Irish tourism body wants action on sterling rate

American tourists could be tempted to visit London and Scotland rather than the State as sterling loses value while UK visitors may find it too expensive to holiday here, a tourism group has warned.

The impact of Brexit represents a significant threat to Ireland's booming tourism sector, prompting calls to ramp up marketing budgets, maintain VAT rates and guarantee value for money.

The Irish Tourist Industry Confederation (ITIC) lobby says Brexit's "two-pronged challenge" – making the UK cheaper and Ireland more expensive for British tourists – requires a swift and decisive response.

In its pre-budget submission on Sunday, the group said the effects of the referendum are already being felt. “The cut of interest rates in the UK last Thursday, the first since 2009, saw a further fall in the sterling versus euro [rate] coming to a 12 per cent drop in recent weeks,” it said.

Government policy

As regards Government policy on tourism – outlined in

People, Policy & Place; Growing Tourism to 2025

– it said setting a target of €5 billion annual revenue from 10 million overseas tourists by 2025 was “not ambitious enough”.

“Given current performance, this would mean an average annual growth rate of less than 2 per cent to reach the revenue target.

“CSO figures show us that international tourists now spend €4.2 billion per annum while staying in Ireland; the idea that as a country we should be aiming to hit only €5 billion by 2025 is not an appropriately stretching target.”

Tourism was worth €7.3 billion to the economy last year with €1.8 billion delivered in taxes. There has been a 13 per cent growth in visitors for the first six months of this year.

Restore budgets

The industry employs 227,840 people. By 2019, Ireland expects to have about 11 million visitors a year up from 8 million today. Projections are positive, but the ITIC says steps must be taken to guard growth. It is asking the Government to restore marketing budgets which it says are down €20 million since the recession took hold.

The retention of the tourism VAT rate of 9 per cent is crucial. "I think it's the right size. It can't be a budgetary issue every year," said ITIC chairman Paul Gallagher. "The Great Britain market represents 42 per cent of all our overseas visitors. That's very significant. If that was to be reduced by 10 or 15 per cent that's about half a million and that makes things quite difficult."

The fall in the value of sterling makes things seem more expensive here, Mr Gallagher said. “That may cause a ripple effect where people won’t programme a [lengthy] stop in Ireland. They may spend longer in the UK with one or two stopovers in Ireland [instead],” he said. “We are always competing and we have to be mindful of that, which is why good value for money is important.”

In the last two years, the UK has seen North American visitor numbers drop from 4 million to about 2.5 million while, at the same time, the number visiting Ireland increased from about 900,000 to 1.6 million.

Many UK visitors arrive here by ferry, bringing revenues to Waterford and Cork, and travel around by car.

UK visitor numbers “softened” slightly in July, by up to 3 per cent, this may have been caused in part by the Euros, as well as uncertainty at home following the EU referendum. The true impact will only become clear from the autumn.