We are getting tourists - just the wrong kind

The year 2000 was a record year for tourism in Ireland. The halcyon days before the technology downturn, foot-and-mouth disease and the attacks on New York, brought a record 5.9 million foreign visitors to these shores.

In 2001 the figures were down only 5 per cent and this year they are expected to crawl back up a point or two towards the levels of 2000. So why is the tourist industry clamouring for reductions in VAT and Government support for marketing while using expressions like "2001 was a difficult year"? The answer is because the numbers of visitors who come to Ireland masks the change in the type of visitor. Over the last two years the British market has performed strongly, home holidays also. But these two segments should not be confused with the high spending, long-staying Americans or even the environment-conscious Germans and Italians.

In the absence of Central Statistic Office figures for even the first half of this year, the Bord Failte Tourism Barometer is a good place to start looking at the health of the industry.

The overall picture seems to be that a fall is being reported for all markets, with the key North American market recording the most pronounced decline, followed by mainland Europe. This follows 2001 in which the high spending US visitors fell by 14 per cent and the Germans fell by 10 per cent. The British market is holding up but growth in this market has not offset the decline in North American and European business.

Faced with a cumulative drop in North American visitors the industry has been making strong recommendations to the Minister for Finance Mr McCreevy for Budget Day.

According to Mr John Power of the Irish Hotels Federation there is a need to harmonise VAT and energy costs with our European neighbours. Mr Power accepts, however, that the industry cannot simply wait until the airline's produce more business for it, while the Government reduces charges. The future, he said, was "quality, access and competitiveness".

Competitiveness has upset the Europeans particularly. Inflation since 1996 has been in the order of 7 to 8 per cent in Germany - in the Republic it has been about 21 per cent. Indeed there is much anecdotal evidence from German visitors that they come here for the environment, but can go to the wilds of Canada just as cheaply.

The downturn in key visitors to the Republic has also coincided with an increase in operating costs, particularly staff and insurance, according to commentators.

Mr Brendan Leahy of the Irish Tourist Industry Confederation, in the industry's submission to Minister McCreevy, called for steps to be taken to tackle the insurance industry's cost base - a factor which any industry would happily endorse. But Mr Leahy has also called for VAT on tourism services to be reduced to 10 per cent.

The competitiveness element of the industry's submissions seems to be based on reducing its own costs - albeit reductions the industry has promised the Minister would be passed onto consumers. Whether he believes this promise we should know on Budget day.

The Minister's does seem to accept the industry argument that there are more Americans out there who are willing to come to Ireland, a fact emphasised by the support for marketing he signalled with publication of the Estimates.

Aer Lingus appears to believe there are more Americans available, relisting Baltimore as one of cities it will service next year.

The Minister certainly has much to ponder, however, as what is good for tourism is undoubtedly good for him. Out-of-State tourism represents between 5 and 6 per cent of Gross National Product (GNP) - or more than ?2 billion in taxes last year.

Tomorrow in our Budget Countdown coverage: Agriculture