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    Shaun Quinn, CEO addresses Oireachtas Committee

    Shaun Quinn, CEO addresses Oireachtas Committee

    Statement by Shaun Quinn, CEO of Fáilte Ireland to the Joint Oireachtas Committee on Transport and Communications 

     
    Introduction

    I would like to thank the Chairman and Members of the Committee for providing Failte Ireland with this opportunity to contribute this morning to your deliberations. I am joined today by my management colleagues Fiona Monaghan and Paddy Matthews.
    With the Chairman’s permission, I would like to read a very brief statement offering some observations on the current performance of tourism in Ireland and highlighting some of the work we are undertaking to support its continued development.

    Tourism performance

    Went I last met with the Committee in July of last year, I was anxious to emphasise that we (Failte Ireland) believed that tourism was turning a corner after a number of very difficult seasons. Struggling to survive since the onset of the economic downturn, a growing number of tourism businesses were in recovery and growth mode.  I am happy to confirm that indeed this has been the case and that growth in the tourism sector has been generally quite robust in the last year and the mood in the industry is particularly upbeat just now.

    There are a number of aspects to the recovery taking place. It is driven principally by a recovery in overseas markets, initially, North America and Continental Europe and more recently by an upturn in our fortunes in the British market. The domestic market, on which many businesses are too dependent, is at best flat, not surprisingly, given the ongoing economic adjustment at home.

    The Gathering also provided both a much needed boost and a valuable platform on which to promote Ireland to potential holidaymakers as well as to family and friends living abroad. An independent economic impact assessment of the Gathering has now been completed and gauges the impact to be up to 250,000 additional visitors and generating foreign earnings in the region of €160m-€200m. This is apart from the obvious impact on social capital locally from the 5,000 or so gatherings organised by communities around the country.

    Members may be aware that Failte Ireland has entered into a commitment with the Local Authorities and IPB Insurances to provide a €1 million fund each year for 3 years to support local communities to build on the legacy of the Gathering by continuing to organise key events linking with our Diaspora.

    By the end of last year, some commentators actually believed the success of the Gathering may have pulled business from the 2014 season back into the 2013 season. This does not appear to have been the case judging by the strong performance of most markets so far this year.

    Looking into the near-distance, tourism industry sentiment is buoyant, upbeat and many operators are anticipating further growth this year. There are a number of factors contributing to this optimistic outlook. Largely, it is believed that domestic and global economies are slowly improving with a sense of visitors holidaying more and spending more.

    Three or four times a year, we carry out a major survey of members of the tourism industry to gauge sentiment and views on the health of the sector. The latest Fáilte Ireland Tourism Barometer is now to hand and will be published shortly. It makes for good reading and I will share a few of the more relevant insights with the Committee. 

    According to our Barometer, three quarters (74%) of tourism enterprises are telling us that they anticipate an increase in business in the months ahead. Just to put that in perspective, in 2008 only 14% of respondents were in a position to anticipate any growth. This level of optimism is the highest we’ve recorded since the downturn. Every sector surveyed is relatively upbeat. Positive sentiment is strongest within the hotel sector 8 out of 10 are expecting a better season than last year.

    This optimism is firmly rooted in improved trading conditions around the country so far this year. For example, the majority (62%) of accommodation operators are reporting an increase in visitor volumes compared to the same period last year. Of these, hotels remain the strongest sector, 7 out of 10 respondents reporting an increase.

    As well as visitor numbers, revenues are improving and this is obviously helping the bottom line with about half of respondents reporting an increase in profitability so far this year.

    Other key points from the survey include;
    •        A decent start to the season for self-catering but better to come
    •        Hostels are performing well
    •        Large increase in business expected for attractions
    •        North America strong for golf tourism
    •        Decent improvement in the restaurant trade
    •        Costs (fuel and energy) remain a concern.
    •        Positive factors include: Retention of 9% VAT, the Wild Atlantic Way, the Gathering Legacy and air access.

    We are also seeing the benefits for recovery filtering around the country. Performance in Dublin is strongest as one might expect but compared with previous seasons, most regions this year are experiencing a much better performance.

    This buoyancy in the sector is also being reflected in employment numbers. By the end of last year, it was estimated by the CSO that 137,000 people were employed in the accommodation and food service sectors alone. This represented an increase of almost 14% or 17,300 extra jobs since 2012. This definition is probably too narrow to capture adequately the full breadth of the tourism industry. We, in Fáilte Ireland, would estimate that total tourism employment is approximately 200,000 and could grow by 6,000 to 8,000 more jobs this year on current trends.

    So, in short, tourism revenues and employment numbers are going up but how do we ensure that this momentum is maintained?

    Competitiveness

    There is little doubt but that our ability to recover market share at a faster pace than initially expected comes down, not only to improving market conditions, but also to our improving competitive position. Ireland’s value for money rating as a tourist destination has continued to trend upwards with those visitors who come here. Thankfully that message is also now percolating out to our overseas markets to those yet to come here and Ireland seems to be shaking off the ‘costly’ tag it acquired during the Celtic Tiger era.
    This is due to a combination of sacrifices made by many industry members to get costs down and also due to the relief provided by the Government’s lowering of the VAT rate to 9% which has been crucial to strengthening competitiveness in Irish Tourism.

    The Industry still faces many pressure points – rising utility costs, Local Authority Rates and (for many) debt repayments. As visitor numbers and occupancy levels increase, there will be a tendency for prices to rise as in any free market. In that context we must remain vigilant around value for money relative to our competitors and avoid the failings of the past if we are to sustain our recovery.

    A Deeper Understanding of the Customer

    A second issue facing the industry is maintaining a much deeper understanding of the changing consumer. Tourism and travel is a dynamic marketplace, responding continually to changes in consumer preferences. It’s a market where Ireland cannot afford to stand still. Over the last two years, and in collaboration with colleagues in Tourism Ireland, we have adopted a more strategic approach to identifying and defining those customers overseas who are our best prospects, what experiences they are looking for and how we can provide them.  This new way of targeting growth, based on a new segmentation model for our core markets, has now been embedded into all our plans and very much guides our investment. The Wild Atlantic Way is in part a response to this approach.

    The emphasis of these new models is on customer motivations rather than demographics, so rather than presuming that everyone of a certain age and social class wants the same thing from a holiday, the new model looks at the triggers - why do people take holidays and what they want to feel from that holiday, both during and after.

    This approach targets those groups within our overseas markets with the greatest potential to come here and actively seeks to convert that potential into action. This kind of research-based targeting of customers requires a rigorous disciplined approach – an approach which must be maintained even as numbers improve. Over the past year we have been very active in sharing these insights with our industry partners.  

    Investing for Success

    An added challenge for Ireland, as a relatively small destination on the international stage, is achieving stand out in a very noisy and cluttered market. We believe that this is best achieved with projects of scale and singularity like the Wild Atlantic Way which can capture the imagination of targeted consumers and resonate with their needs and motivations.

    This is something our Local Authorities along our west coast are supporting as we roll out the Wild Atlantic Way concept. With their help we have managed to complete our signage programme for what is now the longest themed touring route in the world. Next, we will put in place a large number of Discovery Points and associated touring facilities with a specific grant allocation announced in last year’s Budget. 
     
    Businesses and communities along the West Coast are very excited by this development as it provides a mechanism to reposition the west of Ireland in a way which meets the needs of specific consumers in our core markets. The marketing of the Wild Atlantic Way is a priority for our Tourism Ireland colleagues this year and I know the initial feedback from the overseas trade has been extremely encouraging
     
    In a similar fashion, we are currently taking a fresh look at Dublin and how it is packaged and marketed. This year we are also developing a network of discovery trails throughout the city to open it up in a more authentic and interactive way. We are also working with the wider county of Dublin and the local industry to offer a much sought after City Plus experience.
     
    As with the Wild Atlantic way in the west, we are also scoping a new proposition for the East and South of the country based on the rich array of cultural and heritage assets from the North East and midlands all the way down the South East and to Cork City. This comes on foot of substantial investments we recently made in Kilkenny, Waterford and Cork to name but a few.

    Fáilte Ireland has played the leading role in driving significant investment into the tourism sector over the last five years – with a total of €120m invested in almost 60 significant capital projects throughout the country. This year alone, thanks to Government funding in the last Budget, we are investing €8m in capital infrastructure along the Wild Atlantic Way.

    I say ‘investing’ not ‘spending’ as this expenditure is necessary to ensure that Ireland’s appeal remains strong and that we are providing the right experiences for those visitors we need to target. The return on such investment is ensured through increased visitor numbers.

    As things improve in the sector, it might be tempting to ease up on such investment. However, our competitors in other overseas destinations are still out there and we need to ensure that we continue to invest – and invest wisely – in our tourism product if we are to compete and earn our ‘unfair’ share of the pie.

    Irish Tourism Online

    As I already indicated, we live in a rapidly changing world and, I would argue, that the travel sector has been in one of those areas of industry most radically changed by new technology.  Developments in digital marketing and selling continue to transform the manner in which consumers consider and choose a holiday destination. Not surprisingly, our competitors in other destinations continue to invest in this area. This is where Ireland must invest also as there is a widely held view that Ireland’s entire tourism offering is not presented comprehensively within the increasingly important digital channels.

    The primary objective of Failte Ireland’s digital strategy is to assist tourism businesses to exploit the most up to date consumer intelligence and understanding in order to deliver the most appropriate messages through the right channels, in a way which increases Ireland’s international visitor numbers and revenue.
    Given the rapid pace of innovation and development in the digital landscape, we are driving a programme of digital ‘insight development’ with the explicit purpose of enabling a step change in the digital performance of the tourism industry.

    Conclusion

    In conclusion Chairman, Failte Ireland shares the optimism currently pervading the tourism industry but we are not complacent. We are focussing on areas which we believe will further grow visitor numbers and we are confident that if the sector continues to maintain the current balance of quality and value which it provides that we can sustain further growth.

    Tourism can provide economic growth, revenue and jobs with a spatial and regional spread unlike most other sectors. It provides employment in areas where foreign direct investment can’t. As many of you know, from your own constituencies, what is good for tourism is good for Ireland. We in Fáilte Ireland will be doing our best to ensure that things get even better.

    Thank you.

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