Warning that tourism in Ireland at 'tipping point'

RTÉ News​

3 days ago

The Irish Tourism Industry Confederation (ITIC) is calling for the lifting of the Dublin Airport passenger cap, increased Government spending, as well as the restoration of the 9% hospitality VAT rate in order to boost tourism in the country, which it said is at a "tipping point".
In its Budget submission, the ITIC warns of "double-digit" declines in tourists coming to Ireland and that the country is overdependent on US visitors.
"2025 has been a challenging year," said ITIC chief executive Eoghan O'Mara Walsh. "The North American market has been strong... but other markets, unfortunately, are soft - Great Britain, Continental Europe and even the domestic market are soft."
In order to address this, the confederation - which represents 20,000 tourism and hospitality businesses - wants to see annual Government spending on tourism services increased by €90 million to around €340 million.
This funding, it said, would support a market diversification strategy to reduce the reliance on American tourists. That would include looking to boost the number of visitors coming here from the likes of Britain and Germany.
Mr O'Mara Walsh said Ireland will not be able to compete on price with the likes of Mediterranean countries, but it must work to maintain its value.
"Eurostat came out with figures just last month which showed that Ireland was the second most expensive country in the EU - so that obviously finds its way through to restaurant bills, pub bills, hotel bills," he said. "What's key is that we maintain our value proposition and, thankfully, the surveys to date... says Ireland still maintains its value proposition, but it's certainly under pressure.
"It's vital that we, as an industry, maintain the quality of our product," he stressed.
One thing ITIC feels will help to achieve that is the reduction of the hospitality VAT rate to 9%, with that cut extended to visitor attractions and adventure operators.
The Programme for Government pledged such a move but doubt has been cast on it recently, in large part due to the growing uncertainty around the direction of the global economy and the health of Ireland's exchequer finances.
"If you talk to tourism businesses up and down the country, costs of business are the big recurring feedback," he said. "Whether that's utilities or energy, or labour or insurance - costs of business are really squeezing margins.
"The VAT rate at 13.5% is one of the higher VAT rates for tourism services across the whole of the EU."
The Department of Finance has projected that such a cut would cost almost €870m a year, while critics have pointed out that many firms that would benefit are already in a healthy trading position and do not need such support.
However Mr O'Mara Walsh said a VAT cut was the easiest way to support a sector was through a VAT cut - though he also would not oppose any attempt to focus the change on specific businesses.
"I have no problem if Revenue want to take the McDonald's chains out of the equation and just focus on home-grown tourism and hospitality businesses," he said. "But I think the thing to remember is that margins in this sector are really, really squeezed - we're a labour intensive business, we operate on very thin margins".
"When demand is so mixed, and when the outlook is so uncertain, we need as much help as possible," he said.
In relation to the passenger cap at Dublin Airport, the organisation notes that 70% of the tourist economy is dependent on international visitors.
The cap limits the number of passengers travelling through the airport terminals to 32 million a year.
The ITIC is calling for this limit, which is included in the Programme for Government, to be lifted and said this "should happen in tandem with supporting the regional state airports of Cork and Shannon".