I would like to thank the IHF for inviting me here today to make this address at the Third Irish Hotel Investment Conference.
Your President, Stephen McNally, Chief Executive, Tim Fenn, and all those involved in organising today’s event, have put together a very topical agenda and impressive panel of expert speakers.
As you consider the next steps for your own businesses and for the Irish hotel sector generally, I just want to outline briefly the ways in which the Government is supporting the tourism and hospitality industry; how this has led to improved performance and prospects; and how we can all play our part in ensuring continued success for the industry into the future.
GOVERNMENT SUPPORT FOR THE TOURISM SECTOR
When this Government came into office in 2011, it identified the tourism and hospitality as a key sector in Ireland’s overall economic recovery and committed itself to various actions to support the sector, rebuild competitiveness, grow business and increase employment.
Reducing VAT on tourism services has enhanced the competitiveness of the industry.
This measure has been complemented by a radical change in our approach to visitors from developing markets through the Visa Waiver Programme, as well as further positive developments in the broader visa regime.
With specific regard to investment, in the 2013 Budget we extended the Employment and Investment Incentive Scheme (EIIS) to allow the participation of tourism accommodation and also confirmed that hotels and tourism accommodation could be held as Rental Investment Assets by Real Estate Investment Trusts (REITs).
This was extended for another three years in Budget 2015.
Such efforts provided an ideal context for promoting the Gathering in 2013 when we succeeded in increasing tourist traffic and growing revenue.
The zero rating of the Air Travel Tax, announced in Budget 2014, has also had a welcome impact in terms of additional capacity on many existing routes, as well as the introduction of over twenty new services.
I am confident that the Government’s decision to maintain the 9% VAT rate in last year’s Budget will further enhance our competitiveness as a tourist destination and support growth into the future.
Of course, as well as helping boost tourist numbers, I would like to think we played our part in increasing the number of wedding bookings that hotels will get in the coming years, thanks to our successful referendum campaign!
TOURISM PERFORMANCE AND PROSPECTS
The combined efforts of Government, the tourism agencies and the industry have had a very positive effect on tourist numbers, associated revenue and overall employment in the sector.
Inbound tourism to Ireland continues to perform strongly. In 2014, 7.6 million overseas visitors travelled to Ireland – an increase of almost 9% on the previous year. 2014 was a record year for visitor numbers from many of our top source markets, delivering an estimated €3.5 billion in overseas revenue, helping to drive economic renewal and support over 200,000 jobs in communities right across the country.
We have now seen four consecutive years of tourism growth, with overseas visits in 2014 a full 26% higher than in 2010.
The outlook for 2015 is very positive with early data showing that overseas visitors to Ireland have grown by +14% in the first quarter of this year.
Tourism Ireland’s market research indicates that the outlook for the rest of 2015 is good and sentiment among overseas partners remains positive. Enquiries and bookings so far this year have been generally ahead of, or on par with, 2014.
This points to a busy summer season ahead, aided by favourable exchange rates in some key markets and increased air access capacity for the summer. In fact, it is anticipated that 2015 will be the best year ever for tourism to Ireland, surpassing the previous record year of 2007.
These figures have translated into increased business for tourism providers and provisional figures for 2014 show room occupancy is up across all accommodation stock when compared to the previous year. Hotels are up from 61% to 64% and Guesthouses from 52% to 60%.
There is increased optimism in the sector and recent research by Fáilte Ireland indicates that 80% of hotels expect increased business this year. Back in 2008 only 14% of all tourism businesses were similarly optimistic and even as recently as 2012 that figure was just 48%.
Carriers have also increased capacity in air and ferry services and the perception of Ireland as a destination that provides good value for money has improved considerably.
COMPETITIVENESS AND VALUE FOR MONEY
Giving the tourist a good value for money product has been key to this turnaround. Perceptions of poor value are very damaging and can endure long after prices adjust down again.
We shouldn’t forget just how badly our visitors’ view of value for money deteriorated over the past decade, when rising prices combined with unfavourable exchange rates in some markets made a holiday in Ireland seem much more expensive than in many competitor destinations.
As recently as 2009, over two fifths (41%) of visitors surveyed found Ireland to be poor or very poor value for money. This negative legacy has proved particularly challenging in the British market, where the memory of Ireland’s poor value remained long after the situation improved.
Thankfully, huge strides have been made in this area in recent years. Ratings of poor or very poor value for money are falling, with only 6% finding Ireland to be poor or very poor value for money in 2014. This has greatly assisted the growth in visitor numbers and expenditure.
However, we cannot become complacent – we want every visitor to feel they are getting good value here. Following a long, hard battle to restore Ireland’s competitiveness and regain trust internationally as a good value destination, we MUST continue to offer quality, good value, memorable hospitality to our tourists.
Satisfied tourists will encourage further visitors to come and will themselves return.
It is also vital that we provide the services that the tourist wants. For example, we learned in the recent difficult years that accommodation capacity needs to be delivered where the market demands it.
Capacity in the wrong place or of the wrong kind is simply a misallocation of resources – and we must ensure that whatever we do, we do not create conditions for such misallocation.
THE TIME IS RIGHT FOR INVESTMENT
Notwithstanding the need for a competitively priced sector, it is definitely a great time to invest in Irish hotels and guesthouses. The increasing numbers of sales and prices paid are evidence of that and I am heartened at the strong representation by Banks and other finance providers today as evidence of their recognition of the potential that exists in the sector.
The journey the tourism industry has taken since 2008 is remarkable and none more so than in the hotel sector.
Although there remain issues with debt overhang, the overall picture is of a restructured, revitalised industry that is growing again and in terms of turnover and profits.
TOURISM POLICY STATEMENT
The Government’s remains very committed to supporting this growth and further development of Ireland’s tourism sector and this is reflected in the new Tourism Policy Statement which the Taoiseach and I launched in March.
“People, Place and Policy – Growing Tourism to 2025” represents the Government’s commitment to supporting the continued growth of tourism as a source of export earnings, as a source of economic growth, and most importantly of all, as a source of additional employment across every county in Ireland.
The strategymarks the beginning of a new chapter in the story of Irish tourism, and provides a framework for the tourism industry to thrive in a changing global tourism marketplace.
The three headline targets of “People, Place and Policy – Growing Tourism to 2025” are that:
- Revenue from overseas tourism will rise from €3.3 billion in 2013 to €5 billion per year by 2025 net of inflation,
- There will be 250,000 people employed in tourism by 2025, compared with approximately 200,000 at present, and
- We will attract ten million overseas visits to Ireland by 2025, compared to 7.6 million in 2014.
We have looked at Irish tourism through this lens of People and Place, and devised a Policy that builds on our innate strengths as a tourism destination, while preparing ourselves for the challenges that the future will bring.
These focused objectives will assist in the efforts of Government, the tourism industry, Local Authorities, and the wider community, to work more effectively together in the development of Irish tourism.
However, a Policy is only useful if it can be implemented effectively.
To this end, I will shortly announce the membership of a Tourism Leadership Group, which will oversee the creation of an initial three-year Tourism Action Plan for the period up to 2018, which will set out the actions necessary to achieve the policy priorities in the Tourism Policy Statement.
Subsequent three year action plans will be put in place for the period up to 2025.
CONCLUSION
The combined efforts of Government and Industry have succeeded in restoring Ireland’s competitiveness and reputation as a good value holiday destination, growing visitor numbers and expenditure and setting the stage for continued good performance as we enter the peak tourism season.
As Minister with responsibility for tourism, I want to build on recent improvements in performance and maximise opportunities for further growth.
On the commercial markets, now is a good time to invest in hotels. Banks and other financiers should be aware of the turnaround in tourism and of the investment opportunities arising.
With rising demand for hotel accommodation, capacity is increasing again – particularly in Dublin. Indeed, analysis of recent trends and future demand indicates that we will require additional capacity.
Given the kind of timelines which major developments, such as hotels, require, if we are to meet our ambitious targets for tourism in Ireland and especially Dublin, then we need to see steps being taken to deliver additional capacity soon.
Specific Government tourism initiatives are also generating good momentum, with good returns for those willing to capitalise on such momentum and invest in the sector.
This year, with the development of the Wild Atlantic Way, Ireland’s Ancient East and the Grow Dublin Taskforce propositions, there are opportunities available for hotels and other businesses right across the country.
The hotel sector has weathered profound changes in its structure, ownership and finances but proved resilient and resourceful through it all. You have demonstrated your commitment to meeting the changing needs of the international and domestic tourist in an evolving marketplace.
And your presence here today indicates you are ready to consider possible investment opportunities as part of your own future.
Thank you all for the important part you play in our overall tourism industry.
I trust you share my confidence and optimism for the future of the Irish tourism and hospitality industry and feel well equipped and supported to make the most of the opportunities ahead.
Ends