12,000 jobs lost as Ireland’s tourism takes a dive

The number of overseas visitors taking holidays in Ireland fell by almost one-fifth in 2009, and about 12,000 tourism jobs were lost, according to the Irish Tourist Industry Confederation.

At the publication of the tourism industry representative body’s end-of-year review, confederation chairman Tom Haughey said the industry had faced “almost insurmountable” challenges in 2009.

While the total number of overseas visitors fell by about 12 per cent this year, the number of visitors coming to Ireland for holidays fell by 20 per cent, Mr Haughey said.

The trend was particularly worrying in respect of visitors from Britain, he said, who account for about one in every two visitors to Ireland. The total number of British visitors fell by 15 per cent to an estimated 3.1 million while the number of British holiday makers fell by 20 per cent to 1.3 million.

“The biggest challenge we face in 2010 is in our largest market, the UK,” Mr Haughey added. “The competitiveness issue is accentuated in the case of the UK by the very sharp declines in sterling and that will be a continuing challenge in 2010, but if their economy recovers, it still offers us a chance.”

The Irish tourism industry had “never been more competitive” in terms of the prices and quality of service offered. However, “the overall economy is not as competitive as it needs to be. The one thing our industry can’t do, it cannot transform the context of prices overall in Ireland.”

In addition to the high cost of goods, food and drink faced by visitors, the industry was still facing high operating costs such as local authority rates and continuing high energy cost, despite cuts earlier in the year. Visitors had a “negative perception” about high prices in Ireland, although there had been significant reductions.

“While Ireland’s rate of price inflation has become more closely aligned with the euro zone average, the absolute level of prices remains high in comparison with many competitor destinations.

“Even allowing for a steep fall in prices and fares to Ireland, many of the goods and services purchased by tourists have continued to rise in price.”

All these factors combined to make it extremely difficult for businesses such as hotels which had had to lower prices, to meet their costs, Mr Haughey said.

“In many cases, in the industry prices are unsustainable as they are below the cost of recovery. The industry is certainly doing its utmost to attract visitors but prices can’t be pushed any lower.”

Tourist Industry Confederation chief executive Eamonn McKeon said the Government had also contributed to the problem by allowing tax incentives for hotel construction to continue when capacity had already been reached.

“There is about 20 per cent excess capacity in hotel beds. There are about 61,000 hotel beds in the country, an overcapacity of about 12,000 to 13,000,” he said.

“A lot of damage was caused by extending the capital allowances for hotel construction. They should have been cut in 2002 as originally planned. We just built too many rooms,” he added.

However, Mr McKeon said the industry was pleased that funding for marketing Ireland abroad had not been cut in the 2010 Budget.

He said the industry was also optimistic about an upturn in visitors in 2010 from markets which were seeing a recovery in their economies such as Britain, the United States, Germany and France. Together those countries accounted for three-quarters of overseas visitors.

Recovery in the domestic market would take longer, he said, but was likely to return in 2011.

“Things are stabilising and we are hopeful, but we’re talking about crawling back, not bouncing back over the next year or so,” Mr McKeon said.