Eoghan O'Mara Walsh: When tourism highlights warning signs, Government must take heed

Irish Examiner

6 days ago

Now that we are in the peak summer season, how is the Irish tourism industry faring?
It's a simple question, but one with a complex answer.
CSO numbers indicated a double-digit tourism decline for the first half of the year, but data released on Wednesday saw a continued recovery of US visitors.
Meanwhile, outside investors continue to vote confidence in the sector — as shown last week when a Scandinavian consortium bought Dalata, Ireland's largest hotel group, for €1.4bn.
Consistent feedback from tourism and hospitality enterprises is that the unprecedented macroeconomic uncertainty and geopolitical upheaval that Ireland is facing is making business owners understandably nervous.
With 70% of the Irish tourism economy dependent on international visitation, the health of overseas source market economies is all-important.
North American business may be strong this summer, fuelled by ever-growing transatlantic services, particularly from Aer Lingus, however other key markets are looking stubbornly soft
Industry leaders are acutely aware of the growing risk of an over-dependence on the US market. That's not a good place to be for any sector. Tourism chiefs want to defend and deepen transatlantic links, but there is a realisation that, with tariff tensions and a weakening dollar, US tourism flows into the future are, at best, unpredictable.
Regional employers
Market diversification is a strategy that Irish tourism has quietly adopted although mining more business from Britain and continental Europe is not an easy task, particularly as those markets struggle with their own economic woes.
Tourism and hospitality is the country's largest indigenous industry, and biggest regional employer. There are more than 250,000 people employed in the sector across 20,000 businesses. Put simply, tourism matters. That's why when tourism leaders highlight warning signs, Government must sit up and take heed.
Ministers have repeatedly said that Ireland's response to the uncertainty around the new global trading order should be to "control the controlables".
Industry bosses are in full agreement. Competitiveness, connectivity, and investment are all within Government's gift, and must be addressed. Budget day on October 7 presents an ideal opportunity.
In terms of competitiveness, all evidence points to a worrying erosion in our standings compared to international peers
Eurostat figures last month ranked Ireland as the second-most expensive country in the EU, with prices 38% higher than the average. Many business costs are State-induced, and Government can start rowing back on some of these impositions.
From a tourism perspective, the Vat rate for hospitality must be restored to 9%, as committed to in the programme for government, and it was good to hear tourism minister Peter Burke restate his support of this last week.
Most tourism and hospitality businesses are SMEs and are labour-intensive, therefore generally operating with tight profit margins. The 9% Vat rate is an important competitiveness measure bringing Ireland in line with its EU peers, and its introduction would ease some of the cost burdens that a vulnerable but viable sector is wrestling with. Ministers need to face down internal hawkish finance mandarins and reinstate the reduced Vat rate on budget day.
Passenger cap
Another key programme for government commitment is the promise to lift the Dublin Airport passenger cap. This should happen in tandem with supporting regional airports, and it is not just Ryanair's Michael O'Leary who is frustrated by Government's prevarication on such a critical issue. As an island nation, it is self-
evident that there are no bridges, tunnels, or roads connecting us to other markets.
Aviation access is fundamental, and as a small open trading nation, having an arbitrary cap at our main gateway is an act of economic self-sabotage.
Connectivity is not just a tourism concern, but has consequences for the wider economy, from exports to FDI
And the case for investment in tourism services in Budget 2026 is surely indisputable. Research by Indecon Economic Consultants for Fáilte Ireland outlines that 29c of every €1 spent by a visitor is returned to the exchequer in tourism-related taxes.
That means the tourism industry contributed €2.9bn to the exchequer last year. And yet annual investment by the State in tourism services is only €251m.
Can any other sector of the economy point to such a return on investment? Industry chiefs are well within their rights to look for a sharp increase in funding to help tourism agencies and businesses navigate the choppy waters that lie ahead.
A new national policy on tourism is expected from minister Peter Burke this autumn. Hopefully it will match the ambitions of the industry. But sustainable growth can only be enabled by pro-tourism and pro-enterprise policies. Control the controllables please, minister.
Eoghan O'Mara Walsh is chief executive of the Irish Tourism Industry Confederation.