State-backed domestic tourism incentives could unlock €6bn for economy – BPFI

State-backed incentives for domestic tourism could unlock up to €6 billion for the domestic economy and aid the recovery of service-based small and medium enterprises (SMEs), according to a new report from the Banking & Payments Federation Ireland (BPFI).

The latest SME Monitor published by the BPFI, which is a lobby group for banks, lays out the severity of the challenges faced by the accommodation and food-services sector since the onset of the Covid-19 pandemic.

It shows that while the average fall in turnover across all SME sectors between March and October 2020 was 25 per cent, SMEs in hotels and restaurants experienced an average decline of 65 per cent in their turnover during the same period.

The report also highlights that there are 767,000 workers still on some sort of State income support due to the pandemic with the accommodation and food services sector accounting for over one fifth of total State income supports in terms of employment

Asian shares at six-week highs, eyes on Fed, US GDP

---

European shares retreat from record highs

---

Assets in Irish private markets expected to double in five years

---

European shares flat as Volkswagen dips 1.1%

---

The report points out that the Republic’s high rate of gross domestic product (GDP) growth during the pandemic has been down to strong export growth observed in sectors such as pharma and IT, where multinational corporation activity is high.

‘Important role’

Measures that are more related to the actual domestic activity, such as modified domestic demand, show that the Irish economy contracted by about 5.4 per cent in 2020, mainly driven by a 9 per cent decline in personal consumption and a similar decline in investment.

“Tourism plays an important role for the Irish economy as many services-based sectors benefit from the related activity,” the report says.

“It is estimated that during 2019, before the pandemic, non-residents on overseas trips to Ireland spent just over €5 billion in Ireland (excluding fares paid), out of which more than €3 billion was spent for holiday purposes.

“On the other hand, total expenditure by Irish residents on overseas trips for holiday purposes amounted to around €6 billion in 2019 (including fares).

“As all non-essential overseas travel was restricted during 2020, expenditure on overseas holidays is likely to be the major source of some of the savings accumulated during 2020.”

‘Additional savings’

BPFI chief executive Brian Hayes said one of the ways in which the State could get thousands of people back to work is "by encouraging domestic tourism".

“Many consumers may have additional savings available that can be spent on domestic tourism, value for money will be an important factor that will influence their decisions in how they will spend,” he said.

“A new scheme to encourage domestic tourism could be designed to address the value for money concern of the consumers while removing some of the challenges associated with the scheme that was launched last year.”