intelligence and Research 109
Implementation Arrangements 110
Appendix A -Background to Establishment of Review Group and Working
Procedures
Appendix B -Terms of Reference
Appendix C -List of Written Submissions
Appendix D -Tourism Policy on the Island of Ireland
Appendix E -Other State Bodies with Functions Associated with the
Development of Tourism
VII
Tourism Policy Review Group
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VIII
1. Tourism Worldwide An Overview
International tourist numbers will double over the next 20
years but the profile and requirements of customers are
changing rapidly and competition is becoming more intense.
1.1 The growth in international tourism has been one of
the most remarkable economic and social phenomena
of the past century. 700 million international trips are
now made worldwide each year. Tourism is a major
economic sector generating over 500 billion in annual
receipts, sustaining in excess of 70 million jobs and
accounting for almost 4% of global GDP. The industry
has outpaced general economic growth, since 1975, by
a factor of 1.3. Tourism growth has been driven by a
number of key factors, including economic wealth,
mass communication, affordable travel ( especially by
air) , availability of leisure time and the travel
opportunities opened up by new technologies.
1.2 After a prolonged period of uninterrupted growth,
tourism has stalled over the past two years. As of
autumn 2003 it is recovering slowly from the post-2000
global economic downturn, terrorism, the war in Iraq
and the impact of the SARS virus. And future prospects
are good. According to World Tourism Organisation
projections, the number of international arrivals is
expected to double over the next 20 years to almost
1.6 billion a rate of growth in tourism similar to that
of the past 20 years. While current economic conditions
and uncertainties may continue to depress demand in
the immediate future, travel and tourism is firmly
established in the lifestyle and discretionary spending
pattern of the developed economies pointing to an
eventual resurgence in demand.
1.3 In common with all internationally traded services,
global tourism is experiencing significant change. A vast
array of product offerings are becoming available,
encompassing traditional leisure pursuits, new
entertainment and retail complexes, simple back-to-
nature and health-related activities, cultural and
heritage experiences and combinations of different
product offerings. Many new tourism destinations are
opening up providing increasing choice to customers.
Easy access to these destinations is becoming common
place and cheaper. Customer characteristics are
changing rapidly including shorter and more frequent
trips, greater use of e-commerce, later bookings, more
tailored holiday experiences and growth in the older
people share of the market. Tourism will, in future, be
increasingly demand driven with greater emphasis
being placed on value for money, personal fulfilment,
unique experiences, authenticity, emotional
involvement and travel convenience.
1.4 In general, tourism policy internationally is being given
increased weight and emphasis in the range of
Government policies aimed at national and regional
development.
2. Ireland s Tourism Industry: Economic
Contribution, Structure and Policy
Irish tourism is a major economic sector of enterprise, and
of national and regional wealth creation. The industry at
present generates 4 billion in foreign revenue earnings,
supports 140,000 jobs and is by far the largest, Irish-
owned internationally-traded sector of the Irish economy.
2.1 Tourism is highly important to the Irish economy. It
delivers the following major benefits
Benefits of Irish Tourism
4 billion in annual foreign earnings
1 billion in annual domestic earnings
140,000 jobs
Up to 2.2 billion in tax receipts each year
International Tourist Arrivals
Source: World Tourism Organisation ( WTO)
Africa Middle East South Asia
Europe Americas East Asia/ Pacific
1950
800
(
m)
700
600
500
400
300
200
100
0
1960 1970 1980 1990 2000
Executive Summary
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IX
4.4% of GNP
A major instrument of national and regional
development
A sector of major opportunity for Irish-owned
enterprise
Employment grew in the sector by more than 70%
between 1990 and 2002 -a rate of growth
considerably above the 50% growth in employment
generally in the economy over that period. To put the
annual foreign revenue earnings of 4 billion from
tourism in perspective, it is equivalent to more than
50% of the total value of exports by Irish-owned
manufacturing industry or more than twice the value of
exports of Irish-owned internationally-traded services.
2.2 Tourism embraces a wide range of businesses and
services in thousands of enterprises, predominantly
Irish-owned and small and medium in size, distributed
throughout the country. It is a complex, diverse sector
of economic activity. It has a well-structured
representative system which works with Government
Departments and State Agencies in a productive
partnership arrangement to promote the development
of the industry. However, notwithstanding its size and
well-established representative structures, the sector has
had difficulty in ensuring that the value of its economic
and social contribution is fully acknowledged at
Government level and more widely.
2. 3 Government involvement in the development of tourism
has been of long-standing duration. This reflects the
importance of the industry to national and regional
development and the market failures ( i. e. the likely
returns not justifying private sector investment) intrinsic to
a highly-dispersed industry made up of small and
medium sized enterprises operating in a sophisticated
internationally-competing services sector. Today, the
focus of Irish tourism policy is on supporting sustainable
growth in visitor expenditure, with an emphasis on a
wider regional and seasonal spread of business. The
fundamental components of policy encompass:
a Government Department ( the Department of Arts, Sport and Tourism) which promotes and represents
tourism as an important instrument of national
and regional development and source of foreign
earnings within the general Government decision-
making process
a number of State Tourism Agencies which have recently been restructured to support both the
international marketing of the island of Ireland as
a tourist destination and the development of
the sector across its many facets in locations
throughout Ireland
a strong regional organisational structure for the promotion of tourism exercised through the State
Tourism Agencies, the Regional Tourism Authorities and
Shannon Development, County Tourism Committees,
Product Development Management Boards, County
Enterprise Boards and LEADER Groups
a number of evolving partnership arrangements between the State Tourism Agencies and private
sector representatives of the industry
the periodic statement and re-statement of the vision, targets and objectives guiding tourism
development in Ireland by the Department and the
State Agencies which operate under its aegis
a range of State fiscal, financial and advisory supports both Exchequer and EU funded for the
promotion of tourism operating generally, but not
exclusively, under the aegis of the Department of
Arts, Sport and Tourism.
2.4 The first comprehensive statement on tourism policy in
Ireland was set out in a Government White Paper in
1985. Government policy statements have gone
through a number of iterations since then in response
to changing national and international circumstances
and the underlying organisational structures have
evolved in keeping with these changes. This period of
more structured policy development and
implementation has coincided with a substantive take-
off in the development of tourism in Ireland. A number
of factors underlie the rapid expansion of tourism here.
These include a major international increase in demand
driven by the rising real income levels in many parts of
the world, the falling cost of communications and
transport and currency developments favourable to Irish
tourism. Central to the strong performance of Irish
tourism in a favourable international market
environment has been the intrinsic attractiveness of the
landscape, culture and people of Ireland as a visitor
destination together with the energy, enterprise and
increasing professionalism of the people in a largely
Irish-owned service industry. It is also reasonable to
conclude that improvements in policy formulation and
implementation in Ireland played their part.
Tourism Policy Review Group
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2.5 Led by the private sector, with Exchequer and EU
support, total capital spending on tourism-related
products amounted to 4.3 billion over the 1990s. The
direct Exchequer spend on tourism amounts to 107
million in 2003, of which approximately 80 million is
related to marketing and associated costs. In addition, it
is estimated that the industry spend on marketing was
of the order of 134 million in 2001.
3. Ireland s Tourism Industry: Overview of
Performance 1990-2002
Visitor numbers to Ireland and tourism receipts
throughout the 1990s grew well ahead of global
trends, benefiting all regions of the country.
Irish tourism gained market share in most markets
in which it competes. While visitor experience
generally has consistently met or exceeded
expectations for over 90% of visitors, the
perception of good value for money has fallen
significantly in recent years.
3.1 Visitor numbers to Ireland grew well ahead of global
trends throughout the 1990s, increasing by an average
of over 7% each year compared with a corresponding
world figure of 4.3% . In terms of receipts, Ireland s
performance also exceeded European and global
growth rates in the eleven years up to 2001. The best
performance source markets for Irish tourism have been
the US and Britain.
1990 1995 2000 2001 2002
Britain 1,785 2,285 3,428 3,340 3,452
Mainland Europe 744 1,101 1,435 1,336 1,378
France 198 234 283 280 298
Germany 178 319 319 285 288
Other Europe 368 548 834 771 792
North America 443 641 1,056 903 844
USA 402 587 958 829 759
Canada 41 54 98 74 85
Other Overseas Areas 124 204 261 261 245
Total Overseas 3,096 4,231 6,181 5,840 5,919
Foreign Revenue Earnings ( million) 1,112 1,749 2,824 3,115 3,267
Receipts paid to Irish air and sea carriers ( million) 334 383 813 807 718
Total Foreign Revenue Earnings 1,446 2,132 3,637 3,922 3,985
Visitor Numbers and Foreign Revenue Earnings 1990 -2002
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3. 2 Travel to Ireland by those whose main purpose for visiting
was a holiday has grown slightly ahead of the trend in
overall visitor numbers. Irish tourism has increased its
market share of visitors from the US, but latterly has
seen a decline in its share of an expanding British
market and has been losing market share from
Germany and France. All regions of Ireland have
benefited from the growth of Irish tourism in recent
years. Dublin and the South West have achieved the
highest rates of growth nationally. The strong Dublin
performance has been boosted by the significant
increase in the number of visitors on short city breaks.
The lowest growth rates were recorded for the Shannon,
the West and North West regions. Most activity holidays
showed considerable growth in the late 1980s and
early 1990s but have recorded declines since then.
Domestic tourism remains a bedrock for the Irish tourism
industry, contributing almost half of all visitor numbers
seeking accommodation in 2002 and representing a
fifth of the overall revenue generated by tourism.
3. 3 Survey analysis shows that the core tourism appeal of
Ireland is characterised by people, place and pace . Visitors to
Ireland are motivated principally by the expectation of a
warm and welcoming people, the perception of beautiful
unspoilt scenery and the relaxed pace of life. The holiday
experience of visitors to Ireland has met or exceeded
expectations in the case of over 90% of visitors.
4. Tourism in Ireland Today An Assessment
Irish tourism is, arguably, the most successful sector of
Irish-owned enterprise since the foundation of the State.
The industry today has strong foundations which
underpinned its success in the 1990s. It is, however, at an
important turning point in its evolution. Recent years
have seen a significant loss of competitiveness which, if
not redressed, will undermine the capacity of the industry
to benefit from the strong growth envisaged in
international tourism in the years ahead.
4.1 The Irish tourism industry today has strong foundations
based on a substantial and increased customer base,
high overall customer satisfaction ratings, competent
and experienced staff, many highly successful business
enterprises and the quantity and the generally good
quality of its accommodation, restaurants, leisure
facilities and visitor attractions. The industry has also a
successful record in meeting challenging investment,
revenue earnings and employment targets set under
successive national plans and EU Operational Programmes
for Tourism. These provide a solid base to address with
confidence the new challenges facing the sector.
4.2 Today, the industry is at a turning point in its
development. It faces a major challenge in regaining
competitiveness in the light of reducing customer
satisfaction ratings, in particular as regards delivering
good value for money. There has been a noticeable
Regional Distribution of Overseas and
Domestic Tourism Revenue
Tourism Policy Review Group
Source: Fáilte Ireland
1990
m
2002
m
Real Growth
1990-2002
As a % of
1990 revenue
As a % of
2020 revenue
Dublin 356 1,257 151% 22% 30%
South West 290 793 94% 18% 19%
Midlands/ East 159 414 85% 10% 10%
South East 169 434 82% 10% 10%
Shannon 198 433 55% 12% 10%
West 276 596 53% 17% 14%
North West 175 284 15% 11% 7%
Total 1,623 4,211 84%
Important Factors when Choosing to Holiday
in Ireland and Satisfaction Ratings
Source: Fáilte Ireland Visitor Attitudes Surveys 1997-2002
Very Important ( % ) Rating -% Very Satisfied
1997 1999 2000 2001 2002
Friendly, hospitable people 87 88 88 89 88 90
Beautiful scenery 86 89 89 89 89 91
Memorable experience 82 83 82 83 84 82
Natural, unspoilt environment 81 83 77 79 79 83
Safe and secure 77 76 77 78 79 80
Easy, relaxed pace 74 83 83 82 82 82
Suitable for touring 66 76 72 73 73 71
Attractive cities/ towns 64 59 62 66 64 65
Overall Satisfaction Rating 94 91 94 94 93
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drop in recent years in the perception of good value for
money by overseas visitors, which has declined from
63% in 2000 to 45% in 2002. This is mainly price-related.
For visitors, the price issue relates not so much to the
cost of access and accommodation, which is generally
pre-booked, but to the price of eating out, drink, food
in shops and the general cost of living when they get
here. While resolute action by the Government is
essential to help reduce inflation, the tourism industry
itself has the primary role in driving down costs in the
industry. Reforms in the Irish taxation system over the
past decade have resulted in substantial gains for
businesses generally, but comparatively high VAT rates
and excise duties contribute to unfavourable price
differentials in certain key tourism products in Ireland in
comparison with other eurozone countries. High
insurance costs are also a particular concern, pointing
to the need to accelerate the Government' s insurance
reform programme to reduce premiums.
4.3 The range of tourism products and services, including
tourist accommodation, has increased greatly in quantity
and improved significantly in quality in recent years.
There are at present, however, indications of
underutilised capacity and falling margins which, if not
redressed, could threaten reinvestment and the
maintenance of standards in the future. Some
remaining gaps exist in tourism infrastructure, most
importantly the development of a National Conference
Centre and a National Sports Stadium. There is also a
need for an enhanced emphasis on product innovation
and the better marketing and promotion of tourism
products to meet changing customer requirements.
Environmental conservation must become a central
element of tourism policy and its implementation. Air
and sea access to Ireland has seen major improvements
during the 1990s. But changes which enhance
competitiveness in transport policy and the further
improvement of access infrastructure in particular at
Dublin Airport and in serving the wider catchment
needs of Cork and Shannon airports hold significant
potential to generate increased visitor numbers at both
national and regional level.
4.4 The professionalism, friendliness and quality of services
provided by people are essential success factors in Irish
tourism. A greater level of investment is needed in
human resource development to upgrade skill levels
and to address staff retention and other problems.
While there is a strong funding commitment to tourism
marketing and promotion by the State and the tourism
industry, actions are required to improve the efficiency
and effectiveness of spend in this area. The ability of
the Department of Arts, Sport and Tourism, the State
Tourism Agencies and the tourism industry to more
effectively shape and influence Government policy in
the wider issues that impact on tourism, will be a key
influence in determining the future success of the
sector. The Department' s policy formulation and
implementation role and capability requires to be
strengthened and developed in line with the new
tourism strategy set out in this Report.
Overseas Holidaymakers Rating of Value for Money Overseas Holidaymakers Rating of Value for Money
Source: Fáilte Ireland/ Survey of Overseas Travellers Source: Fáilte Ireland/ Survey of Overseas Travellers
%
of
holiday
visitors
Very good/ good value Fair/ Poor/ Very poor value
1997 1998 1999 2000 2001 2002 30
40
50
60
70
80
13
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5. A Strategy for Irish Tourism 2003-2012
The New Vision for Irish Tourism is that of a dynamic,
innovative, sustainable and highly-regarded sector -
offering overseas and domestic customers a positive and
memorable experience beyond their expectations.
Assuming reasonably favourable international economic
and geopolitical circumstances, the Review Group has set
a challenging target to double overseas visitor spend to
6 billion over the 10 year period to 2012, with an
associated increase in visitor numbers from just under 6
million to 10 million.
5.1 Irish Tourism at a Crossroads: Irish tourism in 2003 is
at a crossroads. It requires a new strategy to chart the
way forward at a pivotal point in its evolution. It has
come through a period of major development and
success in the 1990s probably the most successful
decade in its history. Today, it faces major changes in
the international economic and geopolitical environment
very different to those which helped to underpin its
success in the 1990s. Significant changes have emerged
in the profile of its customer base, both at home and
abroad. The competition that it faces from traditional
competitors has intensified in the face of a downturn
in world tourism and some uncertainty about the
immediate future. At the same time new competitors
from Eastern Europe and further afield have entered the
market in which Irish tourism has traditionally competed.
5.2 Competitiveness Threat: All of this is happening at a
time when the competitiveness of Irish tourism has
deteriorated and is under further threat. This arises
from a combination of price pressures and from a
certain complacency at industry and Government
levels that the good performance of the past can,
on the basis of an out-dated approach, be sustained
in a changed international and domestic environment.
Congestion factors have arisen following a decade
of both economic and tourism growth faster than
had been anticipated and faster than the capacity
of many elements of infrastructure to adjust to the
increased demands.
5.3 Public Finance Constraints: It is also clear that the
significant levels of financial support for the
development of the industry from the EU and
Government, widely available in the 1990s and to the
present time through direct grants, taxation incentives
and infrastructural supports, will not be available at
anything like the same level in future years.
5.4 Irish Tourism An increasingly Self--Reliant, Agile
and Adaptable Sector of Successful Enterprise: A
successful Irish tourism industry in the years ahead will
be an industry that is more self-reliant, agile and
adaptable to change in the market place. The industry
has shown, over the past decade and more, its capacity
to adapt. It has many strengths including, and beyond,
those available when the industry started on an
extraordinarily successful development path in the
1990s. Among these strengths are its proven track
record of meeting customer needs and a deep
knowledge of customer requirements associated with
that success, a capital stock based on recent investment
that is modern and efficient across all segments of the
industry and a people in tourism resource to which
visitors have consistently awarded the very highest
accolades. Arguably tourism represents the most
successful sector of Irish-owned enterprise since the
foundation of the State.
5.5 Competitiveness The Key to Success: Central to the
success of Irish tourism in the years ahead will be a
recovery of the competitiveness that has been lost in
recent years.
5.6 A New Strategy for Irish Tourism Key Components: :
To address these issues a new strategy for Irish tourism
is needed which clearly sets out a new way forward in
the context of the fundamental changes now affecting
the industry. Such a strategy has been developed by
the Review Group. It encompasses:
Components of a New Strategy for Irish Tourism
a clear vision of where Irish tourism wants to go
an understanding of the underlying forces that
are shaping the industry at present and those
that will continue to do so in future
the establishment of challenging targets and
objectives for the industry going forward
a knowledge of the factors that will drive success
in the industry
an enhanced capability to innovate and respond
effectively to unforeseen circumstances
a decision-making framework that facilitates
the formulation of such a strategy and its
implementation through consistent and decisive
actions at Government level and across the
different sectors of the industry itself.
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5.7 A New Vision for Irish Tourism: The new vision for
Irish tourism set out in this Report is of a dynamic,
innovative, sustainable and highly-regarded sector,
offering overseas and domestic visitors a positive and
memorable experience beyond their expectations.
Vision for Irish Tourism
Ireland will be a destination of choice for discerning
international and domestic tourists which:
provides a tourism experience that exceeds customer
expectations in terms of friendliness, quality of
environment, diversity and depth of culture
has a range of high-quality, world-class, competitive
products and services widely distributed throughout
all the regions of the country
is a vibrant source of foreign and regional earnings
throughout the year
respects the natural and built environments and
supports their conservation and enhancement
provides attractive career opportunities in tourism for
people with a range of skills and employment needs
provides the opportunity for people working in
tourism to enhance their skills through experience,
training and life-long learning
respects and supports Irish culture in all its diversity
provides a positive international profile of Ireland.
The new strategy for Irish tourism can be represented diagrammatically as follows:
Forces of Change
Fundamental Changes Affecting Global &
Domestic Tourism
Vision
Contribution to National Social & Economic Objectives
Future Drivers of Success
Competitiveness and Value for Money, Product, People, Marketing,
Technology, Access Transport & Business Environment
Flexibility
Agility to respond to change
Targets & Objectives
Motivators Benchmarks of Performance Decision-making Framework Improved Resource Allocation
Tourism Strategy
2003 -2012
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5.8 International Prospects: The medium and long-term
prospects for tourism worldwide remain strong despite
the recent deceleration in the underlying growth rates
since 2000 because of economic and geopolitical
uncertainty. The fundamental drivers of change
affecting tourism internationally are expected to result
in strong growth rates which, over the next 20 years,
are projected to be similar to the doubling of tourist
traffic that occurred over the period 1980-2000.
Tourism development will continue to be largely
determined by the rate of global and regional
economic growth and associated increases in the
disposable incomes of a wide distribution of individuals.
The developed countries will remain the largest source
and destination of tourism numbers in absolute terms
but new markets for Ireland are emerging including
those from Eastern Europe and the Far East.
5.9 Key Markets and Determinants of Success: For
Ireland, the tourism markets of most importance will
continue to be in Britain, the US, the larger countries of
Mainland Europe and the domestic market. But the
customer profile is changing rapidly, driven by
technology, demographics and societal changes such as
better education, increasing interest in cultural
experiences, increased leisure time, multiple but shorter
holiday breaks, greater interest in health enhancing
tourist experiences and increasing empathy with
environmental conservation. Developments in access
transport are of fundamental importance in facilitating
tourism development. The quality, price, frequency and
routes of air and sea carriers have improved during the
1990s. In particular, low fare airline services have
transformed the market for travel between Ireland,
Britain and Mainland Europe. The potential for
additional route development in these services, and on
transatlantic air routes, remains strong. The upgrading
of internal transport services will be important for the
regional spread of visitors. Measures to optimise the use
of new information and communication technologies
throughout the tourism sector are also of key importance.
5.10 Tourism Development Targets 2003-2012: Ambitious
but realistic targets for key indicators of performance
are an essential component of Irish tourism strategy.
Strategic targets, few in number, provide a sense of
direction for tourism policy and facilitate the
prioritisation of actions to support the development of
the sector. Assuming reasonably favourable
international economic and geopolitical circumstances,
the Review Group has set a challenging target to
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double overseas visitor spend from 3 billion to 6 billion
over the 10 year period to 2012, with an associated
increase in visitor numbers from just under 6 million to 10
million. Targets are also being set
to increase the share of promotable segments
( holiday, conference, language study and incentive
travel) from 45% to 50% of total visitor numbers
to increase the number of domestic holiday trips
from 3 million to 4.3 million, with associated revenue
earnings increasing from 0.6 billion to 1 billion
to double the number of overseas promotable visitors
staying at least one night in the Border Midland and
Western ( BMW) region.
XVI
Revenue ( million 2002 prices) 2002 Actual 2006 Target 2012 Target Av. Annual Growth % 2002-2012
Overseas Visitor Spend 1 3,088 3,835 6,000 6.9%
No. of visitors ( m)
Britain 3.5 4.1 5.5 4.8%
Mainland Europe 1.4 1.7 2.3 5.3%
North America 0.8 1.0 1.8 7.6%
Other areas 0.2 0.3 0.5 6.3%
Total 5.9 7.0 10.0 5.4%
Overseas Revenue and Visitor Number Targets to 2012
1 Excluding receipts paid to Irish air and sea carriers & revenue from Northern Ireland visitors
Overseas Visitor Number Targets to 2012
No.
of
Visitors
(
m)
2000 2006 2012
North America
Other areas
Britain
Mainland Europe
0
1
2
3
4
5
6
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5.11 The Drivers of Success: The key strategic drivers of
success for Irish tourism in the future which will determine
the achievement of the targets set are as follows:
Key Drivers of Success
Business Environment
Competitiveness & Value for Money
Access Transport
Information and Communication Technologies
Product Development & Innovation
Marketing & Promotion
The People in Tourism
The Government Sector
Information, Intelligence & Research
The impact of these factors on Irish tourism in the
future are set out in detail in the main Report.
5.12 An Agenda for Action: The tourism development
strategy set out by the Review Group provides a clear
framework and set of actions to support the further
development of tourism in Ireland and its regions. The
specific actions required are clearly set out together
with the reasons for taking them, the bodies
responsible for implementing the actions and the
timeframe within which the actions should be
accomplished.
5.13 I mplementation Group: In order to reflect the action
orientation of the report a small, high-level
Implementation Group should be established, for a
two-year period with high-level representation from the
private and public sectors. The Group should report
directly to the Minister for Arts, Sport and Tourism. The
task of the Implementation Group will be to oversee
the implementation of the recommended actions in the
Report and to revise them as necessary in consultation
with the bodies responsible for their implementation. A
strong, ongoing process of consultation with the
industry is a critical component of the follow-up to the
report of the Review Group.
6. Implementing the Strategy
the Actions Required
The policies and actions that have delivered strong
performance in Irish tourism in the past will not suffice to
do so in the future. The way in which the changes now
required are anticipated, managed and put in place will
determine the future success of Irish tourism as a sector
of investment opportunity, innovation and enterprise, and
as an instrument of Government development policies.
6.1 The Irish tourism industry is a highly complex and
diverse sector of interdependent, economic activities
within the domain of both the private and public
sectors. The actions now required to implement the
new strategy for Irish tourism outlined in the Report are
equally diverse and wide-ranging. They encompass
many different decision makers in both the private and
public sectors.
6.2 In identifying the key actions needed to deliver the
strategy outlined, the Review Group was guided by
three fundamental principles
Fundamental Principles
Guiding Recommended Actions
tourism growth is driven by private sector
enterprise, innovation and investment
the need for a consistent framework of well chosen
actions across all areas of Government activity
targeted public sector interventions to be confined to
market failure in close partnership with the industry.
Tourism Policy Review Group
Overseas Visitor Revenue Targets to 2012 ( 2002 prices)
2000 2006 2012
Overseas Visitor Spend
1,000
2,000
3,000
4,000 ( m)
5,000
6,000
7,000
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6.3 Substantive change is required in key areas of
Government policy, in the delivery of that policy by the
State Tourism Agencies, in the work of the industry
representative bodies, and, importantly, at the level of
individual enterprises throughout the industry. The
effectiveness and efficiency with which the changes
required are anticipated, managed and delivered will
determine the future success of Irish tourism as a sector
of private sector investment opportunity, innovation
and enterprise, and as an instrument of Government
social and economic development. The fundamental
components of that change require
a new policy framework and set of related actions that
continue to promote strong, self-reliant, profitable,
innovative, customer-focused tourism enterprises
an industry that itself anticipates and embraces the
changing needs of its customer base both
domestic and overseas visitors and offers to each
customer a product, service and experience which
surpasses that available from alternative providers
both at home and abroad.
6.4 The specific actions required to be taken under each of
the key drivers of a successful Irish tourism industry are
set out in Chapter 6. The actions focus on the period
2003-2005. To attempt to recommend today what
actions will require to be taken beyond 2005 is not
realistic. What is required, instead, in an increasingly
volatile tourism environment, is a process of frequent
review of strategy, at two-yearly intervals, and the
adoption of a series of rolling 2-3 year action plans
which reflect changing circumstances, the periodic
review of strategy and the immediately preceding
action plan.
6.5 The set of actions recommended in the Report may,
accordingly, be regarded as t he first rolling action plan
for the development of Irish tourism over the next
decade. It sets out
the rationale underlying the identification of the
particular driver of success in Irish tourism
the objectives which the actions recommended seek
to attain
where primary responsibility lies for undertaking the
actions recommended
the timeframe within which the actions
recommended should be accomplished.
The longer term strategy and more immediate action
plan set out in this Report provide a coherent
framework of actions for the development of Irish
tourism, at this stage of its evolution, particularly taking
account of the fact that the majority of businesses are
small and medium in size. The strategy and action plan
will facilitate the ongoing review process recommended
as an inherent element of the development process for
the industry going forward. The review process will be
led by the Department of Arts, Sport and Tourism, and
will encompass the State Tourism Agencies, other
Government Departments and State Agencies whose
policies and actions significantly affect tourism and,
importantly, representatives of the key sectors of the
industry itself.
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Tourism Policy Review Group
Tourism Worldwide -An Overview
International tourist numbers
will double over the next
20 years but the profile and
requirements of customers
are changing rapidly and
competition is becoming
more intense.
1 chapter one
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4
Summary of Main Conclusions
International tourism:
is a major economic sector generating over 500 billion in tourism receipts,
accounting for almost 4% of global GDP and sustaining close to 70 million jobs
has outpaced general economic growth, since 1975, by a factor of 1.3
continues to be driven largely by affordable travel, especially by air, and the
travel opportunities opened up by new technologies
is, today, recovering slowly from the economic downturn, terrorism, the war in
Iraq, and the impact of the SARS virus on travel in the first half of 2003
is experiencing significant changes in customer trends, including shorter and
more frequent trips, greater use of e-commerce, later booking, more tailored
holiday experiences and growth in the older people share of the market
will, in future, be increasingly driven by more demanding customer requirements,
with greater emphasis being placed on value for money, personal fulfilment,
unique experiences, authenticity, emotional involvement and travel convenience
is projected to experience a doubling in the number of international arrivals over
the next 20 years to almost 1.6 billion
is being given increased weight and emphasis in the range of Government
policies aimed at national and regional development.
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1.1 A Global Industry
The phenomenal growth in tourism activity worldwide
marks the sector out as one of the most remarkable
economic and social phenomena of the past century.
A record 715 million international trips were made
worldwide in 2002 1 . Tourism receipts in 2001 generated
approximately 518 billion. International travel and tourism
contributes 3.7% to global Gross Domestic Product ( GDP) ,
while sustaining over 70 million jobs or 2.6% of the world s
employment 2 . The industry has an impressive record of
sustained growth with the number of international trips
increasing, on average, by 7% a year over the past 50 years.
Global revenues from tourism also grew consistently by 11%
annually in real terms up to 2001.
In 2001, Europeans accounted for 58% of international
arrivals ( or 403 million arrivals) which reflected a 4% % annual
growth rate in the 1990s. Within Europe, intra-regional travel
accounts for 350 million arrivals ( 87% of the total) , with
leisure/ holiday representing nearly two thirds of this number.
The Americas and Asia/ Pacific are the next largest source
markets for international travel, generating 124 million and
121 million trips per annum respectively. Despite an above
average rate of growth in the incidence of inter-continental
travel in recent years, 80% of all trips are intra-regional
reflecting the importance of close to home markets.
Tourism has not only seen significant growth but also a
continued diversification in geographic spread and in the
range of products and experiences on offer. Europe' s share
of worldwide tourism has been declining. Over the past
decade the Asia Pacific region and the former Eastern
European countries have been fast growing destinations.
Arrivals in Asia/ Pacific grew at an average rate of 7.2% per
annum, at a time when, overall, world tourism was growing
by 4.3% each year and European tourism by 3.6% .
Transatlantic travel is the largest inter-regional traffic flow
in the world. In 2001, 25 million Americans travelled east
and 20 million Europeans visited the Americas. The next
largest flow is between Europe and the Asia/ Pacific
region, with between 12 and 13 million visitors going
each way respectively.
Leisure, recreation or holiday travel accounts for some 60%
of international trips. However, throughout the 1990s,
international business travel grew at a faster rate than
leisure trips. Trips to visit family and friends or for religious
or health purposes, account for almost 25% of all travel.
While air travel and sea cruising are each fast growing
sectors, road transportation continues to be used by almost
half of all international travellers worldwide.
Figure 1.1 International Tourist Arrivals 1950 -2001 Figure 1.2 Share of Worldwide Arrivals by Global Region 2001
Source: World Tourism Organisation ( WTO) Source: WTO
Africa Middle East South Asia
Europe Americas East Asia/ Pacific
1950
800
(
million)
700
600
500
400
300
200
100
0
1960 1970 1980 1990 2000
Europe
Americas
Asia/ Pacific
Africa
Middle East Source: WTO
58%
17%
17%
4% 3%
1 According to World Tourism Organisation ( WTO) statistics. The WTO, based in Madrid, is an international governmental organisation that serves as a forum for tourism policy and issues. Its membership includes countries, territories and affiliate members from the public and private sectors.
2 Estimates from the World Travel and Tourism Council the Forum for business leaders in travel and tourism, , based in London.
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Despite the rapid growth in international travel, domestic
tourists outnumber international visitors in most developed
nations around the world. Accordingly, the domestic
market represents a very important component in the
viability of enterprises engaged in tourism. However, in
more developed economies, the rate of growth in
international travel tends to exceed that of domestic trips.
1.2 The Underlying Forces Driving Worldwide Tourism
Worldwide tourism growth has been driven by a number of
key factors, including economic wealth, mass communication,
information and communication technologies, socio-political
stability and availability of leisure time.
A strong underlying relationship exists between the
level of consumer disposable income and travel.
International tourism significantly outpaced the
growth of economic output ( GDP) between 1975
and 2000, growing on average 1.3 times faster, as
shown in Figure 1.3.
Increased leisure time, with more holiday
entitlements and flexible working conditions, has
stimulated a widespread desire for travel and
together with strong economic growth in
developed economies in recent decades has
generated the cash rich time poor population
segment seeking to maximise the use of available
recreational time.
A major driver of tourism growth has been the
increasing availability of affordable transportation,
especially air travel. Travel costs have fallen sharply
in real terms in recent decades at a time when
capacity and routes have dramatically increased.
Medium and long-haul air travel has become
significantly more affordable, while the low fare
airlines have revolutionised short-haul journeys
within North America, Europe and Australia.
The reduction in travel and border formalities ( e. g.
visa entry requirements, customs and currency
restrictions) has also contributed to the growth of
international travel.
Real GDP
Average 1975 -2000
Tourist Arrivals
Average 1975 -2000
Source: WTO/ International Monetary Fund ( IMF) Source: WTO/ International Monetary Fund ( IMF)
1975
% change over
previous year
10
8
6
4
2
0
-2
1980 1985 1990 1995 2000
Figure 1.3 Growth of GDP and International Tourist Arrivals
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The application of new information and
communication technologies has dramatically
broadened people s access to information and travel
opportunities. The result has been a transformation
in the way people plan and book travel. Online
travel sales, estimated at 55 billion in 2003, are
projected to almost double over the next two years.
The importance of a stable socio-political
environment for travel to grow is amply
demonstrated in the downturn in travel to
destinations affected by conflict and terrorism.
More recently, concerns on the part of travellers
about safety, security and health issues are
increasingly influencing travel patterns.
1.3 Key Trends in International Tourism and Travel
The international tourism and travel industry is a highly
dynamic sector of activity characterised by continuous
change. Significant changes in recent years include shifts
between markets, in customer profiles and preferences,
together with changes in the structure of the industry, its
management and the way it does business. The principal
customer trends to emerge, over the past decade or so,
have included:
shorter and more frequent trips
greater consumer use of modern information and
communication technologies
more experienced travellers with heightened quality
and value expectations
a trend towards later booking
mass marketing giving way to more individually
tailored holidays
growth of the older people share of the total market,
as this group now represents the wealthiest
segment of society in Europe, the US and Japan.
Sun holidays, city breaks and touring holidays together
account for almost 70% of all international holidays taken
by Europeans.
The way people make their holiday arrangements is also
changing. Internet use has had a major impact on travel
and the tourism industry. More than 6 in 10 US households
currently research their leisure travel online. In Europe low
fare air carriers have pioneered online booking for travel
and, also, for a wide range of travel-related services. While
Europe has some way to go before the Internet is as
significant a distribution channel as it is in the US, it has
already had a radical impact on consumer holiday decision-
making in all of Ireland s main markets and its influence is
continuing to grow strongly.
1.4 Recent Performance
Growth in international travel has stalled only twice in the
past 50 years -in 1982, following the oil crises, and in
2001. Weak demand due to economic conditions in the
early part of 2001, the outbreak of Foot and Mouth disease
in northern Europe, coupled with the impact of the terrorist
attacks of September 11th resulted in a drop of 0.6% in
tourism arrivals globally, with earnings falling by 5.2% .
However these global figures tend to understate the extent
of the severe downturn in travel experienced in the
Americas and to a lesser extent Europe, the world s top
destination and source markets.
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The September 11th terrorist attacks in the US resulted in
an unprecedented impact in terms of reduced demand for
leisure and business travel and accelerated changes already
underway in the structure of the travel and tourism
industry and the choice of type and location of holiday
travel. The industry, in many countries, experienced job
losses and business closures. The more lasting impact
included an increasing concern regarding safety and
security, a radical restructuring of the global airline industry,
changing patterns of travel and significant changes in how
destinations and products position are positioned in the
marketplace.
Results for 2002 indicated a slow recovery with
international arrivals worldwide increasing by over 3% to
reach a record 715 million. However, recovery has not been
universal. The war in Afghanistan, terrorist attacks on
tourists in a number of locations, fear of further terrorist
attacks and the anticipation of war in Iraq severely
dampened demand in 2002, at a time when low interest
rates were stimulating consumer spending. Trips tended to
be closer to home while uncertainty and heightened price
sensitivity encouraged later bookings. The business travel
sector continued to be severely depressed. Within the
airline industry, only low fare airlines recorded healthy
volume and profit growth, while sea cruise tourism
recovered largely on the basis of heavy discounting.
The position for 2003 is that soft economic conditions in
most of the main source markets, the conflict in Iraq,
terrorist attacks and the outbreaks of Severe Acute
Respiratory Syndrome ( SARS) , have combined to depress
demand for discretionary and business travel. This has been
reflected in a decline in international air travel and tour
operator holidays during the early months of the year.
Many airlines, tour operators and other tourism businesses
continue to issue profit warnings as the combined impact
of global events on tourism continues to threaten future
earnings. While the war in Iraq mainly affected forward
bookings and traffic flows on transatlantic, Middle East and
eastern Mediterranean routes, fears about the SARS
epidemic have had a significant impact on global travel,
especially to and from the Asia/ Pacific region.
International Tourist Arrivals Market Share Average
annual
( million) ( % ) growth ( % )
1990 1995 1999 2000 2001 1990 1995 2001 90-00 95-00
World 457.3 551.7 652.3 696.8 692.6 100 100 100 4.3 4.8
From:
Africa 11.3 13.1 15.6 15.8 16.3 2.5 2.4 2.4 3.4 3.8
Americas 96.2 111.8 130.0 130.6 123.9 21.0 20.3 17.9 3.1 3.2
East Asia and the Pacific 56.5 94.0 110.0 110.1 112.9 12.3 17.0 16.3 6.9 3.2
Europe 274.0 339.7 404.8 404.4 402.8 59.9 61.6 58.2 4.0 3.5
Middle East 8.1 8.3 11.5 12.4 12.4 1.8 1.5 1.8 4.5 8.4
South Asia 4.0 5.3 7.4 7.8 7.9 0.9 1.0 1.1 6.9 8.1
Origin not specified 3 7.3 -20.6 -26.9 15.5 16.4 1.6 -3.7 2.4
Same region 362.6 436.6 513.1 546.4 549.9 79.3 79.5 79.4 4.2 4.5
Other regions 79.7 99.8 123.5 134.8 126.2 17.4 18.1 18.2 5.4 6.2
( Data as collected by WTO September 2002)
3 Countries that could not be allocated to a specific region of origin. As information is derived from inbound tourism data this occurs when data on the country of origin is missing
or when a category such as other countries of the world is used grouping countries together that are not separately specified. .
Table 1.1 Outbound Tourism by Region of Origin 1990-2001
Source: WTO
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Some recovery is anticipated in bookings for leisure travel
for the remainder of the year, with the European market
likely to show greater buoyancy than North America,
provided that the threat of terrorism decreases and as fears
of the SARS virus continue to abate.
1.5 Future Prospects and Determinants of Growth
The short to medium term prospects for international
tourism may be summarised as follows:
a quick return to the buoyant market conditions of
2000 is unlikely. However, international arrivals
worldwide are forecast to continue to increase in
the immediate future, although at a slower rate of
growth than that experienced in the 1990s.
According to WTO projections, the number of
arrivals is expected to double over the next 20 years
to almost 1.6 billion, an outturn which, if achieved,
would be broadly in line with the rate of growth
experienced over the previous 20 years. The current
conditions and uncertainties caused by the
economic downturn will continue to depress
demand in the immediate future but the underlying
trends suggest a resurgence in demand in the
medium and longer term. Travel and tourism is
firmly established in the lifestyle and discretionary
spending pattern of the developed economies. The
market of experienced international travellers has
expanded greatly, and there is increasing potential,
in several important source markets such as China
and Central and Eastern Europe
travel recovery will lag somewhat behind an uneven
and slow economic recovery, particularly for
business travel. Economic recovery and a stable
geo-political environment are both inextricably
intertwined as major determinants of future
demand for travel and tourism. While worldwide
GDP is forecast to increase from 3% in 2002 to
3.2% in 2003 and 4% in 2004, according to IMF
estimates, consumer confidence is vulnerable and
wide areas of business are likely to continue to
retrench. Consumer spending is expected to slow
down even if interest rates remain low. Any
weakening in the US dollar, while good for the
global economy, has a dampening demand on
external travel, particularly transatlantic. Overall, as
long as the threat of terrorism and war persists, the
short-term prospects for intra-regional travel remain
better than for inter-continental travel
while leisure demand will continue to increase,
markets will become more competitive. The ageing
population in the developed world, especially within
Europe, presents significant new challenges and
opportunities for tourism, relating to changing
travel patterns, different customer needs and
demand for more customised products and services.
In addition, factors such as the increasing number
of single person households, changing work and
career patterns, an emphasis on personal well-being
and evolving value systems, will all influence the
volume, type, frequency and duration of leisure
trips in the future
the US as a source of international tourists has been
hardest hit by the threat of terrorism and will take
longest to recover. Asia/ Pacific is set to become the
fastest growing region for tourism with a decline in
the relative share of global tourism in Europe and
North America
the factors that determine demand for travel will
continue to change with greater emphasis being
placed on value for money, personal fulfilment,
unique experiences, authenticity, emotional
involvement and travel convenience. Security,
health and environmental issues, and increased
competition from new destinations and products,
will continue to influence demand patterns
greater consolidation within the industry,
particularly in the airline sector, and increased
integration along the tourism supply chain is
envisaged. Although liberalisation and deregulation
have radically altered the face of commercial
aviation over the past decade, the structure of the
airline industry is set to change further. The
traditional business model for full service network
airlines no longer appears to be sustainable with the
global airline industry cumulatively losing US$ 31
billion over the past two years. While growth in air
travel will continue to be a function of economic
growth, pricing and deregulation, the continuing
decline in fares is not guaranteed. The availability of
air services will change with low fare point-to-point
carriers predominating in the short haul markets
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and a rationalised structure of long haul services by
a more limited number of network airlines
the expansion of internet technology -applications,
functionality, and accessibility will continue to
revolutionise how travel businesses operate and
interface with a more knowledgeable, price and
value aware customer
effective marketing and communications will
continue to be important motivators of travel in the
future. Integrated marketing campaigns, meeting
specific customer needs, will become increasingly
powerful generators of discretionary travel in a
more competitive environment.
1.6 Tourism and Government Policies Internationally
As an increasingly important source of wealth-creation,
employment and foreign earnings from external and
domestic sources, Governments worldwide have put in
place a wide range of policies both direct and indirect
to support the development of their tourism industries.
Within these policies a number of key features and trends
are apparent:
an increasing emphasis on the sustainability of tourism
development in environmental and societal terms
closer linkages between tourism policy and other
policy areas including those dealing with national
economic development, regional development,
transport, arts and culture, sport, conservation and
environmental planning
greater involvement at local political and
community levels in the development and
implementation of policies relating to tourism
stronger industry associations taking increased
responsibility for developing networks and initiatives
to support their members and the industry and in
working with Government bodies
widespread initiatives by both Government bodies
and industry associations to strengthen the use of
information and communication technologies in
developing tourism
increasing focus on high standards of public health,
workplace conditions and general training.
In general, tourism policy internationally is being given
increased weight and emphasis in the range of
Government policies aimed at national and regional
development.
1.7 Overview/ Conclusions
In summary, while the nature and structure of international
tourism is undergoing fundamental change, the future
prospects remain highly promising and positive according
to the projections of the most authoritative sources,
including the WTO. As set out later in this Report, the Irish
tourism industry has demonstrated a strong record of
success, particularly over the past fifteen years, in attracting
visitors and gaining share in a number of important areas
of the tourism market. The challenge for the tourism
industry in Ireland over the next decade and beyond is to
build on that success and to respond effectively to the
changes underway in international tourism as set out in this
Chapter. Chief among these changes are the greater
competition between destinations and changing customer
profiles in economic status, age, discernment and value-
consciousness.
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12
Ireland s Tourism Industry: Economic Contribution,
Structure and Policy
Irish tourism is a major economic sector
of enterprise, and of national and
regional wealth creation. The industry
at present generates 4 billion in foreign
revenue earnings, supports 140,000
jobs and is by far the largest, Irish-owned
internationally-traded sector of the
Irish economy.
Tourism Policy Review Group
2 chapter two
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Summary of Main Conclusions
Irish tourism in a major sector of successful enterprise and a significant
instrument of national and regional economic and social development
Six million overseas visitors spent 4 billion in Ireland in 2002, while Irish people
took close to six million trips in the country, spending almost 1 billion.
To put the annual tourism receipts of 4 billion from overseas visitors in
perspective, it is equivalent to
more than 50% of the total value of exports by Irish-owned manufacturing
industry, or
more than twice the value of exports of Irish-owned internationally-traded
services.
The Irish tourism industry embraces a wide range of diverse small and medium
sized enterprises that are predominantly Irish-owned.
The industry supports some 140,000 jobs or one in 12 of all jobs in the
economy. Employment grew in the sector by more than 70% between 1990
and 2002 a rate of growth considerably above the 50% % growth in
employment generally in the economy over that period.
Tourism generates as much as 2.2 billion in tax receipts and contributes 4.4%
of GNP.
The public and private sectors play joint and complementary roles in the
development of tourism in Ireland with organisational structures in place to
promote partnership, particularly in relation to marketing.
Total capital investment in tourism during the 1990s amounted to 4.3 billion.
The direct Exchequer spend on tourism amounts to 107 million in 2003, of
which approximately 80 million is related to marketing and associated costs,
while the industry spend on marketing was of the order of 134 million in 2001.
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2.1 Tourism' s Contribution to Economic, Social and Regional Development
Tourism is a major and largely Irish-owned sector of enterprise,
and of national and regional wealth creation delivering the
following very significant benefits to the economy:
expenditure ( including receipts of over 700
million paid to Irish air and sea carriers) by the 6
million overseas visitors to Ireland in 2002
amounted to almost 4 billion. The equivalent
figure in 1990 was approximately 1.5 billion. In
real terms, when inflation is taken into account, this
represents a doubling of revenue since 1990.
Domestic expenditure amounted to approximately
1 billion in 2002, making tourism in total a major
5 billion turnover industry
to put the 2002 tourism receipts of 4 billion from
overseas visitors in context, it is equivalent to
more than 50% of the total value of exports by
Irish-owned manufacturing industry, or
more than twice the value of exports of Irish-
owned internationally-traded services.
Tourism goods have low import content in
comparison to other exports
tourism supported approximately 140,000 jobs in
2002 up from 82,000 jobs in 1990. . With an
estimated 1,765,000 people at work in Ireland in
2002, tourism spend supported 8% of
employment, equivalent to one in 12 of all jobs in
the economy. The equivalent proportion in 1990
was 7% . The 70% growth in jobs in the sector was
considerably above the 50% growth in
employment generally in the economy
notwithstanding that general employment growth
was at unprecedented high levels
it is estimated that each million euro of overseas
tourism expenditure supports 30 jobs and every
million euro of domestic tourism spend supports
23 jobs
it is estimated that, in 2002, the Government
earned as much as 2.2 billion through taxation of
tourism expenditure in VAT, excise duties and
income tax receipts 1.9 billion of which came
from foreign tourists
tourism made a direct contribution of 4.4% to GNP
in 2002
tourism is a major instrument of regional
development. Many tourism enterprises are
situated in areas where other employment
options are limited
local communities benefit from investment in
facilities for tourists such as leisure and sporting
facilities and in associated infrastructure including
access transport and roads
a vibrant tourism industry contributes to the
viability and sustainability of a wide range of local
enterprises
tourism promotes an enhanced awareness and
positive appreciation of local traditions, way of life
and cultural facilities
Figure 2.1 Tourism Revenue
1990 & 2002 ( m)
Figure 2.2 Overseas Visitor Numbers
1990 & 2002 ( m)
Source: Fáilte Ireland
1,446
1990 2002 1990 2002
3,985
3.1
5.9
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2.2 The Structure of the Tourism Industry
The Commercial Sector
Tourism is not easy to categorise as a readily definable
sector within the economy. It embraces a wide range of
different activities in both the private and public sectors.
It comprises thousands of individual businesses. Indicative
of that fact are the some 10,000 members in the Regional
Tourism Authorities ( RTAs) . The tourism industry in Ireland
comprises predominantly Irish-owned, small and medium
sized enterprises ( SMEs) . Table 2.1 contains estimates of the
number of establishments/ operations in certain key sectors.
There is also an important range of State-owned facilities
including visitor information centres, museums and
heritage attractions, national monuments and national
parks. A limited number of large commercial enterprises,
including publicly listed companies and State-owned
corporations, are important providers of transport and
accommodation. A number of foreign-owned air and sea
carriers also provide transport links to and from Ireland.
Most foreign involvement in hotels is through use of
franchise and management contract arrangements under
leading international brands. There has been a trend for
Irish-owned family groups to increase their share of the
stock of hotels over recent years.
Table 2.2 describes the tourism related enterprises within
the main sub-sectors of the industry. The right hand
column of the table indicates the ownership structure of
the industry. The predominance of SMEs is very apparent.
Tourism Industry Representative Bodies
( The Irish Tourist Industry Confederation)
Over the past 20 years the Irish tourist industry has formed
into a number of sectoral representative groupings, many
of which have come together under an umbrella
representative body -the Irish Tourist Industry
Confederation ( ITIC) . Established in 1984, ITIC is the
national representative organisation for the tourism sector
encompassing membership from both the public and
private sectors. Current membership includes the Irish
Hotels Federation, the key B& B Groups ( Town and Country
Homes Association, Irish Farm Holidays Association) , the
Irish Tour Operators Association, Restaurants Association of
Ireland, Coach Tourism and Transport Council of Ireland,
Car Rental Council of Ireland, Irish Boat Rental Association,
Irish Caravan Council, MEI ( Marketing English in Ireland) -
RELSA and a number of other interests as well as air and sea
carriers. The purpose of the Confederation is to act as a
single voice for tourism, to address strategic issues critical
to the success of the sector, to influence the
regulatory/ legislative environment and to influence
Government and EU tourism policies. The Confederation
pursues its objectives through a strategy of influencing
policies that impact on tourism, through professional case
making and by seeking industry representation on State
bodies which deal with tourism. However, the diversified
nature of the sector and the preponderance of SMEs have
challenged the ability of the industry to highlight at
national level in a fully effective way, and to highlight, the
scale of its importance in economic and social terms.
Table 2.1 Number of Establishments/ Operations by Sector 1996-2002
Source: Fáilte Ireland
Sector 1996 1998 1999 2000 2001 2002
Hotels 716 775 826 844 854 860
Guesthouses 356 427 475 481 495 488
Restaurants 1,619 1,890 1,987 2,120 2,129 2,115
Licensed premises 8,694 n/ a 8,071 8,100 8,110 8,000
Tourism Services & Attractions 2,012 n/ a 2,680 n/ a 3,074 3,018
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The Public Sector
In addition to its role in helping to develop the tourism
sector through direct support for product development,
marketing and training/ education, the public sector is also
responsible for a number of activities that are essential to
the development of tourism. These include:
the provision of infrastructure and services, in
particular those relating to access transport, roads
and telecommunications
the protection and maintenance of natural, cultural
and heritage resources
the regulation of building and site development and
environmental protection
the regulation of business and the labour market
the determination of fiscal policy.
Responsibility for the formulation of national tourism
policies rests with the Department of Arts, Sport and
Tourism. Its goal is to facilitate the continued development
of an economic and environmentally sustainable and
spatially balanced tourism sector, through formulating,
monitoring and reviewing a range of supporting policies
and programmes, particularly within the framework of the
National Development Plan and North/ South co-operation.
Policy is implemented by State-sponsored bodies and
executive agencies, operating under the aegis of the
Department. The principal State Agencies are Fáilte Ireland,
Tourism Ireland, Shannon Development and the Regional
Tourism Authorities.
Table 2.2 Main Sub-sectors, Services and Structure of Tourism Industry
Source: Fáilte Ireland
Sub-sector Services Structure
Transport Airlines & Shipping Companies, Air & Sea
Ports, Internal Transport Bus, Rail Services,
Car Hire, Coach Tours
Mainly public and larger companies, except
in case of coach and car hire
Accommodation Hotels; Guesthouses; B& B s; Self-catering;
Hostels; Caravan & Camping Parks;
University Campus; Host Homes
Mainly SMEs although larger hotel groups
are growing in number
Food Accommodation providers; Restaurants;
Pubs; Fast Food Outlets; Shops
SMEs apart from larger hotel groups
Facilities/ Amenities Historical sites; Houses; Gardens; Museums;
Art Galleries; Theatres; Entertainment; Pubs
SMEs & State enterprises
Activities Golf; Walking; Angling; Cycling; Cabin
Cruising; Equestrian Activities; Events; Sailing;
Other Water Based Pursuits; Shopping;
Language Schools and Genealogy
SMEs almost exclusively except in the case of
cabin cruising
Basic Services Petrol Stations; Banking; Communications;
Tourist Information; Other Retail Outlets
Mainly SMEs but including major companies
in banking services and petrol distribution
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The functions of the two principal State agencies involved
in tourism at national level are as follows:
National Tourism Development Authority
Fáilte Ireland : Established by legislation in May
2003, the new agency s mission is to foster
sustainable and competitive tourism development
by working in partnership with the industry and
State bodies to achieve world-class standards of
excellence in the products, services and marketing
of the sector, thereby contributing to wealth
creation and employment in the economy of Ireland
and its regions. The new agency is intended to
streamline the State s support services to tourism by
incorporating the services and programmes
previously carried out by Bord Fáilte and CERT.
Fáilte Ireland has responsibility for supporting the
tourism industry in the areas of:
product development
marketing of domestic tourism on the island
of Ireland
training and education
research and strategic planning
niche/ specialist product marketing
and promotions
implementation of special initiatives to
attract international sports events to Ireland
and to support the marketing of festivals and
cultural events.
It also has statutory functions for registration and
grading of certain tourism accommodation, the co-
ordination of activities of the Regional Tourism
Authorities and the promotion of sustainable
tourism. In carrying out these functions, Fáilte
Ireland provides a range of supports to the tourism
industry, including those that support the building
of business capability, improve the quality of
product which the industry offers and enhance its
competitiveness.
Tourism Ireland: As part of the Agreement reached
in the Multi-Party Negotiations concluded in Belfast
in April 1998, tourism was designated an area for
co-operation under the North/ South Ministerial
Council. In December 1998, the parties to the
Agreement decided that a publicly-owned limited
company would be established jointly by the
Northern Ireland Tourist Board ( NITB) and the then
Bord Fáilte to carry out functions aimed at
promoting tourism to the island of Ireland. Tourism
Ireland was incorporated in December 2000 and
has taken over responsibility with effect from the
2002 season, for the overseas marketing of the
island of Ireland as a tourist destination.
In exercising its overseas marketing activities,
Tourism Ireland has taken on a number of functions
including ownership and management of the
tourism brand for Ireland, strategic all-island
destination marketing in all markets outside the
island of Ireland and responsibility for the overseas
office network. Tourism Ireland is also responsible
for the international delivery of product/ regional
marketing programmes on behalf of both Fáilte
Ireland and NITB. Appendix D sets out a brief
outline on Tourism Policy on the Island of Ireland .
In addition to Fáilte Ireland and Tourism Ireland, a
number of other State Bodies as set out in Appendix E ,
have functions associated with the development of
tourism. The number and range of such bodies has given
rise to some concerns about the risk of overlap and
duplication in the delivery and efficiency of services.
While there has been a recent major restructuring of
bodies at national level, regional and local structures
have remained largely unchanged.
Tourism Marketing Partnerships
While the concept of partnership has existed within the
tourism industry for many years, it is only in recent years
that formalised structures have been put in place to
facilitate the mutual engagement of the private and public
sectors in the design and implementation of tourism
marketing and development plans and programmes. In the
mid 1990s, a new industry-led joint marketing body, the
Overseas Tourism Marketing Initiative ( OTMI) , was formed
and operated on an all-island basis. The tourist boards from
both Northern Ireland and the South were members of
OTMI and its board included industry representation from
both jurisdictions. In 1995, the island of Ireland theme was
used to advertise Ireland. The use of a branded approach to
marketing Ireland emerged during this time, culminating in
the development of Tourism Brand Ireland ( TBI) . TBI was
adopted by the tourism industry in both jurisdictions and
by OTMI. In 1996, for the first time, an all-island branded
advertising campaign was used to promote holidays to
Ireland in the four main markets i. e. US, Britain, France and
Germany. The Tourism Marketing Partnership ( TMP)
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structure has succeeded the OTMI to facilitate, in a formal
way, co-operation between the public and private sectors in
formulating marketing policies and plans. There is an all-
Island TMP group under the aegis of Tourism Ireland and
individual TMPs in the South and Northern Ireland
operating in association with the tourist boards.
2.3 Tourism Policy
The Components of Tourism Policy
Government policy for the development of the tourism
sector in Ireland has focused on supporting sustainable
growth in visitor expenditure with an emphasis on a wider
regional and seasonal spread of business.
The Agreed Programme for Government 2002, recognises
that the tourism industry will continue to be a vital
industry requiring sustained support and investment in the
coming years . The Programme sets out 10 priority
measures relating to marketing, access transport, product
development and standards, the role of local authorities
and environmental management, the creation of a new
National Tourism Development Authority, and the
construction of a state of the art National Conference
Centre. The Government regards the maintenance of top
class standards and services, and a continued focus by the
industry on value for money, as imperative for the
continuing success of the tourism industry.
Key policy measures in the recent past have supported:
product development: principally through use
of EU funded Tourism and Regional Operational
Programmes and selective fiscal incentives
for investment
overseas marketing: through annual funding from
the Exchequer, together with funding under earlier
EU Operational Programmes for Tourism
human resource development/ training: primarily
focused on the provision of educational, basic
training and recruitment services, in the past largely
funded from EU sources.
Evolution and Trends in Irish Tourism Policy 1980 -2002
The Government White Paper on Tourism Policy 1985 was the
first comprehensive statement on tourism policy in Ireland
and set the following objectives:
To optimise the economic and social benefits to Ireland of the
promotion and development of tourism both to and within the
country consistent with ensuring an acceptable economic rate
of return on the resources employed and taking account of
tourism' s potential for job creation; the quality of life and
development of the community; the enhancement and
preservation of the nation' s cultural heritage; the conservation
of the physical resources of the country; and tourism' s
contribution to regional development.
The White Paper gave rise to a response from the key
industry representative groups. The industry recommended
ambitious targets for the sector which were subsequently
adopted by Government. Since the late eighties, the prime
objectives of national tourism policy were clearly articulated
in successive national partnership development plans, and
within the EU Community Support Framework for Ireland.
Key developments included are set out below.
The Programme for National Recovery 1988 -1993
identified tourism as a major instrument of national
and regional economic and social development and
set out a number of measures to encourage
investment in tourism, including through the
Business Expansion Scheme ( BES) . Initiatives were
also taken at that time to open the airline industry
in Ireland to competition with far-reaching
beneficial consequences for airfares and tourism
numbers subsequently.
The Operational Programme for Tourism 1989 -1993 ,
with EU grant support, resulted in some 980
million being invested in tourism over the period of
the Programme. This was more than the total
investment over the previous 20 years.
The Tourism Task Force 1992 , appointed by
Government, made a number of recommendations
to support the development of the sector including
the liberalisation of the Shannon stop requirement,
greater co-operation between industry and
Government and special initiatives to address
seasonality and product development.
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The National Development Plan 1994 -1999 set out
ambitious growth targets for the industry. Ireland s
competitiveness improved during this period with
economic buoyancy, falling inflation, favourable
currency developments, the further liberalisation of
air service regulations, and an improving political
situation in Northern Ireland.
The Operational Programme for Tourism 1994 -1999 ,
with support from the EU, introduced a number of
measures designed to extend the tourism season, to
secure large scale anchor projects, to develop
cultural and heritage projects, to encourage co-
operative marketing, to build marketing skills in
tourism enterprises and to improve training and
human resource development within the industry.
Bord Fáilte s role was re-defined, following a review
carried out for the Government by consultants
A. D. Little in 1995. The new emphasis was on
international marketing, product development and
strategic research, with the outsourcing of non-core
functions. This in turn led to the development and
launch of the Tourism Brand Ireland project, under
which Ireland was marketed internationally in line
with modern brand practice.
Overseas Tourism Marketing Initiative 1995 was the
first ever all-island destination marketing campaign
structured on a public/ private sector partnership
basis, with funding from the Operational
Programme for Tourism, the public sector North
and South and commercial enterprises.
Tourism Ireland, the jointly funded all-island tourism
destination marketing organisation, was
incorporated in December 2000 as a co-operation
body under the terms of the Agreement reached in
the Multi-Party negotiations concluded in Belfast in
April 1998.
The National Development Plan 2000 -2006 ( NDP)
shifted the prime tourism policy objective from job
creation to sustained foreign revenue earnings with
a growing emphasis on sustainable and spatially
balanced development, reflecting the need to
ensure the benefits are distributed throughout the
country while alleviating any negative
environmental impacts. The NDP included provision
for the first ever multi-annual Tourism Marketing
Fund, with a budget of 190 million over the
period of the plan.
The Tourism Product Development Scheme 2000 -
2006, funded under the two Regional Operational
Programmes, was established with a total budget
of 130 million, including 55m in EU funding,
to support a range of new product developments,
with the emphasis on regional spread, cluster
development, specialist niche market products and
environmental sustainability.
2.4 Industry, Government and European Union Expenditure on Tourism
Capital Investment
Led by the private sector and assisted by EU and Exchequer
funding, spending on tourism-related capital projects
increased substantially during the 1990s. Total capital
spending on physical investment in Irish tourism-related
projects amounted to 4.3 billion over the years 1989 to
1999, according to estimates prepared by the economic
consultants Fitzpatrick Associates. The scale of tourism
investment in physical assets on an annual basis is set out
in Table 2.3.
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Exchequer Expenditure
The current direct annual Exchequer spend on tourism
through the Vote of the Department of Arts, Sport and
Tourism is budgeted at 107 million for 2003.
Approximately 80 million of this budget relates to general
marketing activities, including the administrative costs of
the key Tourism State Agencies. Details of expenditure over
the period 1997 to 2003, in current terms, are set out in
Table 2.4. The substantial increase in Exchequer funding
from 2000 onwards took into account the scaling down in
EU funding after completion of the Operational Programme
for Tourism, 1994 -1999.
Table 2.3 Capital Investment in Irish Tourism 1989-1999 ( m)
Source: Fitzpatrick Associates 1 Investment unallocated by year in 1998 and 1999
Year EU/ International Fund for Ireland Private Sector Exchequer Total
1989 1 105 22 128
1990 14 135 50 198
1991 34 185 76 296
1992 44 193 79 316
1993 41 207 69 316
1994 29 137 42 208
1995 22 151 47 220
1996 34 274 89 397
1997 70 368 240 678
1998 44 532 196 772
1999 31 420 164 615
Other 1 0 91 84 175
Investment 1989-1999 364 2,798 1,156 4,319
% Total 1989-1999 8% 65% 27% 100%
Source: Department of Arts, Sports and Tourism
1997 m 1998 m 1999 m 2000 m 2001 m 2002 m 2003 2 m
Bord Fáilte 33.3 44.8 46.7 57.6 87.0 51.1 46.4
CERT 4.2 4.4 15.0 19.2 21.2 21.0 20.6
National Tourism Development Authority -Fáilte Ireland ------0.6
Tourism Ireland ----1.7 34.0 38.6
Shannon Development 1.3 1.1 2.3 1.2 0.9 0.9 0.9
Total 38.8 50.3 64.0 78.0 110.8 107.0 107.1
2 2003 Estimates provisions -the establishment of Fáilte Ireland in May 2003 will impact on the outturn for the year by Agency
Table 2.4 Tourism Agency Funding from Exchequer
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European Union Investment
EU investment support for tourism under the Operational
Programme for Tourism, 1994 -1999 amounted to
approximately 431 million, details of which are set out in
Table 2.5.
Under the current EU Community Support Framework,
2000 -2006, EU co-funding for tourism is confined to the
Tourism Product Development Measure under the two
Regional Operational Programmes. By mid-2003 no grants
had been allocated to specific projects although
consideration of applications, under an open bid process,
had been well advanced. The Product Development
Scheme provides for 55 million in EU funding under the
European Regional Development Fund over the life of the
Programme.
Industry Investment in Marketing
The ITIC Marketing Expenditure Survey of February 2002
estimated that the Irish tourist industry spent 134 million
on marketing in 2001. The industry spent a total of 35
million on advertising, a further 38 million on promotional
campaigns and brochures with the balance of expenditure
attributed to marketing staff and associated overheads.
2.5 Overview/ Conclusions
Tourism is a major sector of economic and social
development in Ireland. Employment grew in the sector by
more than 70% between 1990 and 2002 a rate of
growth considerably above the 50% growth in
employment generally in the economy over the same
period notwithstanding that general employment growth
was at unprecedented high levels.
The structure of the Irish tourism industry is predominantly
that of Irish-owned small and medium-sized enterprises
( SMEs) in hotels, guesthouses, restaurants, licensed
premises and tourism services and attractions. The industry
has a well-structured representative system that works well
with Government Departments and State agencies in a
generally productive private-public partnership to promote
the development of the industry.
Government involvement in the development of tourism
has been of long-standing duration reflecting the
importance of the industry to national and regional
development and the market failures ( ie. the likely returns
not justifying private sector investment) intrinsic to a highly-
dispersed, small scale industry operating in a sophisticated
internationally-competing services sector. Today, Irish
tourism policy is focused on supporting sustainable growth
in visitor expenditure, with an emphasis on a wider regional
and seasonal spread of business. The fundamental
components of policy encompass:
a Government Department ( the Department of Arts,
Sport and Tourism) which represents tourism within the
general Government decision-making process
Table 2.5 EU Investment in Tourism 1994-2001
Source: Department of Arts, Sport and Tourism
EU Funding 1994 m 1995 m 1996 m 1997 m 1998 m 1999 m 2000 m 2001 m Total
Product Development 6 18 29 47 44 41 46 22 252
Marketing 5 11 13 12 11 11 8 -72
Training 15 16 16 18 19 20 4 -107
Total 26 45 57 76 74 72 58 22 431
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a number of Tourism State Agencies which have
recently been restructured to focus on the overseas
marketing of the island of Ireland and the development
of the sector
a strong regional organisational structure for the
promotion of tourism exercised through the Tourism
State Agencies, the Regional Tourism Authorities and
Shannon Development, County Tourism Committees,
Product Development Management Boards, County
Enterprise Boards and LEADER Groups
a number of evolving partnership arrangements
between the Tourism State Agencies and private sector
representatives of the industry
the periodic statement and re-statement of the vision,
targets and objectives guiding tourism development in
Ireland by the Department and the State Agencies
which operate under its aegis
a range of State fiscal, financial and advisory supports
both Exchequer and EU funded -for the promotion of
tourism operating generally, but not exclusively, under
the aegis of the Department of Arts, Sport and Tourism.
The first comprehensive statement on tourism policy in
Ireland was set out in a Government White Paper in 1985.
Government policy statements have gone through a
number of iterations since then in response to changing
national and international circumstances and the
underlying organisational structures have evolved in
keeping with these changes. This period of more structured
policy development and implementation has coincided
with a substantive take-off in the development of tourism in
Ireland. A number of factors underlie the expansion of
tourism here, including a major international increase in
demand driven by the rising real income levels in many
parts of the world, the falling cost of communications and
transportation and currency developments favourable to
Irish tourism. But it is also reasonable to conclude that
improvements in policy formulation and implementation in
Ireland played their part, as did the entrepreneurship of an
Irish-owned industry rooted in the natural and built
environment, and in the culture and people of Ireland.
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Ireland s Tourism Industry: Overview of Performance
1990 -2002
Visitor numbers to Ireland and tourism
receipts throughout the 1990s grew well
ahead of global trends, benefiting all
regions of the country. Irish tourism gained
market share in most markets in which it
competes. While visitor experience
generally has consistently met or exceeded
expectations for over 90% of visitors, the
perception of good value for money has
fallen significantly in recent years.
3 chapter three
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Summary of Main Conclusions
Visitor numbers to Ireland grew well ahead of global trends throughout the
1990s, increasing by an average of over 7% each year compared with a
corresponding world figure of 4.3% .
In terms of average annual tourism receipts, Ireland' s performance ( 5.8% ) is also
ahead of European ( 4.4% ) and global ( 5.3% ) growth rates over the period
1990-2001.
The best performing source markets for Irish tourism have been the US and
Britain while performance from Germany and France was below average.
Travel to Ireland by those whose main purpose for visiting was a holiday has
grown slightly ahead of the trend in overall visitor numbers.
Irish tourism has increased its market share of visitors from the US, but has been
losing market share from Germany and France and has seen a decline latterly in
its share of an expanding British market.
All regions of Ireland have benefited from the growth of Irish tourism in recent
years, with Dublin and the South West benefiting most while Shannon, the West
and the North West regions have recorded the lowest growth rates.
Domestic tourism remains a bedrock for the Irish tourism industry contributing
almost half of all visitor numbers seeking accommodation in 2002 and
representing a fifth of the overall revenue generated by tourism.
Survey analysis shows that the core tourism appeal of Ireland is characterised by
people, place and pace .
The holiday experience of visitors to Ireland has met or exceeded expectations in
the case of over 90% of visitors.
There has been a significant drop in the perception of good value for money
among visitors in recent years.
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3.1 Tourism Performance Visitor Numbers and Revenue
Overall Performance 1990-2002
Visitor numbers to Ireland grew well ahead of global trends
throughout the 1990s, increasing by 7.3% per annum from
1990 to 2000. This compared with a world annual average
increase of 4.3% over the corresponding period. Because of
Foot and Mouth disease and the impact of the terrorist
atrocities of September 11th, Ireland s relative performance
worsened somewhat in 2001. Table 3.1 illustrates
comparative trends, taking the latest year for which
estimates are available.
Tourism receipts in WTO comparative data are measured in
US dollars and, therefore, reflect exchange rate
movements. In terms of tourism receipts, Ireland' s
performance is ahead of European and global growth rates.
In local currency, Ireland s revenue earnings have grown
ahead of inflation at an annual rate of 9.5% % for the
period 1990 to 2001. As set out in Table 3.2, the increase
in visitor numbers has been the main stimulus to revenue
growth while per capita and per diem visitor spend have
increased more slowly one of the contributing factors
being the significant growth in short breaks in Dublin.
Country of Origin
Total visitor numbers to Ireland increased at an annual
average rate of 5.5% over the period 1990 to 2002. The
British market matched the overall growth rate over the
twelve year period and growth from Mainland European
markets other than Germany and France was above
average. North American visitor numbers also grew by
5.5% per annum to 2002, having achieved a 9% annual
average growth rate up to 2000 prior to the outbreak of
Foot and Mouth disease and the impact of September
11th. German and French growth was below average for
the period, at 4.1% and 3.5% , respectively. The details are
set out in Tables 3.2 and 3.3.
Table 3.1 Average Annual Growth ( % ) in Overseas Visitor
Numbers and Receipts 1990-2001
Source: Fáilte Ireland
Visitor Numbers Tourism Receipts
World 3.8% 5.3%
Europe 3.2% 4.4%
Northern Europe 3.4% 2.3%
Ireland 6.1% 5.9%
Table 3.2 Annual Average Trends in Tourism Performance ( % Change)
Source: Fáilte Ireland
Total Revenue Tourism Visitor Numbers Per capita spend ( per visit) Per diem visitor spend
2002 v 1990 + 9.8% + 5.5% + 4.0% + 3.3%
1996 v 1990 + 10.5% + 7.1% + 3.2% + 3.4%
2002 v 1996 + 9.0% + 4.0% + 4.8% + 3.2%
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Tourism Policy Review Group
Overall tourism receipts are influenced by variations in the
market mix. For example, an above average growth in
visitors from the American market would tend to drive up
average revenue earnings because these visitors generally
stay longer, travel more within Ireland and spend more
than other visitors. Figure 3.1 shows the share of visitor
numbers and revenue attributable to each major market
source in 2002.
Source: Fáilte Ireland
000 Visitors
1990 1995 2000 2001 2002
Britain 1,785 2,285 3,428 3,340 3,452
Mainland Europe 744 1,101 1,435 1,336 1,378
France 198 234 283 280 298
Germany 178 319 319 285 288
Other Europe 368 548 834 771 792
North America 443 641 1,056 903 844
USA 402 587 958 829 759
Canada 41 54 98 74 85
Other Overseas Areas 124 204 261 261 245
Total Overseas 3,096 4,231 6,181 5,840 5,919
Foreign Revenue Earnings ( million) 1,112 1,749 2,824 3,115 3,267
Receipts paid to Irish air and sea carriers ( million) 334 383 813 807 718
Total Foreign Revenue Earnings ( million) 1,446 2,132 3,637 3,922 3,985
Table 3.3 Visitor Numbers and Foreign Revenue Earnings 1990-2002
North America
Other Areas
Mainland Europe
Britain
Source: Fáilte Ireland
Figure 3.1 Share of Visitor Numbers and Revenue
2002 Share of Visitors -5.9 million
North America
Other Areas
Mainland Europe
Britain
2002 Share of Revenue - 4 billion
59% 42%
23% 23%
4% 7%
14%
28%
50
50
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Britain provides the largest number of visitors ( 59% ) and
share of revenue ( 42% ) . The share of revenue accounted
for by overseas visitors, other than from Britain, is larger
than their share of visitor numbers.
Table 3.4 shows that North American visitors have a
consistently very high level of per capita spend in
comparison with Britain and Mainland Europe. As a
consequence any downturn in the American market has a
disproportionate effect on the overall revenue stream.
Purpose of Visit
In examining visitor flows, it is relevant to distinguish
between discretionary and non-discretionary travel. Table
3.5 shows that travel to Ireland by those whose main
purpose for visiting was for a holiday has grown slightly
ahead of the trend in overall visitor numbers.
Total holiday visits peaked in 2000 at 2.5 million, but
slipped back to 2.4 million in 2002 ( the second highest
level on record) . The highest growth rate over the decade
was attributable to business travel, undoubtedly fuelled by
strong economic growth in Ireland. In contrast, the lowest
increase was evident in the numbers visiting friends and
relatives reflecting, perhaps, the fall-off in emigration in
the 1990s.
Overseas Holiday Visitors
Despite the problems encountered in 2001 and 2002,
overseas holiday visitor numbers grew by an average of
more than 6% per annum over the 12 years from 1990.
Holidaymakers from Britain recorded the strongest
growth at 8.3% . North American holiday visitors grew by
9% per annum up to the record performance in 2000.
However, following the setbacks in 2001 and 2002, the
annual average growth rate dropped below 6% . Holiday
visitors from Mainland Europe grew by almost 4% per
annum since 1990 with the major markets, Germany and
France, performing below average at 2.5% % per annum
for Germany and France registering a reduction of 1%
per annum.
Table 3.6 sets out the growth in overseas holiday visitor
numbers, broken down between key source markets.
Table 3.4 Overseas Visitor Spend per Capita ( ) 1990-2002
Source: CSO/ Fáilte Ireland
1990 1995 2000 2001 2002
Britain 237 279 317 362 372
Mainland Europe 425 447 506 610 629
North America 477 545 652 795 840
Other Areas 483 601 684 801 933
Total Overseas 326 386 434 505 522
Table 3.5 Growth Rates in Visitor Numbers by Purpose of Visit
2000 v 1990 2002 v 1990
Total Visitors + 7.2% + 5.5%
Holiday ( main purpose of visit) + 8.0% + 6.3%
Business + 9.8% + 7.5%
Visiting Friends/ Relatives + 5.1% + 4.8%
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