New Horizons for IrishTourism · 2019. 8. 1. · 5 A STRATEGY FOR IRISH TOURISM 2003-2012 Summary of Main Conclusions 64 5.1 The Components of a New Tourism Strategy 65 5.2 Inter-dependency

New Horizons for Irish Tourism

Report of the Tourism Policy Review Group to John O’Donoghue T.D. Minister for Arts, Sport & Tourism

An Agenda for Action

September 2003

Report of the Tourism Policy Review

Group

New

Horizo

ns fo

r Irish To

urism

9 780755 71 7804

ISBN 0-7557-1780-5

I

Dear Minister

I have the honour to submit to you, on behalf of the

Tourism Policy Review Group, our Report on the Review

of Irish Tourism. We have completed the Review under the

title New Horizons for Ir ish Tourism: An Agenda for

Act ion. The Report has been completed in accordance

with the terms of reference you provided to us.

Yours sincerely

JOHN TRAVERS

Chairman30th September 2003

Report of the Tourism Policy Review Group toJOHN O’DONOGHUE T.D.

Minister for Arts, Sport & Tourism

Tourism Policy Review Group

II

Irish tourism has been a major success story - perhaps themost successful sector of Irish-owned enterprise since thefoundation of the State. Its contribution as a major source offoreign earnings with a low import content, as a powerfulinstrument of national and regional development and as asource of entrepreneurial opportunity has not always beenfully acknowledged and recognised.

The Review Group draws attention to a number ofimportant facts about the tourism industry in Ireland.Employment in tourism over the past 10 years, has increasedat a faster pace than even the unprecedented high rates ofemployment increase in the economy generally over thatsame period. Today the sector employs more people than thetotals employed in either Irish-owned or foreign-ownedmanufacturing industry. Tourism is by far the largest, Irish-owned, internationally-traded services sector in the economy.It is a sector firmly rooted in the natural and builtenvironment and in the people and culture of Ireland. As aproduct, therefore, it cannot relocate to another country. But,by the same token, its customers, both domestic andoverseas, can. International analyses indicate that, despite thepost-2001 slowdown, the future prospects for internationaltourism over the next 20 years are good and similar to thehigh growth rates of the previous 20 years.

It is not certain, however, that despite the strongopportunities, Irish tourism will, over the next 10 years, enjoythe same growth and success as it has over the past decade.The sector is at a significant turning point in its development.Competitiveness has been lost in recent years. A certaincomplacency, the fruit, partly of success, has set in across manyparts of the industry. And this is happening at a time when theexpectations and requirements of the potential customers ofIrish tourism have become more demanding and when thealternative choices of high visitor attraction and good valuefor money available to them have greatly increased.

Preface

John TraversChairman

III

It is, therefore, certain that the policies and actions thathave delivered strong performance in Irish tourism in the pastwill not suffice to do so in the future. The way in which thechanges now required are anticipated, managed and put inplace will determine the future success of Irish tourism as asector of investment opportunity, innovation and enterpriseand as an instrument of Government development policies.

Regaining the competitiveness lost in recent years iscentral to the new strategy for the development of Irishtourism set out in this Report. This is the fundamentalchallenge which the industry itself must face and overcome.

There are also important challenges for the Government– none more so than the recognition through relevant,practical and systematic actions of the central role that thetourism industry plays as a major instrument of national andregional development. This will only come about if the scopeof tourism policy formulation and implementation isextended beyond its traditional ambit to encompass all areasof Government policy that impact in a significant way on thedevelopment of tourism.

The Report of the Review Group acknowledges andarticulates the constructive and positive role which tourismpolicy has played in supporting the significant growthachieved by the industry over the past decade and more.It concludes, however, that the major international anddomestic changes affecting Irish tourism at the present timeand those anticipated in the foreseeable future, now requireurgent and fundamental changes in the policies and actionsof both the Government, and of the tourism industry itself,if the success of the industry over the past decade is to bereplicated in the future.

This Report, therefore, sets out a new strategy for Irishtourism which is comprehensive, coherent and challengingfor the industry itself and for Government. We believe that ifit is followed through to implementation with conviction,energy and commitment that it will make a real and lastingcontribution to the development of Irish tourism in the yearsahead and to the complementary objectives of national andregional development.

I wish to record my appreciation and thanks to mycolleagues on the Review Group for the individual talents,wisdom and contributions they brought to the work anddeliberations of the Group. I want to express the thanks ofthe Group to Mary Jackson for her commitment and

professionalism as Secretary to the Group and to hercolleague Gráinne Ní Néill for her dedication and support. Ialso wish to extend our appreciation to Malcolm Connolly,Deirdre O’Keeffe, Brian Maher and Eileen Gallagher of FáilteIreland and to Mark Henry of Tourism Ireland who providedmuch of the analytical and administrative support underlyingthe work of the Review Group.

Finally, I would like to thank John O’Donoghue,Minister for Arts, Sport and Tourism, for the opportunityafforded to the Review Group to make a contribution to thedevelopment of such an important sector of national andregional development and to the Secretary General of theDepartment, Philip Furlong, for his support and advice.

John Travers

Chairman30th September 2003


IV

Members of the Tourism Policy Review GroupJohn Travers(Chairman)former Chief Executive Forfás

Patrick O’DonoghueManaging DirectorGleneagle Hotel

Paul BatesAssistant SecretaryDepartment of Arts,Sport and Tourism

Shaun QuinnChief ExecutiveFáilte Ireland

Brian PattersonChairmanThe Irish Times

Peter CassellsExecutive ChairmanNational Centre forPartnership andPerformance

Gillian BowlerBusinesswomanand Chairman ofFáilte Ireland

V

Niall Reddyformer Acting ChiefExecutive Bord Fáilte

Paschal TaggartFinancial Advisor

Frank RocheAcademicSmurfit Graduate Schoolof Business

Mary JacksonSecretary to the Group

Tony KellyMarketing DirectorIrish Ferries

Pat McCannChief ExecutiveJurys Doyle Hotel Group plc

Paul O’TooleChief ExecutiveTourism Ireland


VI

Chairman’s Letter to the Minister IChairman’s Preface IIMembers of the Tourism Policy Review Group IVContents VIExecutive Summary VIII

1 TOURISM WORLDWIDE – AN OVERVIEW

Summary of Main Conclusions 4

1.1 A Global Industry 51.2 The Underlying Forces Driving Worldwide Tourism 61.3 Key Trends in International Tourism and Travel 71.4 Recent Performance 71.5 Future Prospects and Determinants of Growth 91.6 Tourism and Government Policies Internationally 101.7 Overview/Conclusions 10

2 IRELAND’S TOURISM INDUSTRY: ECONOMIC CONTRIBUTION,STRUCTURE AND POLICY


2.1 Tourism’s Contribution to Economic, Social and Regional Development 152.2 The Structure of the Tourism Industry 162.3 Tourism Policy 192.4 Industry, Government and European Union Expenditure on Tourism 202.5 Overview/Conclusions 22

3 IRELAND’S TOURISM INDUSTRY: OVERVIEW OF PERFORMANCE 1990-2002


3.1 Tourism Performance – Visitor Numbers and Revenue 293.2 The Irish Tourism Experience 363.3 Overview/Conclusions 38

4 TOURISM IN IRELAND TODAY - AN ASSESSMENT


4.1 Foundations for Future Success 434.2 Competitiveness and Value for Money 444.3 Product Development 484.4 Access Transport 514.5 The People in Tourism 544.6 Marketing and Promotion 554.7 Wider Issues Affecting Tourism Growth 574.8 Tourism Policy Formulation and Implementation 584.9 Overview/Conclusions 59

Contents

5 A STRATEGY FOR IRISH TOURISM 2003-2012


5.1 The Components of a New Tourism Strategy 655.2 Inter-dependency of Activities - A Defining Characteristic of Irish Tourism 655.3 A New Vision for Irish Tourism 655.4 Irish Tourism – Forces of Change 665.5 Strategic Targets for Irish Tourism 2003-2012 675.6 Future Drivers of Success 715.7 Flexibility/Agility 795.8 Decision-Making Framework 795.9 Overview/Conclusions 80

6 IMPLEMENTING THE STRATEGY – THE ACTIONS REQUIRED

6.1 Translating Strategy into Action 836.2 Action Plan 2003-2005 84

Actions to Improve the Business Environment for Tourism Operators 85Actions to Improve Competitiveness and Value for Money 89Actions to Improve Access Transport 92Actions to Improve the Use of Information and Communication Technologies 95Actions to Support Product Development and Innovation 97Actions to Support Marketing and Promotion 101Actions to Support Human Resource (People) Capability 104Actions to Support More Effective Government Leadership andInterventions in Promoting Tourism 106Actions to Improve the Quality of Information, Intelligence and Research 109Implementation Arrangements 110

Appendix A - Background to Establishment of Review Group and WorkingProcedures

Appendix B - Terms of Reference

Appendix C - List of Written Submissions

Appendix D - Tourism Policy on the Island of Ireland

Appendix E - Other State Bodies with Functions Associated with theDevelopment of Tourism

VII


VIII

1. Tourism Worldwide – An Overview

International tourist numbers will double over the next 20years but the profile and requirements of customers arechanging rapidly and competition is becoming more intense.

1.1 The growth in international tourism has been one ofthe most remarkable economic and social phenomenaof the past century. 700 million international trips arenow made worldwide each year. Tourism is a majoreconomic sector generating over €500 billion in annualreceipts, sustaining in excess of 70 million jobs andaccounting for almost 4% of global GDP. The industryhas outpaced general economic growth, since 1975, bya factor of 1.3. Tourism growth has been driven by anumber of key factors, including economic wealth,mass communication, affordable travel (especially byair), availability of leisure time and the travelopportunities opened up by new technologies.

1.2 After a prolonged period of uninterrupted growth,tourism has stalled over the past two years. As ofautumn 2003 it is recovering slowly from the post-2000global economic downturn, terrorism, the war in Iraqand the impact of the SARS virus. And future prospectsare good. According to World Tourism Organisationprojections, the number of international arrivals isexpected to double over the next 20 years to almost1.6 billion – a rate of growth in tourism similar to thatof the past 20 years. While current economic conditionsand uncertainties may continue to depress demand in

the immediate future, travel and tourism is firmlyestablished in the lifestyle and discretionary spendingpattern of the developed economies pointing to aneventual resurgence in demand.

1.3 In common with all internationally traded services,global tourism is experiencing significant change. A vastarray of product offerings are becoming available,encompassing traditional leisure pursuits, newentertainment and retail complexes, simple back-to-nature and health-related activities, cultural andheritage experiences and combinations of differentproduct offerings. Many new tourism destinations areopening up providing increasing choice to customers.Easy access to these destinations is becoming commonplace and cheaper. Customer characteristics arechanging rapidly including shorter and more frequenttrips, greater use of e-commerce, later bookings, moretailored holiday experiences and growth in the olderpeople share of the market. Tourism will, in future, beincreasingly demand driven with greater emphasisbeing placed on value for money, personal fulfilment,unique experiences, authenticity, emotionalinvolvement and travel convenience.

1.4 In general, tourism policy internationally is being givenincreased weight and emphasis in the range ofGovernment policies aimed at national and regionaldevelopment.

2. Ireland’s Tourism Industry: EconomicContribution, Structure and Policy

Irish tourism is a major economic sector of enterprise, andof national and regional wealth creation. The industry atpresent generates €4 billion in foreign revenue earnings,supports 140,000 jobs and is by far the largest, Irish-owned internationally-traded sector of the Irish economy.

2.1 Tourism is highly important to the Irish economy. Itdelivers the following major benefits

Benefits of Irish Tourism

• €4 billion in annual foreign earnings

• €1 billion in annual domestic earnings

• 140,000 jobs

• Up to €2.2 billion in tax receipts each year

International Tourist Arrivals

Source: World Tourism Organisation (WTO)

AfricaMiddle EastSouth Asia

EuropeAmericasEast Asia/Pacific

1950

800

(m)

700

600

500

400

300

200

100

0

1960 1970 1980 1990 2000

Executive Summary

IX

• 4.4% of GNP

• A major instrument of national and regionaldevelopment

• A sector of major opportunity for Irish-ownedenterprise

Employment grew in the sector by more than 70%between 1990 and 2002 - a rate of growthconsiderably above the 50% growth in employmentgenerally in the economy over that period. To put theannual foreign revenue earnings of €4 billion fromtourism in perspective, it is equivalent to more than50% of the total value of exports by Irish-ownedmanufacturing industry or more than twice the value ofexports of Irish-owned internationally-traded services.

2.2 Tourism embraces a wide range of businesses andservices in thousands of enterprises, predominantlyIrish-owned and small and medium in size, distributedthroughout the country. It is a complex, diverse sectorof economic activity. It has a well-structuredrepresentative system which works with GovernmentDepartments and State Agencies in a productivepartnership arrangement to promote the developmentof the industry. However, notwithstanding its size andwell-established representative structures, the sector hashad difficulty in ensuring that the value of its economicand social contribution is fully acknowledged atGovernment level and more widely.

2.3 Government involvement in the development of tourismhas been of long-standing duration. This reflects theimportance of the industry to national and regionaldevelopment and the market failures (i.e. the likelyreturns not justifying private sector investment) intrinsic toa highly-dispersed industry made up of small andmedium sized enterprises operating in a sophisticatedinternationally-competing services sector. Today, thefocus of Irish tourism policy is on supporting sustainablegrowth in visitor expenditure, with an emphasis on awider regional and seasonal spread of business. Thefundamental components of policy encompass:

• a Government Department (the Department of Arts,Sport and Tourism) which promotes and representstourism as an important instrument of nationaland regional development and source of foreignearnings within the general Government decision-making process

• a number of State Tourism Agencies which haverecently been restructured to support both theinternational marketing of the island of Ireland asa tourist destination and the development ofthe sector across its many facets in locationsthroughout Ireland

• a strong regional organisational structure for thepromotion of tourism exercised through the StateTourism Agencies, the Regional Tourism Authorities andShannon Development, County Tourism Committees,Product Development Management Boards, CountyEnterprise Boards and LEADER Groups

• a number of evolving partnership arrangementsbetween the State Tourism Agencies and privatesector representatives of the industry

• the periodic statement and re-statement of thevision, targets and objectives guiding tourismdevelopment in Ireland by the Department and theState Agencies which operate under its aegis

• a range of State fiscal, financial and advisorysupports – both Exchequer and EU funded – for thepromotion of tourism operating generally, but notexclusively, under the aegis of the Department ofArts, Sport and Tourism.

2.4 The first comprehensive statement on tourism policy inIreland was set out in a Government White Paper in1985. Government policy statements have gonethrough a number of iterations since then in responseto changing national and international circumstancesand the underlying organisational structures haveevolved in keeping with these changes. This period ofmore structured policy development andimplementation has coincided with a substantive take-off in the development of tourism in Ireland. A numberof factors underlie the rapid expansion of tourism here.These include a major international increase in demanddriven by the rising real income levels in many parts ofthe world, the falling cost of communications andtransport and currency developments favourable to Irishtourism. Central to the strong performance of Irishtourism in a favourable international marketenvironment has been the intrinsic attractiveness of thelandscape, culture and people of Ireland as a visitordestination together with the energy, enterprise andincreasing professionalism of the people in a largelyIrish-owned service industry. It is also reasonable toconclude that improvements in policy formulation andimplementation in Ireland played their part.


X

2.5 Led by the private sector, with Exchequer and EUsupport, total capital spending on tourism-relatedproducts amounted to €4.3 billion over the 1990s. Thedirect Exchequer spend on tourism amounts to €107million in 2003, of which approximately €80 million isrelated to marketing and associated costs. In addition, itis estimated that the industry spend on marketing wasof the order of €134 million in 2001.

3. Ireland’s Tourism Industry: Overview ofPerformance 1990-2002

Visitor numbers to Ireland and tourism receiptsthroughout the 1990s grew well ahead of globaltrends, benefiting all regions of the country.Irish tourism gained market share in most marketsin which it competes. While visitor experiencegenerally has consistently met or exceededexpectations for over 90% of visitors, theperception of good value for money has fallensignificantly in recent years.

3.1 Visitor numbers to Ireland grew well ahead of globaltrends throughout the 1990s, increasing by an averageof over 7% each year compared with a correspondingworld figure of 4.3%. In terms of receipts, Ireland’sperformance also exceeded European and globalgrowth rates in the eleven years up to 2001. The bestperformance source markets for Irish tourism have beenthe US and Britain.

1990 1995 2000 2001 2002

Britain 1,785 2,285 3,428 3,340 3,452

Mainland Europe 744 1,101 1,435 1,336 1,378

France 198 234 283 280 298

Germany 178 319 319 285 288

Other Europe 368 548 834 771 792

North America 443 641 1,056 903 844

USA 402 587 958 829 759

Canada 41 54 98 74 85

Other Overseas Areas 124 204 261 261 245

Total Overseas 3,096 4,231 6,181 5,840 5,919

Foreign Revenue Earnings (€million) 1,112 1,749 2,824 3,115 3,267

Receipts paid to Irish air and sea carriers (€million) 334 383 813 807 718

Total Foreign Revenue Earnings 1,446 2,132 3,637 3,922 3,985

Visitor Numbers and Foreign Revenue Earnings 1990 - 2002

XI

3.2 Travel to Ireland by those whose main purpose for visitingwas a holiday has grown slightly ahead of the trend inoverall visitor numbers. Irish tourism has increased itsmarket share of visitors from the US, but latterly hasseen a decline in its share of an expanding Britishmarket and has been losing market share fromGermany and France. All regions of Ireland havebenefited from the growth of Irish tourism in recentyears. Dublin and the South West have achieved thehighest rates of growth nationally. The strong Dublinperformance has been boosted by the significantincrease in the number of visitors on short city breaks.The lowest growth rates were recorded for the Shannon,the West and North West regions. Most activity holidaysshowed considerable growth in the late 1980s andearly 1990s but have recorded declines since then.

Domestic tourism remains a bedrock for the Irish tourismindustry, contributing almost half of all visitor numbersseeking accommodation in 2002 and representing afifth of the overall revenue generated by tourism.

3.3 Survey analysis shows that the core tourism appeal ofIreland is characterised by people, place and pace. Visitors toIreland are motivated principally by the expectation of awarm and welcoming people, the perception of beautifulunspoilt scenery and the relaxed pace of life. The holidayexperience of visitors to Ireland has met or exceededexpectations in the case of over 90% of visitors.

4. Tourism in Ireland Today – An Assessment

Irish tourism is, arguably, the most successful sector ofIrish-owned enterprise since the foundation of the State.The industry today has strong foundations whichunderpinned its success in the 1990s. It is, however, at animportant turning point in its evolution. Recent yearshave seen a significant loss of competitiveness which, ifnot redressed, will undermine the capacity of the industryto benefit from the strong growth envisaged ininternational tourism in the years ahead.

4.1 The Irish tourism industry today has strong foundationsbased on a substantial and increased customer base,high overall customer satisfaction ratings, competentand experienced staff, many highly successful businessenterprises and the quantity and the generally goodquality of its accommodation, restaurants, leisurefacilities and visitor attractions. The industry has also asuccessful record in meeting challenging investment,revenue earnings and employment targets set undersuccessive national plans and EU Operational Programmesfor Tourism. These provide a solid base to address withconfidence the new challenges facing the sector.

4.2 Today, the industry is at a turning point in itsdevelopment. It faces a major challenge in regainingcompetitiveness in the light of reducing customersatisfaction ratings, in particular as regards deliveringgood value for money. There has been a noticeable

Regional Distribution of Overseas andDomestic Tourism Revenue


Source: Fáilte Ireland

1990€m

2002€m

Real Growth1990-2002

As a % of1990 revenue

As a % of2020 revenue

Dublin 356 1,257 151% 22% 30%

South West 290 793 94% 18% 19%

Midlands/East 159 414 85% 10% 10%

South East 169 434 82% 10% 10%

Shannon 198 433 55% 12% 10%

West 276 596 53% 17% 14%

North West 175 284 15% 11% 7%

Total 1,623 4,211 84%

Important Factors when Choosing to Holidayin Ireland and Satisfaction Ratings

Source: Fáilte Ireland Visitor Attitudes Surveys 1997-2002

Very Important(%)

Rating - % Very Satisfied

1997 1999 2000 2001 2002

Friendly, hospitable people 87 88 88 89 88 90

Beautiful scenery 86 89 89 89 89 91

Memorable experience 82 83 82 83 84 82

Natural, unspoilt environment 81 83 77 79 79 83

Safe and secure 77 76 77 78 79 80

Easy, relaxed pace 74 83 83 82 82 82

Suitable for touring 66 76 72 73 73 71

Attractive cities/towns 64 59 62 66 64 65

Overall Satisfaction Rating 94 91 94 94 93

XII

drop in recent years in the perception of good value formoney by overseas visitors, which has declined from63% in 2000 to 45% in 2002. This is mainly price-related.

For visitors, the price issue relates not so much to thecost of access and accommodation, which is generallypre-booked, but to the price of eating out, drink, foodin shops and the general cost of living when they gethere. While resolute action by the Government isessential to help reduce inflation, the tourism industryitself has the primary role in driving down costs in theindustry. Reforms in the Irish taxation system over thepast decade have resulted in substantial gains forbusinesses generally, but comparatively high VAT ratesand excise duties contribute to unfavourable pricedifferentials in certain key tourism products in Ireland incomparison with other eurozone countries. Highinsurance costs are also a particular concern, pointingto the need to accelerate the Government's insurancereform programme to reduce premiums.

4.3 The range of tourism products and services, includingtourist accommodation, has increased greatly in quantityand improved significantly in quality in recent years.There are at present, however, indications ofunderutilised capacity and falling margins which, if notredressed, could threaten reinvestment and themaintenance of standards in the future. Someremaining gaps exist in tourism infrastructure, mostimportantly the development of a National ConferenceCentre and a National Sports Stadium. There is also aneed for an enhanced emphasis on product innovationand the better marketing and promotion of tourismproducts to meet changing customer requirements.

Environmental conservation must become a centralelement of tourism policy and its implementation. Airand sea access to Ireland has seen major improvementsduring the 1990s. But changes which enhancecompetitiveness in transport policy and the furtherimprovement of access infrastructure – in particular atDublin Airport and in serving the wider catchmentneeds of Cork and Shannon airports – hold significantpotential to generate increased visitor numbers at bothnational and regional level.

4.4 The professionalism, friendliness and quality of servicesprovided by people are essential success factors in Irishtourism. A greater level of investment is needed inhuman resource development to upgrade skill levelsand to address staff retention and other problems.While there is a strong funding commitment to tourismmarketing and promotion by the State and the tourismindustry, actions are required to improve the efficiencyand effectiveness of spend in this area. The ability ofthe Department of Arts, Sport and Tourism, the StateTourism Agencies and the tourism industry to moreeffectively shape and influence Government policy inthe wider issues that impact on tourism, will be a keyinfluence in determining the future success of thesector. The Department's policy formulation andimplementation role and capability requires to bestrengthened and developed in line with the newtourism strategy set out in this Report.

Overseas Holidaymakers Rating of Value for MoneyOverseas Holidaymakers Rating of Value for Money

Source: Fáilte Ireland/Survey of Overseas TravellersSource: Fáilte Ireland/Survey of Overseas Travellers

% o

f h

olid

ay v

isit

ors

Very good/good value Fair/Poor/Very poor value

1997 1998 1999 2000 2001 200230

40

50

60

70

80

XIII

5. A Strategy for Irish Tourism 2003-2012

The New Vision for Irish Tourism is that of a dynamic,innovative, sustainable and highly-regarded sector -offering overseas and domestic customers a positive andmemorable experience beyond their expectations.Assuming reasonably favourable international economicand geopolitical circumstances, the Review Group has seta challenging target to double overseas visitor spend to€6 billion over the 10 year period to 2012, with anassociated increase in visitor numbers from just under 6million to 10 million.

5.1 Irish Tourism at a Crossroads: Irish tourism in 2003 isat a crossroads. It requires a new strategy to chart theway forward at a pivotal point in its evolution. It hascome through a period of major development andsuccess in the 1990s – probably the most successfuldecade in its history. Today, it faces major changes inthe international economic and geopolitical environmentvery different to those which helped to underpin itssuccess in the 1990s. Significant changes have emergedin the profile of its customer base, both at home andabroad. The competition that it faces from traditionalcompetitors has intensified in the face of a downturnin world tourism and some uncertainty about theimmediate future. At the same time new competitorsfrom Eastern Europe and further afield have entered themarket in which Irish tourism has traditionally competed.

5.2 Competitiveness Threat: All of this is happening at atime when the competitiveness of Irish tourism hasdeteriorated and is under further threat. This arisesfrom a combination of price pressures and from acertain complacency at industry and Governmentlevels that the good performance of the past can,on the basis of an out-dated approach, be sustainedin a changed international and domestic environment.Congestion factors have arisen following a decadeof both economic and tourism growth faster thanhad been anticipated and faster than the capacityof many elements of infrastructure to adjust to theincreased demands.

5.3 Public Finance Constraints: It is also clear that thesignificant levels of financial support for thedevelopment of the industry from the EU andGovernment, widely available in the 1990s and to thepresent time through direct grants, taxation incentivesand infrastructural supports, will not be available atanything like the same level in future years.

5.4 Irish Tourism – An increasingly Self-Reliant, Agileand Adaptable Sector of Successful Enterprise: Asuccessful Irish tourism industry in the years ahead willbe an industry that is more self-reliant, agile andadaptable to change in the market place. The industryhas shown, over the past decade and more, its capacityto adapt. It has many strengths including, and beyond,those available when the industry started on anextraordinarily successful development path in the1990s. Among these strengths are its proven trackrecord of meeting customer needs and a deepknowledge of customer requirements associated withthat success, a capital stock based on recent investmentthat is modern and efficient across all segments of theindustry and a people in tourism resource to whichvisitors have consistently awarded the very highestaccolades. Arguably tourism represents the mostsuccessful sector of Irish-owned enterprise since thefoundation of the State.

5.5 Competitiveness – The Key to Success: Central to thesuccess of Irish tourism in the years ahead will be arecovery of the competitiveness that has been lost inrecent years.

5.6 A New Strategy for Irish Tourism – Key Components:To address these issues a new strategy for Irish tourismis needed which clearly sets out a new way forward inthe context of the fundamental changes now affectingthe industry. Such a strategy has been developed bythe Review Group. It encompasses:

Components of a New Strategy for Irish Tourism

• a clear vision of where Irish tourism wants to go

• an understanding of the underlying forces thatare shaping the industry at present and thosethat will continue to do so in future

• the establishment of challenging targets andobjectives for the industry going forward

• a knowledge of the factors that will drive successin the industry

• an enhanced capability to innovate and respondeffectively to unforeseen circumstances

• a decision-making framework that facilitatesthe formulation of such a strategy and itsimplementation through consistent and decisiveactions at Government level and across thedifferent sectors of the industry itself.


XIV

5.7 A New Vision for Irish Tourism: The new vision forIrish tourism set out in this Report is of a dynamic,innovative, sustainable and highly-regarded sector,offering overseas and domestic visitors a positive andmemorable experience beyond their expectations.

Vision for Irish Tourism

Ireland will be a destination of choice for discerninginternational and domestic tourists which:

• provides a tourism experience that exceeds customerexpectations in terms of friendliness, quality ofenvironment, diversity and depth of culture

• has a range of high-quality, world-class, competitiveproducts and services widely distributed throughoutall the regions of the country

• is a vibrant source of foreign and regional earningsthroughout the year

• respects the natural and built environments andsupports their conservation and enhancement

• provides attractive career opportunities in tourism forpeople with a range of skills and employment needs

• provides the opportunity for people working intourism to enhance their skills through experience,training and life-long learning

• respects and supports Irish culture in all its diversity

• provides a positive international profile of Ireland.

The new strategy for Irish tourism can be represented diagrammatically as follows:

Forces of Change

Fundamental Changes Affecting Global &Domestic Tourism

Vision

Contribution to National Social &Economic Objectives

Future Drivers of Success

Competitiveness and Value for Money,Product, People, Marketing,

Technology, Access Transport &Business Environment

Flexibility

Agility to respond to change

Targets & Objectives

MotivatorsBenchmarks of Performance

Decision-making Framework

Improved Resource Allocation

Tourism Strategy

2003 - 2012

XV

5.8 International Prospects: The medium and long-termprospects for tourism worldwide remain strong despitethe recent deceleration in the underlying growth ratessince 2000 because of economic and geopoliticaluncertainty. The fundamental drivers of changeaffecting tourism internationally are expected to resultin strong growth rates which, over the next 20 years,are projected to be similar to the doubling of touristtraffic that occurred over the period 1980-2000.Tourism development will continue to be largelydetermined by the rate of global and regionaleconomic growth and associated increases in thedisposable incomes of a wide distribution of individuals.The developed countries will remain the largest sourceand destination of tourism numbers in absolute termsbut new markets for Ireland are emerging includingthose from Eastern Europe and the Far East.

5.9 Key Markets and Determinants of Success: ForIreland, the tourism markets of most importance willcontinue to be in Britain, the US, the larger countries ofMainland Europe and the domestic market. But thecustomer profile is changing rapidly, driven bytechnology, demographics and societal changes such asbetter education, increasing interest in culturalexperiences, increased leisure time, multiple but shorterholiday breaks, greater interest in health enhancingtourist experiences and increasing empathy withenvironmental conservation. Developments in accesstransport are of fundamental importance in facilitatingtourism development. The quality, price, frequency androutes of air and sea carriers have improved during the1990s. In particular, low fare airline services havetransformed the market for travel between Ireland,Britain and Mainland Europe. The potential foradditional route development in these services, and ontransatlantic air routes, remains strong. The upgradingof internal transport services will be important for theregional spread of visitors. Measures to optimise the useof new information and communication technologiesthroughout the tourism sector are also of key importance.

5.10 Tourism Development Targets 2003-2012: Ambitiousbut realistic targets for key indicators of performanceare an essential component of Irish tourism strategy.Strategic targets, few in number, provide a sense ofdirection for tourism policy and facilitate theprioritisation of actions to support the development ofthe sector. Assuming reasonably favourableinternational economic and geopolitical circumstances,the Review Group has set a challenging target to


double overseas visitor spend from €3 billion to €6 billionover the 10 year period to 2012, with an associatedincrease in visitor numbers from just under 6 million to 10million. Targets are also being set

• to increase the share of promotable segments(holiday, conference, language study and incentivetravel) from 45% to 50% of total visitor numbers

• to increase the number of domestic holiday tripsfrom 3 million to 4.3 million, with associated revenueearnings increasing from €0.6 billion to €1 billion

• to double the number of overseas promotable visitorsstaying at least one night in the Border Midland andWestern (BMW) region.

XVI

Revenue (€ million 2002 prices) 2002Actual

2006Target

2012Target

Av. Annual Growth% 2002-2012

Overseas Visitor Spend1 3,088 3,835 6,000 6.9%

No. of visitors (m)

Britain 3.5 4.1 5.5 4.8%Mainland Europe 1.4 1.7 2.3 5.3%North America 0.8 1.0 1.8 7.6%

Other areas 0.2 0.3 0.5 6.3%Total 5.9 7.0 10.0 5.4%

Overseas Revenue and Visitor Number Targets to 2012

1 Excluding receipts paid to Irish air and sea carriers & revenue from Northern Ireland visitors

Overseas Visitor Number Targets to 2012

No

. o

f V

isit

ors

(m

)

2000 2006 2012

North America

Other areas

Britain

Mainland Europe

0

1

2

3

4

5

6

XVII

5.11 The Drivers of Success: The key strategic drivers ofsuccess for Irish tourism in the future which will determinethe achievement of the targets set are as follows:

Key Drivers of Success

• Business Environment

• Competitiveness & Value for Money

• Access Transport

• Information and Communication Technologies

• Product Development & Innovation

• Marketing & Promotion

• The People in Tourism

• The Government Sector

• Information, Intelligence & Research

The impact of these factors on Irish tourism in thefuture are set out in detail in the main Report.

5.12 An Agenda for Action: The tourism developmentstrategy set out by the Review Group provides a clearframework and set of actions to support the furtherdevelopment of tourism in Ireland and its regions. Thespecific actions required are clearly set out togetherwith the reasons for taking them, the bodiesresponsible for implementing the actions and thetimeframe within which the actions should beaccomplished.

5.13 Implementation Group: In order to reflect the actionorientation of the report a small, high-levelImplementation Group should be established, for atwo-year period with high-level representation from theprivate and public sectors. The Group should reportdirectly to the Minister for Arts, Sport and Tourism. Thetask of the Implementation Group will be to overseethe implementation of the recommended actions in theReport and to revise them as necessary in consultationwith the bodies responsible for their implementation. Astrong, ongoing process of consultation with theindustry is a critical component of the follow-up to thereport of the Review Group.

6. Implementing the Strategy –the Actions Required

The policies and actions that have delivered strongperformance in Irish tourism in the past will not suffice todo so in the future. The way in which the changes nowrequired are anticipated, managed and put in place willdetermine the future success of Irish tourism as a sectorof investment opportunity, innovation and enterprise, andas an instrument of Government development policies.

6.1 The Irish tourism industry is a highly complex anddiverse sector of interdependent, economic activitieswithin the domain of both the private and publicsectors. The actions now required to implement thenew strategy for Irish tourism outlined in the Report areequally diverse and wide-ranging. They encompassmany different decision makers in both the private andpublic sectors.

6.2 In identifying the key actions needed to deliver thestrategy outlined, the Review Group was guided bythree fundamental principles

Fundamental PrinciplesGuiding Recommended Actions

• tourism growth is driven by private sectorenterprise, innovation and investment

• the need for a consistent framework of well chosenactions across all areas of Government activity

• targeted public sector interventions to be confined tomarket failure in close partnership with the industry.


Overseas Visitor Revenue Targets to 2012 (2002 prices)

2000 2006 2012

Overseas Visitor Spend

1,000

2,000

3,000

4,000

(€m

)

5,000

6,000

7,000

XVIII

6.3 Substantive change is required in key areas ofGovernment policy, in the delivery of that policy by theState Tourism Agencies, in the work of the industryrepresentative bodies, and, importantly, at the level ofindividual enterprises throughout the industry. Theeffectiveness and efficiency with which the changesrequired are anticipated, managed and delivered willdetermine the future success of Irish tourism as a sectorof private sector investment opportunity, innovationand enterprise, and as an instrument of Governmentsocial and economic development. The fundamentalcomponents of that change require

• a new policy framework and set of related actions thatcontinue to promote strong, self-reliant, profitable,innovative, customer-focused tourism enterprises

• an industry that itself anticipates and embraces thechanging needs of its customer base – bothdomestic and overseas visitors – and offers to eachcustomer a product, service and experience whichsurpasses that available from alternative providersboth at home and abroad.

6.4 The specific actions required to be taken under each ofthe key drivers of a successful Irish tourism industry areset out in Chapter 6. The actions focus on the period2003-2005. To attempt to recommend today whatactions will require to be taken beyond 2005 is notrealistic. What is required, instead, in an increasinglyvolatile tourism environment, is a process of frequentreview of strategy, at two-yearly intervals, and theadoption of a series of rolling 2-3 year action planswhich reflect changing circumstances, the periodicreview of strategy and the immediately precedingaction plan.

6.5 The set of actions recommended in the Report may,accordingly, be regarded as the first rolling action planfor the development of Irish tourism over the nextdecade. It sets out

• the rationale underlying the identification of theparticular driver of success in Irish tourism

• the objectives which the actions recommended seekto attain

• where primary responsibility lies for undertaking theactions recommended

• the timeframe within which the actionsrecommended should be accomplished.

The longer term strategy and more immediate actionplan set out in this Report provide a coherentframework of actions for the development of Irishtourism, at this stage of its evolution, particularly takingaccount of the fact that the majority of businesses aresmall and medium in size. The strategy and action planwill facilitate the ongoing review process recommendedas an inherent element of the development process forthe industry going forward. The review process will beled by the Department of Arts, Sport and Tourism, andwill encompass the State Tourism Agencies, otherGovernment Departments and State Agencies whosepolicies and actions significantly affect tourism and,importantly, representatives of the key sectors of theindustry itself.

XIX


1

2


Tourism Worldwide - An Overview

“International tourist numberswill double over the next20 years but the profile andrequirements of customersare changing rapidly andcompetition is becomingmore intense.”

1chapter one

3

4

Summary of Main Conclusions

International tourism:

• is a major economic sector generating over €500 billion in tourism receipts,accounting for almost 4% of global GDP and sustaining close to 70 million jobs

• has outpaced general economic growth, since 1975, by a factor of 1.3

• continues to be driven largely by affordable travel, especially by air, and thetravel opportunities opened up by new technologies

• is, today, recovering slowly from the economic downturn, terrorism, the war inIraq, and the impact of the SARS virus on travel in the first half of 2003

• is experiencing significant changes in customer trends, including shorter andmore frequent trips, greater use of e-commerce, later booking, more tailoredholiday experiences and growth in the older people share of the market

• will, in future, be increasingly driven by more demanding customer requirements,with greater emphasis being placed on value for money, personal fulfilment,unique experiences, authenticity, emotional involvement and travel convenience

• is projected to experience a doubling in the number of international arrivals overthe next 20 years to almost 1.6 billion

• is being given increased weight and emphasis in the range of Governmentpolicies aimed at national and regional development.


1.1 A Global Industry

The phenomenal growth in tourism activity worldwidemarks the sector out as one of the most remarkableeconomic and social phenomena of the past century.

A record 715 million international trips were madeworldwide in 20021. Tourism receipts in 2001 generatedapproximately €518 billion. International travel and tourismcontributes 3.7% to global Gross Domestic Product (GDP),while sustaining over 70 million jobs or 2.6% of the world’semployment2. The industry has an impressive record ofsustained growth with the number of international tripsincreasing, on average, by 7% a year over the past 50 years.Global revenues from tourism also grew consistently by 11%annually in real terms up to 2001.

In 2001, Europeans accounted for 58% of internationalarrivals (or 403 million arrivals) – which reflected a 4% annualgrowth rate in the 1990s. Within Europe, intra-regional travelaccounts for 350 million arrivals (87% of the total), withleisure/holiday representing nearly two thirds of this number.The Americas and Asia/Pacific are the next largest sourcemarkets for international travel, generating 124 million and121 million trips per annum respectively. Despite an aboveaverage rate of growth in the incidence of inter-continentaltravel in recent years, 80% of all trips are intra-regional

reflecting the importance of close to home markets.

Tourism has not only seen significant growth but also acontinued diversification in geographic spread and in therange of products and experiences on offer. Europe's shareof worldwide tourism has been declining. Over the pastdecade the Asia Pacific region and the former EasternEuropean countries have been fast growing destinations.Arrivals in Asia/Pacific grew at an average rate of 7.2% perannum, at a time when, overall, world tourism was growingby 4.3% each year and European tourism by 3.6%.

Transatlantic travel is the largest inter-regional traffic flowin the world. In 2001, 25 million Americans travelled eastand 20 million Europeans visited the Americas. The nextlargest flow is between Europe and the Asia/Pacificregion, with between 12 and 13 million visitors goingeach way respectively.

Leisure, recreation or holiday travel accounts for some 60%of international trips. However, throughout the 1990s,international business travel grew at a faster rate thanleisure trips. Trips to visit family and friends or for religiousor health purposes, account for almost 25% of all travel.While air travel and sea cruising are each fast growingsectors, road transportation continues to be used by almosthalf of all international travellers worldwide.

Figure 1.1International Tourist Arrivals 1950 - 2001

Figure 1.2Share of Worldwide Arrivals by Global Region 2001

Source: World Tourism Organisation (WTO) Source: WTO

AfricaMiddle EastSouth Asia

EuropeAmericasEast Asia/Pacific

1950

800

(mill

ion

)

700

600

500

400

300

200

100

0

1960 1970 1980 1990 2000

EuropeAmericas

Asia/PacificAfrica

Middle EastSource: WTO

58%17%

17%

4%3%

1 According to World Tourism Organisation (WTO) statistics. The WTO, based in Madrid, is an international governmental organisation that serves as aforum for tourism policy and issues. Its membership includes countries, territories and affiliate members from the public and private sectors.

2 Estimates from the World Travel and Tourism Council – the Forum for business leaders in travel and tourism, based in London.

5


Despite the rapid growth in international travel, domestictourists outnumber international visitors in most developednations around the world. Accordingly, the domesticmarket represents a very important component in theviability of enterprises engaged in tourism. However, inmore developed economies, the rate of growth ininternational travel tends to exceed that of domestic trips.

1.2 The Underlying Forces DrivingWorldwide Tourism

Worldwide tourism growth has been driven by a number ofkey factors, including economic wealth, mass communication,information and communication technologies, socio-politicalstability and availability of leisure time.

• A strong underlying relationship exists between thelevel of consumer disposable income and travel.International tourism significantly outpaced thegrowth of economic output (GDP) between 1975and 2000, growing on average 1.3 times faster, asshown in Figure 1.3.

• Increased leisure time, with more holidayentitlements and flexible working conditions, hasstimulated a widespread desire for travel andtogether with strong economic growth indeveloped economies in recent decades hasgenerated the cash rich time poor populationsegment seeking to maximise the use of availablerecreational time.

• A major driver of tourism growth has been theincreasing availability of affordable transportation,especially air travel. Travel costs have fallen sharplyin real terms in recent decades at a time whencapacity and routes have dramatically increased.Medium and long-haul air travel has becomesignificantly more affordable, while the low fareairlines have revolutionised short-haul journeyswithin North America, Europe and Australia.

• The reduction in travel and border formalities (e.g.visa entry requirements, customs and currencyrestrictions) has also contributed to the growth ofinternational travel.

Real GDP

Average 1975 - 2000

Tourist Arrivals

Average 1975 - 2000

Source: WTO/International Monetary Fund (IMF)Source: WTO/International Monetary Fund (IMF)

1975

% changeover

previousyear

10

8

6

4

2

0

-2

1980 1985 1990 1995 2000

Figure 1.3Growth of GDP and International Tourist Arrivals

6

7

• The application of new information andcommunication technologies has dramaticallybroadened people’s access to information and travelopportunities. The result has been a transformationin the way people plan and book travel. Onlinetravel sales, estimated at €55 billion in 2003, areprojected to almost double over the next two years.

• The importance of a stable socio-politicalenvironment for travel to grow is amplydemonstrated in the downturn in travel todestinations affected by conflict and terrorism.More recently, concerns on the part of travellersabout safety, security and health issues areincreasingly influencing travel patterns.

1.3 Key Trends in International Tourismand Travel

The international tourism and travel industry is a highlydynamic sector of activity characterised by continuouschange. Significant changes in recent years include shiftsbetween markets, in customer profiles and preferences,together with changes in the structure of the industry, itsmanagement and the way it does business. The principalcustomer trends to emerge, over the past decade or so,have included:

• shorter and more frequent trips

• greater consumer use of modern information andcommunication technologies

• more experienced travellers with heightened qualityand value expectations

• a trend towards later booking

• mass marketing giving way to more individuallytailored holidays

• growth of the older people share of the total market,as this group now represents the wealthiestsegment of society in Europe, the US and Japan.

Sun holidays, city breaks and touring holidays togetheraccount for almost 70% of all international holidays takenby Europeans.

The way people make their holiday arrangements is alsochanging. Internet use has had a major impact on traveland the tourism industry. More than 6 in 10 US householdscurrently research their leisure travel online. In Europe lowfare air carriers have pioneered online booking for traveland, also, for a wide range of travel-related services. WhileEurope has some way to go before the Internet is assignificant a distribution channel as it is in the US, it hasalready had a radical impact on consumer holiday decision-making in all of Ireland’s main markets and its influence iscontinuing to grow strongly.

1.4 Recent Performance

Growth in international travel has stalled only twice in thepast 50 years - in 1982, following the oil crises, and in2001. Weak demand due to economic conditions in theearly part of 2001, the outbreak of Foot and Mouth diseasein northern Europe, coupled with the impact of the terroristattacks of September 11th resulted in a drop of 0.6% intourism arrivals globally, with earnings falling by 5.2%.However these global figures tend to understate the extentof the severe downturn in travel experienced in theAmericas and to a lesser extent Europe, the world’s topdestination and source markets.

8


The September 11th terrorist attacks in the US resulted inan unprecedented impact in terms of reduced demand forleisure and business travel and accelerated changes alreadyunderway in the structure of the travel and tourismindustry and the choice of type and location of holidaytravel. The industry, in many countries, experienced joblosses and business closures. The more lasting impactincluded an increasing concern regarding safety andsecurity, a radical restructuring of the global airline industry,changing patterns of travel and significant changes in howdestinations and products position are positioned in themarketplace.

Results for 2002 indicated a slow recovery withinternational arrivals worldwide increasing by over 3% toreach a record 715 million. However, recovery has not beenuniversal. The war in Afghanistan, terrorist attacks ontourists in a number of locations, fear of further terroristattacks and the anticipation of war in Iraq severelydampened demand in 2002, at a time when low interestrates were stimulating consumer spending. Trips tended tobe closer to home while uncertainty and heightened price

sensitivity encouraged later bookings. The business travelsector continued to be severely depressed. Within theairline industry, only low fare airlines recorded healthyvolume and profit growth, while sea cruise tourismrecovered largely on the basis of heavy discounting.

The position for 2003 is that soft economic conditions inmost of the main source markets, the conflict in Iraq,terrorist attacks and the outbreaks of Severe AcuteRespiratory Syndrome (SARS), have combined to depressdemand for discretionary and business travel. This has beenreflected in a decline in international air travel and touroperator holidays during the early months of the year.Many airlines, tour operators and other tourism businessescontinue to issue profit warnings as the combined impactof global events on tourism continues to threaten futureearnings. While the war in Iraq mainly affected forwardbookings and traffic flows on transatlantic, Middle East andeastern Mediterranean routes, fears about the SARSepidemic have had a significant impact on global travel,especially to and from the Asia/Pacific region.

International Tourist Arrivals Market Share Averageannual

(million) (%) growth (%)1990 1995 1999 2000 2001 1990 1995 2001 90-00 95-00

World 457.3 551.7 652.3 696.8 692.6 100 100 100 4.3 4.8

From:

Africa 11.3 13.1 15.6 15.8 16.3 2.5 2.4 2.4 3.4 3.8

Americas 96.2 111.8 130.0 130.6 123.9 21.0 20.3 17.9 3.1 3.2

East Asia and the Pacific 56.5 94.0 110.0 110.1 112.9 12.3 17.0 16.3 6.9 3.2

Europe 274.0 339.7 404.8 404.4 402.8 59.9 61.6 58.2 4.0 3.5

Middle East 8.1 8.3 11.5 12.4 12.4 1.8 1.5 1.8 4.5 8.4

South Asia 4.0 5.3 7.4 7.8 7.9 0.9 1.0 1.1 6.9 8.1

Origin not specified3 7.3 -20.6 -26.9 15.5 16.4 1.6 -3.7 2.4

Same region 362.6 436.6 513.1 546.4 549.9 79.3 79.5 79.4 4.2 4.5

Other regions 79.7 99.8 123.5 134.8 126.2 17.4 18.1 18.2 5.4 6.2

(Data as collected by WTO September 2002)

3 Countries that could not be allocated to a specific region of origin. As information is derived from inbound tourism data this occurs when data on the country of origin is missingor when a category such as ’other countries of the world’ is used grouping countries together that are not separately specified.

Table 1.1Outbound Tourism by Region of Origin 1990-2001

Source: WTO

Some recovery is anticipated in bookings for leisure travelfor the remainder of the year, with the European marketlikely to show greater buoyancy than North America,provided that the threat of terrorism decreases and as fearsof the SARS virus continue to abate.

1.5 Future Prospects and Determinantsof Growth

The short to medium term prospects for internationaltourism may be summarised as follows:

• a quick return to the buoyant market conditions of2000 is unlikely. However, international arrivalsworldwide are forecast to continue to increase inthe immediate future, although at a slower rate ofgrowth than that experienced in the 1990s.According to WTO projections, the number ofarrivals is expected to double over the next 20 yearsto almost 1.6 billion, an outturn which, if achieved,would be broadly in line with the rate of growthexperienced over the previous 20 years. The currentconditions and uncertainties caused by theeconomic downturn will continue to depressdemand in the immediate future but the underlyingtrends suggest a resurgence in demand in themedium and longer term. Travel and tourism isfirmly established in the lifestyle and discretionaryspending pattern of the developed economies. Themarket of experienced international travellers hasexpanded greatly, and there is increasing potential,in several important source markets such as Chinaand Central and Eastern Europe

• travel recovery will lag somewhat behind an unevenand slow economic recovery, particularly forbusiness travel. Economic recovery and a stablegeo-political environment are both inextricablyintertwined as major determinants of futuredemand for travel and tourism. While worldwideGDP is forecast to increase from 3% in 2002 to3.2% in 2003 and 4% in 2004, according to IMFestimates, consumer confidence is vulnerable andwide areas of business are likely to continue toretrench. Consumer spending is expected to slowdown even if interest rates remain low. Anyweakening in the US dollar, while good for theglobal economy, has a dampening demand onexternal travel, particularly transatlantic. Overall, as

long as the threat of terrorism and war persists, theshort-term prospects for intra-regional travel remainbetter than for inter-continental travel

• while leisure demand will continue to increase,markets will become more competitive. The ageingpopulation in the developed world, especially withinEurope, presents significant new challenges andopportunities for tourism, relating to changingtravel patterns, different customer needs anddemand for more customised products and services.In addition, factors such as the increasing numberof single person households, changing work andcareer patterns, an emphasis on personal well-beingand evolving value systems, will all influence thevolume, type, frequency and duration of leisuretrips in the future

• the US as a source of international tourists has beenhardest hit by the threat of terrorism and will takelongest to recover. Asia/Pacific is set to become thefastest growing region for tourism with a decline inthe relative share of global tourism in Europe andNorth America

• the factors that determine demand for travel willcontinue to change with greater emphasis beingplaced on value for money, personal fulfilment,unique experiences, authenticity, emotionalinvolvement and travel convenience. Security,health and environmental issues, and increasedcompetition from new destinations and products,will continue to influence demand patterns

• greater consolidation within the industry,particularly in the airline sector, and increasedintegration along the tourism supply chain isenvisaged. Although liberalisation and deregulationhave radically altered the face of commercialaviation over the past decade, the structure of theairline industry is set to change further. Thetraditional business model for full service networkairlines no longer appears to be sustainable with theglobal airline industry cumulatively losing US$31billion over the past two years. While growth in airtravel will continue to be a function of economicgrowth, pricing and deregulation, the continuingdecline in fares is not guaranteed. The availability ofair services will change with low fare point-to-pointcarriers predominating in the short haul markets

9

10


and a rationalised structure of long haul services bya more limited number of network airlines

• the expansion of internet technology - applications,functionality, and accessibility – will continue torevolutionise how travel businesses operate andinterface with a more knowledgeable, price andvalue aware customer

• effective marketing and communications willcontinue to be important motivators of travel in thefuture. Integrated marketing campaigns, meetingspecific customer needs, will become increasinglypowerful generators of discretionary travel in amore competitive environment.

1.6 Tourism and Government PoliciesInternationally

As an increasingly important source of wealth-creation,employment and foreign earnings from external anddomestic sources, Governments worldwide have put inplace a wide range of policies – both direct and indirect –to support the development of their tourism industries.Within these policies a number of key features and trendsare apparent:

• an increasing emphasis on the sustainability of tourismdevelopment in environmental and societal terms

• closer linkages between tourism policy and otherpolicy areas including those dealing with nationaleconomic development, regional development,transport, arts and culture, sport, conservation andenvironmental planning

• greater involvement at local political andcommunity levels in the development andimplementation of policies relating to tourism

• stronger industry associations taking increasedresponsibility for developing networks and initiativesto support their members and the industry and inworking with Government bodies

• widespread initiatives by both Government bodiesand industry associations to strengthen the use ofinformation and communication technologies indeveloping tourism

• increasing focus on high standards of public health,workplace conditions and general training.

In general, tourism policy internationally is being givenincreased weight and emphasis in the range ofGovernment policies aimed at national and regionaldevelopment.

1.7 Overview/Conclusions

In summary, while the nature and structure of internationaltourism is undergoing fundamental change, the futureprospects remain highly promising and positive accordingto the projections of the most authoritative sources,including the WTO. As set out later in this Report, the Irishtourism industry has demonstrated a strong record ofsuccess, particularly over the past fifteen years, in attractingvisitors and gaining share in a number of important areasof the tourism market. The challenge for the tourismindustry in Ireland over the next decade and beyond is tobuild on that success and to respond effectively to thechanges underway in international tourism as set out in thisChapter. Chief among these changes are the greatercompetition between destinations and changing customerprofiles in economic status, age, discernment and value-consciousness.

11

12

Ireland’s Tourism Industry:

Economic Contribution,

Structure and Policy

“Irish tourism is a major economic sectorof enterprise, and of national andregional wealth creation. The industryat present generates €4 billion in foreignrevenue earnings, supports 140,000jobs and is by far the largest, Irish-ownedinternationally-traded sector of theIrish economy.


2chapter two

13

14


• Irish tourism in a major sector of successful enterprise and a significantinstrument of national and regional economic and social development

• Six million overseas visitors spent €4 billion in Ireland in 2002, while Irish peopletook close to six million trips in the country, spending almost €1 billion.

• To put the annual tourism receipts of €4 billion from overseas visitors inperspective, it is equivalent to

• more than 50% of the total value of exports by Irish-owned manufacturingindustry, or

• more than twice the value of exports of Irish-owned internationally-tradedservices.

• The Irish tourism industry embraces a wide range of diverse small and mediumsized enterprises that are predominantly Irish-owned.

• The industry supports some 140,000 jobs or one in 12 of all jobs in theeconomy. Employment grew in the sector by more than 70% between 1990and 2002 – a rate of growth considerably above the 50% growth inemployment generally in the economy over that period.

• Tourism generates as much as €2.2 billion in tax receipts and contributes 4.4%of GNP.

• The public and private sectors play joint and complementary roles in thedevelopment of tourism in Ireland with organisational structures in place topromote partnership, particularly in relation to marketing.

• Total capital investment in tourism during the 1990s amounted to €4.3 billion.

• The direct Exchequer spend on tourism amounts to €107 million in 2003, ofwhich approximately €80 million is related to marketing and associated costs,while the industry spend on marketing was of the order of €134 million in 2001.


15

2.1 Tourism's Contribution to Economic,Social and Regional Development

Tourism is a major and largely Irish-owned sector of enterprise,and of national and regional wealth creation delivering thefollowing very significant benefits to the economy:

• expenditure (including receipts of over €700million paid to Irish air and sea carriers) by the 6million overseas visitors to Ireland in 2002amounted to almost €4 billion. The equivalentfigure in 1990 was approximately €1.5 billion. Inreal terms, when inflation is taken into account, thisrepresents a doubling of revenue since 1990.Domestic expenditure amounted to approximately€1 billion in 2002, making tourism in total a major€5 billion turnover industry

• to put the 2002 tourism receipts of €4 billion fromoverseas visitors in context, it is equivalent to

• more than 50% of the total value of exports byIrish-owned manufacturing industry, or

• more than twice the value of exports of Irish-owned internationally-traded services.

• Tourism goods have low import content incomparison to other exports

• tourism supported approximately 140,000 jobs in2002 – up from 82,000 jobs in 1990. With anestimated 1,765,000 people at work in Ireland in2002, tourism spend supported 8% ofemployment, equivalent to one in 12 of all jobs inthe economy. The equivalent proportion in 1990was 7%. The 70% growth in jobs in the sector wasconsiderably above the 50% growth inemployment generally in the economy –notwithstanding that general employment growthwas at unprecedented high levels

• it is estimated that each million euro of overseastourism expenditure supports 30 jobs and everymillion euro of domestic tourism spend supports23 jobs

• it is estimated that, in 2002, the Governmentearned as much as €2.2 billion through taxation oftourism expenditure in VAT, excise duties andincome tax receipts – €1.9 billion of which camefrom foreign tourists

• tourism made a direct contribution of 4.4% to GNPin 2002

• tourism is a major instrument of regionaldevelopment. Many tourism enterprises aresituated in areas where other employmentoptions are limited

• local communities benefit from investment infacilities for tourists such as leisure and sportingfacilities and in associated infrastructure includingaccess transport and roads

• a vibrant tourism industry contributes to theviability and sustainability of a wide range of localenterprises

• tourism promotes an enhanced awareness andpositive appreciation of local traditions, way of lifeand cultural facilities

Figure 2.1Tourism Revenue1990 & 2002 (€m)

Figure 2.2Overseas Visitor Numbers1990 & 2002 (m)


1,446

1990 2002 1990 2002

3,985

3.1

5.9

16


2.2 The Structure of the Tourism Industry

The Commercial Sector

Tourism is not easy to categorise as a readily definablesector within the economy. It embraces a wide range ofdifferent activities in both the private and public sectors.It comprises thousands of individual businesses. Indicativeof that fact are the some 10,000 members in the RegionalTourism Authorities (RTAs). The tourism industry in Irelandcomprises predominantly Irish-owned, small and mediumsized enterprises (SMEs). Table 2.1 contains estimates of thenumber of establishments/operations in certain key sectors.

There is also an important range of State-owned facilitiesincluding visitor information centres, museums andheritage attractions, national monuments and nationalparks. A limited number of large commercial enterprises,including publicly listed companies and State-ownedcorporations, are important providers of transport andaccommodation. A number of foreign-owned air and seacarriers also provide transport links to and from Ireland.Most foreign involvement in hotels is through use offranchise and management contract arrangements underleading international brands. There has been a trend forIrish-owned family groups to increase their share of thestock of hotels over recent years.

Table 2.2 describes the tourism related enterprises withinthe main sub-sectors of the industry. The right handcolumn of the table indicates the ownership structure ofthe industry. The predominance of SMEs is very apparent.

Tourism Industry Representative Bodies(The Irish Tourist Industry Confederation)

Over the past 20 years the Irish tourist industry has formedinto a number of sectoral representative groupings, manyof which have come together under an umbrellarepresentative body - the Irish Tourist IndustryConfederation (ITIC). Established in 1984, ITIC is thenational representative organisation for the tourism sectorencompassing membership from both the public andprivate sectors. Current membership includes the IrishHotels Federation, the key B&B Groups (Town and CountryHomes Association, Irish Farm Holidays Association), theIrish Tour Operators Association, Restaurants Association ofIreland, Coach Tourism and Transport Council of Ireland,Car Rental Council of Ireland, Irish Boat Rental Association,Irish Caravan Council, MEI (Marketing English in Ireland) -RELSA and a number of other interests as well as air and seacarriers. The purpose of the Confederation is to act as asingle voice for tourism, to address strategic issues criticalto the success of the sector, to influence theregulatory/legislative environment and to influenceGovernment and EU tourism policies. The Confederationpursues its objectives through a strategy of influencingpolicies that impact on tourism, through professional casemaking and by seeking industry representation on Statebodies which deal with tourism. However, the diversifiednature of the sector and the preponderance of SMEs havechallenged the ability of the industry to highlight atnational level in a fully effective way, and to highlight, thescale of its importance in economic and social terms.

Table 2.1Number of Establishments/Operations by Sector 1996-2002


Sector 1996 1998 1999 2000 2001 2002

Hotels 716 775 826 844 854 860

Guesthouses 356 427 475 481 495 488

Restaurants 1,619 1,890 1,987 2,120 2,129 2,115

Licensed premises 8,694 n/a 8,071 8,100 8,110 8,000

Tourism Services & Attractions 2,012 n/a 2,680 n/a 3,074 3,018

17

The Public Sector

In addition to its role in helping to develop the tourismsector through direct support for product development,marketing and training/education, the public sector is alsoresponsible for a number of activities that are essential tothe development of tourism. These include:

• the provision of infrastructure and services, inparticular those relating to access transport, roadsand telecommunications

• the protection and maintenance of natural, culturaland heritage resources

• the regulation of building and site development andenvironmental protection

• the regulation of business and the labour market

• the determination of fiscal policy.

Responsibility for the formulation of national tourismpolicies rests with the Department of Arts, Sport andTourism. Its goal is to facilitate the continued developmentof an economic and environmentally sustainable andspatially balanced tourism sector, through formulating,monitoring and reviewing a range of supporting policiesand programmes, particularly within the framework of theNational Development Plan and North/South co-operation.Policy is implemented by State-sponsored bodies andexecutive agencies, operating under the aegis of theDepartment. The principal State Agencies are Fáilte Ireland,Tourism Ireland, Shannon Development and the RegionalTourism Authorities.

Table 2.2Main Sub-sectors, Services and Structure of Tourism Industry


Sub-sector Services Structure

Transport Airlines & Shipping Companies, Air & SeaPorts, Internal Transport–Bus, Rail Services,Car Hire, Coach Tours

Mainly public and larger companies, exceptin case of coach and car hire

Accommodation Hotels; Guesthouses; B&B’s; Self-catering;Hostels; Caravan & Camping Parks;

University Campus; Host Homes

Mainly SMEs although larger hotel groupsare growing in number

Food Accommodation providers; Restaurants;Pubs; Fast Food Outlets; Shops

SMEs apart from larger hotel groups

Facilities/Amenities Historical sites; Houses; Gardens; Museums; Art Galleries; Theatres; Entertainment; Pubs

SMEs & State enterprises

Activities Golf; Walking; Angling; Cycling; CabinCruising; Equestrian Activities; Events; Sailing;

Other Water Based Pursuits; Shopping;Language Schools and Genealogy

SMEs almost exclusively except in the case ofcabin cruising

Basic Services Petrol Stations; Banking; Communications;Tourist Information; Other Retail Outlets

Mainly SMEs but including major companiesin banking services and petrol distribution

18


The functions of the two principal State agencies involvedin tourism at national level are as follows:

• National Tourism Development Authority –Fáilte Ireland: Established by legislation in May2003, the new agency’s mission is to fostersustainable and competitive tourism developmentby working in partnership with the industry andState bodies to achieve world-class standards ofexcellence in the products, services and marketingof the sector, thereby contributing to wealthcreation and employment in the economy of Irelandand its regions. The new agency is intended tostreamline the State’s support services to tourism byincorporating the services and programmespreviously carried out by Bord Fáilte and CERT.Fáilte Ireland has responsibility for supporting thetourism industry in the areas of:

• product development• marketing of domestic tourism on the island

of Ireland• training and education• research and strategic planning• niche/specialist product marketing

and promotions• implementation of special initiatives to

attract international sports events to Irelandand to support the marketing of festivals andcultural events.

It also has statutory functions for registration andgrading of certain tourism accommodation, the co-ordination of activities of the Regional TourismAuthorities and the promotion of sustainabletourism. In carrying out these functions, FáilteIreland provides a range of supports to the tourismindustry, including those that support the buildingof business capability, improve the quality ofproduct which the industry offers and enhance itscompetitiveness.

• Tourism Ireland: As part of the Agreement reachedin the Multi-Party Negotiations concluded in Belfastin April 1998, tourism was designated an area forco-operation under the North/South MinisterialCouncil. In December 1998, the parties to theAgreement decided that a publicly-owned limitedcompany would be established jointly by theNorthern Ireland Tourist Board (NITB) and the then

Bord Fáilte to carry out functions aimed atpromoting tourism to the island of Ireland. TourismIreland was incorporated in December 2000 andhas taken over responsibility with effect from the2002 season, for the overseas marketing of theisland of Ireland as a tourist destination.In exercising its overseas marketing activities,Tourism Ireland has taken on a number of functionsincluding ownership and management of thetourism brand for Ireland, strategic all-islanddestination marketing in all markets outside theisland of Ireland and responsibility for the overseasoffice network. Tourism Ireland is also responsiblefor the international delivery of product/regionalmarketing programmes on behalf of both FáilteIreland and NITB. Appendix D sets out a briefoutline on Tourism Policy on the Island of Ireland.

In addition to Fáilte Ireland and Tourism Ireland, anumber of other State Bodies as set out in Appendix E,have functions associated with the development oftourism. The number and range of such bodies has givenrise to some concerns about the risk of overlap andduplication in the delivery and efficiency of services.While there has been a recent major restructuring ofbodies at national level, regional and local structureshave remained largely unchanged.

Tourism Marketing Partnerships

While the concept of partnership has existed within thetourism industry for many years, it is only in recent yearsthat formalised structures have been put in place tofacilitate the mutual engagement of the private and publicsectors in the design and implementation of tourismmarketing and development plans and programmes. In themid 1990s, a new industry-led joint marketing body, theOverseas Tourism Marketing Initiative (OTMI), was formedand operated on an all-island basis. The tourist boards fromboth Northern Ireland and the South were members ofOTMI and its board included industry representation fromboth jurisdictions. In 1995, the island of Ireland theme wasused to advertise Ireland. The use of a branded approach tomarketing Ireland emerged during this time, culminating inthe development of Tourism Brand Ireland (TBI). TBI wasadopted by the tourism industry in both jurisdictions andby OTMI. In 1996, for the first time, an all-island brandedadvertising campaign was used to promote holidays toIreland in the four main markets i.e. US, Britain, France andGermany. The Tourism Marketing Partnership (TMP)

19

structure has succeeded the OTMI to facilitate, in a formalway, co-operation between the public and private sectors informulating marketing policies and plans. There is an all-Island TMP group under the aegis of Tourism Ireland andindividual TMPs in the South and Northern Irelandoperating in association with the tourist boards.

2.3 Tourism Policy

The Components of Tourism Policy

Government policy for the development of the tourismsector in Ireland has focused on supporting sustainablegrowth in visitor expenditure with an emphasis on a widerregional and seasonal spread of business.

The Agreed Programme for Government 2002, recognisesthat ”the tourism industry will continue to be a vitalindustry requiring sustained support and investment in thecoming years”. The Programme sets out 10 prioritymeasures relating to marketing, access transport, productdevelopment and standards, the role of local authoritiesand environmental management, the creation of a newNational Tourism Development Authority, and theconstruction of a state of the art National ConferenceCentre. The Government regards the maintenance of topclass standards and services, and a continued focus by theindustry on value for money, as imperative for thecontinuing success of the tourism industry.

Key policy measures in the recent past have supported:

• product development: principally through useof EU funded Tourism and Regional OperationalProgrammes and selective fiscal incentivesfor investment

• overseas marketing: through annual funding fromthe Exchequer, together with funding under earlierEU Operational Programmes for Tourism

• human resource development/training: primarilyfocused on the provision of educational, basictraining and recruitment services, in the past largelyfunded from EU sources.

Evolution and Trends in Irish Tourism Policy 1980 - 2002

The Government White Paper on Tourism Policy 1985 was thefirst comprehensive statement on tourism policy in Irelandand set the following objectives:

”To optimise the economic and social benefits to Ireland of thepromotion and development of tourism both to and within thecountry consistent with ensuring an acceptable economic rateof return on the resources employed and taking account oftourism's potential for job creation; the quality of life anddevelopment of the community; the enhancement andpreservation of the nation's cultural heritage; the conservationof the physical resources of the country; and tourism'scontribution to regional development.”

The White Paper gave rise to a response from the keyindustry representative groups. The industry recommendedambitious targets for the sector which were subsequentlyadopted by Government. Since the late eighties, the primeobjectives of national tourism policy were clearly articulatedin successive national partnership development plans, andwithin the EU Community Support Framework for Ireland.Key developments included are set out below.

• The Programme for National Recovery 1988 - 1993identified tourism as a major instrument of nationaland regional economic and social development andset out a number of measures to encourageinvestment in tourism, including through theBusiness Expansion Scheme (BES). Initiatives werealso taken at that time to open the airline industryin Ireland to competition with far-reachingbeneficial consequences for airfares and tourismnumbers subsequently.

• The Operational Programme for Tourism 1989 - 1993,with EU grant support, resulted in some €980million being invested in tourism over the period ofthe Programme. This was more than the totalinvestment over the previous 20 years.

• The Tourism Task Force 1992, appointed byGovernment, made a number of recommendationsto support the development of the sector includingthe liberalisation of the Shannon stop requirement,greater co-operation between industry andGovernment and special initiatives to addressseasonality and product development.

20


• The National Development Plan 1994 - 1999 set outambitious growth targets for the industry. Ireland’scompetitiveness improved during this period witheconomic buoyancy, falling inflation, favourablecurrency developments, the further liberalisation ofair service regulations, and an improving politicalsituation in Northern Ireland.

• The Operational Programme for Tourism 1994 - 1999,with support from the EU, introduced a number ofmeasures designed to extend the tourism season, tosecure large scale anchor projects, to developcultural and heritage projects, to encourage co-operative marketing, to build marketing skills intourism enterprises and to improve training andhuman resource development within the industry.

• Bord Fáilte’s role was re-defined, following a reviewcarried out for the Government by consultantsA.D. Little in 1995. The new emphasis was oninternational marketing, product development andstrategic research, with the outsourcing of non-corefunctions. This in turn led to the development andlaunch of the Tourism Brand Ireland project, underwhich Ireland was marketed internationally in linewith modern brand practice.

• Overseas Tourism Marketing Initiative 1995 was thefirst ever all-island destination marketing campaignstructured on a public/private sector partnershipbasis, with funding from the OperationalProgramme for Tourism, the public sector Northand South and commercial enterprises.

• Tourism Ireland, the jointly funded all-island tourismdestination marketing organisation, wasincorporated in December 2000 as a co-operationbody under the terms of the Agreement reached inthe Multi-Party negotiations concluded in Belfast inApril 1998.

• The National Development Plan 2000 - 2006 (NDP)shifted the prime tourism policy objective from jobcreation to sustained foreign revenue earnings witha growing emphasis on sustainable and spatiallybalanced development, reflecting the need toensure the benefits are distributed throughout thecountry while alleviating any negativeenvironmental impacts. The NDP included provisionfor the first ever multi-annual Tourism Marketing

Fund, with a budget of €190 million over theperiod of the plan.

• The Tourism Product Development Scheme 2000 -2006, funded under the two Regional OperationalProgrammes, was established with a total budgetof €130 million, including €55m in EU funding,to support a range of new product developments,with the emphasis on regional spread, clusterdevelopment, specialist niche market products andenvironmental sustainability.

2.4 Industry, Government and EuropeanUnion Expenditure on Tourism

Capital Investment

Led by the private sector and assisted by EU and Exchequerfunding, spending on tourism-related capital projectsincreased substantially during the 1990s. Total capitalspending on physical investment in Irish tourism-relatedprojects amounted to €4.3 billion over the years 1989 to1999, according to estimates prepared by the economicconsultants Fitzpatrick Associates. The scale of tourisminvestment in physical assets on an annual basis is set outin Table 2.3.

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Exchequer Expenditure

The current direct annual Exchequer spend on tourismthrough the Vote of the Department of Arts, Sport andTourism is budgeted at €107 million for 2003.Approximately €80 million of this budget relates to generalmarketing activities, including the administrative costs ofthe key Tourism State Agencies. Details of expenditure over

the period 1997 to 2003, in current terms, are set out inTable 2.4. The substantial increase in Exchequer fundingfrom 2000 onwards took into account the scaling down inEU funding after completion of the Operational Programmefor Tourism, 1994 - 1999.

Table 2.3Capital Investment in Irish Tourism 1989-1999 (€m)

Source: Fitzpatrick Associates 1 Investment unallocated by year in 1998 and 1999

Year EU/International Fundfor Ireland Private Sector Exchequer Total

1989 1 105 22 128

1990 14 135 50 198

1991 34 185 76 296

1992 44 193 79 316

1993 41 207 69 316

1994 29 137 42 208

1995 22 151 47 220

1996 34 274 89 397

1997 70 368 240 678

1998 44 532 196 772

1999 31 420 164 615

Other1 0 91 84 175

Investment 1989-1999 364 2,798 1,156 4,319

% Total 1989-1999 8% 65% 27% 100%

Source: Department of Arts, Sports and Tourism

1997€m

1998€m

1999€m

2000€m

2001€m

2002€m

20032

€m

Bord Fáilte 33.3 44.8 46.7 57.6 87.0 51.1 46.4

CERT 4.2 4.4 15.0 19.2 21.2 21.0 20.6

National Tourism Development Authority - Fáilte Ireland - - - - - - 0.6

Tourism Ireland - - - - 1.7 34.0 38.6

Shannon Development 1.3 1.1 2.3 1.2 0.9 0.9 0.9

Total 38.8 50.3 64.0 78.0 110.8 107.0 107.1

2 2003 Estimates provisions - the establishment of Fáilte Ireland in May 2003 will impact on the outturn for the year by Agency

Table 2.4Tourism Agency Funding from Exchequer

22


European Union Investment

EU investment support for tourism under the OperationalProgramme for Tourism, 1994 - 1999 amounted toapproximately €431 million, details of which are set out inTable 2.5.

Under the current EU Community Support Framework,2000 - 2006, EU co-funding for tourism is confined to theTourism Product Development Measure under the twoRegional Operational Programmes. By mid-2003 no grantshad been allocated to specific projects althoughconsideration of applications, under an open bid process,had been well advanced. The Product DevelopmentScheme provides for €55 million in EU funding under theEuropean Regional Development Fund over the life of theProgramme.

Industry Investment in Marketing

The ITIC Marketing Expenditure Survey of February 2002estimated that the Irish tourist industry spent €134 millionon marketing in 2001. The industry spent a total of €35million on advertising, a further €38 million on promotionalcampaigns and brochures with the balance of expenditureattributed to marketing staff and associated overheads.


Tourism is a major sector of economic and socialdevelopment in Ireland. Employment grew in the sector bymore than 70% between 1990 and 2002 – a rate ofgrowth considerably above the 50% growth inemployment generally in the economy over the sameperiod – notwithstanding that general employment growthwas at unprecedented high levels.

The structure of the Irish tourism industry is predominantlythat of Irish-owned small and medium-sized enterprises(SMEs) in hotels, guesthouses, restaurants, licensedpremises and tourism services and attractions. The industryhas a well-structured representative system that works wellwith Government Departments and State agencies in agenerally productive private-public partnership to promotethe development of the industry.

Government involvement in the development of tourismhas been of long-standing duration reflecting theimportance of the industry to national and regionaldevelopment and the market failures (ie. the likely returnsnot justifying private sector investment) intrinsic to a highly-dispersed, small scale industry operating in a sophisticatedinternationally-competing services sector. Today, Irishtourism policy is focused on supporting sustainable growthin visitor expenditure, with an emphasis on a wider regionaland seasonal spread of business. The fundamentalcomponents of policy encompass:

• a Government Department (the Department of Arts,Sport and Tourism) which represents tourism within thegeneral Government decision-making process

Table 2.5EU Investment in Tourism 1994-2001

Source: Department of Arts, Sport and Tourism

EU Funding 1994€m

1995€m

1996€m

1997€m

1998€m

1999€m

2000€m

2001€m Total

Product Development 6 18 29 47 44 41 46 22 252

Marketing 5 11 13 12 11 11 8 - 72

Training 15 16 16 18 19 20 4 - 107

Total 26 45 57 76 74 72 58 22 431

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• a number of Tourism State Agencies which haverecently been restructured to focus on the overseasmarketing of the island of Ireland and the developmentof the sector

• a strong regional organisational structure for thepromotion of tourism exercised through the TourismState Agencies, the Regional Tourism Authorities andShannon Development, County Tourism Committees,Product Development Management Boards, CountyEnterprise Boards and LEADER Groups

• a number of evolving partnership arrangementsbetween the Tourism State Agencies and private sectorrepresentatives of the industry

• the periodic statement and re-statement of the vision,targets and objectives guiding tourism development inIreland by the Department and the State Agencieswhich operate under its aegis

• a range of State fiscal, financial and advisory supports –both Exchequer and EU funded - for the promotion oftourism operating generally, but not exclusively, underthe aegis of the Department of Arts, Sport and Tourism.

The first comprehensive statement on tourism policy inIreland was set out in a Government White Paper in 1985.Government policy statements have gone through anumber of iterations since then in response to changingnational and international circumstances and theunderlying organisational structures have evolved inkeeping with these changes. This period of more structuredpolicy development and implementation has coincidedwith a substantive take-off in the development of tourism inIreland. A number of factors underlie the expansion oftourism here, including a major international increase indemand driven by the rising real income levels in manyparts of the world, the falling cost of communications andtransportation and currency developments favourable toIrish tourism. But it is also reasonable to conclude thatimprovements in policy formulation and implementation inIreland played their part, as did the entrepreneurship of anIrish-owned industry rooted in the natural and builtenvironment, and in the culture and people of Ireland.

24


25


26

Ireland’s Tourism Industry:

Overview of Performance

1990-2002

“Visitor numbers to Ireland and tourismreceipts throughout the 1990s grew wellahead of global trends, benefiting allregions of the country. Irish tourism gainedmarket share in most markets in which itcompetes. While visitor experiencegenerally has consistently met or exceededexpectations for over 90% of visitors, theperception of good value for money hasfallen significantly in recent years.”

3chapter three

27

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• Visitor numbers to Ireland grew well ahead of global trends throughout the1990s, increasing by an average of over 7% each year compared with acorresponding world figure of 4.3%.

• In terms of average annual tourism receipts, Ireland's performance (5.8%) is alsoahead of European (4.4%) and global (5.3%) growth rates over the period1990-2001.

• The best performing source markets for Irish tourism have been the US andBritain while performance from Germany and France was below average.

• Travel to Ireland by those whose main purpose for visiting was a holiday hasgrown slightly ahead of the trend in overall visitor numbers.

• Irish tourism has increased its market share of visitors from the US, but has beenlosing market share from Germany and France and has seen a decline latterly inits share of an expanding British market.

• All regions of Ireland have benefited from the growth of Irish tourism in recentyears, with Dublin and the South West benefiting most while Shannon, the Westand the North West regions have recorded the lowest growth rates.

• Domestic tourism remains a bedrock for the Irish tourism industry contributingalmost half of all visitor numbers seeking accommodation in 2002 andrepresenting a fifth of the overall revenue generated by tourism.

• Survey analysis shows that the core tourism appeal of Ireland is characterised bypeople, place and pace.

• The holiday experience of visitors to Ireland has met or exceeded expectations inthe case of over 90% of visitors.

• There has been a significant drop in the perception of good value for moneyamong visitors in recent years.

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3.1 Tourism Performance – Visitor Numbersand Revenue

Overall Performance 1990-2002Visitor numbers to Ireland grew well ahead of global trendsthroughout the 1990s, increasing by 7.3% per annum from1990 to 2000. This compared with a world annual averageincrease of 4.3% over the corresponding period. Because ofFoot and Mouth disease and the impact of the terroristatrocities of September 11th, Ireland’s relative performanceworsened somewhat in 2001. Table 3.1 illustratescomparative trends, taking the latest year for whichestimates are available.

Tourism receipts in WTO comparative data are measured inUS dollars and, therefore, reflect exchange ratemovements. In terms of tourism receipts, Ireland'sperformance is ahead of European and global growth rates.In local currency, Ireland’s revenue earnings have grownahead of inflation – at an annual rate of 9.5% for theperiod 1990 to 2001. As set out in Table 3.2, the increasein visitor numbers has been the main stimulus to revenuegrowth while per capita and per diem visitor spend haveincreased more slowly – one of the contributing factorsbeing the significant growth in short breaks in Dublin.

Country of Origin

Total visitor numbers to Ireland increased at an annualaverage rate of 5.5% over the period 1990 to 2002. TheBritish market matched the overall growth rate over thetwelve year period and growth from Mainland Europeanmarkets other than Germany and France was aboveaverage. North American visitor numbers also grew by5.5% per annum to 2002, having achieved a 9% annualaverage growth rate up to 2000 prior to the outbreak ofFoot and Mouth disease and the impact of September11th. German and French growth was below average forthe period, at 4.1% and 3.5%, respectively. The details areset out in Tables 3.2 and 3.3.

Table 3.1Average Annual Growth (%) in Overseas VisitorNumbers and Receipts 1990-2001


Visitor Numbers Tourism Receipts

World 3.8% 5.3%

Europe 3.2% 4.4%

Northern Europe 3.4% 2.3%

Ireland 6.1% 5.9%

Table 3.2Annual Average Trends in Tourism Performance (% Change)


Total Revenue Tourism VisitorNumbers

Per capita spend(per visit)

Per diemvisitor spend

2002 v 1990 +9.8% +5.5% +4.0% +3.3%

1996 v 1990 +10.5% +7.1% +3.2% +3.4%

2002 v 1996 +9.0% +4.0% +4.8% +3.2%

30


Overall tourism receipts are influenced by variations in themarket mix. For example, an above average growth invisitors from the American market would tend to drive upaverage revenue earnings because these visitors generallystay longer, travel more within Ireland and spend morethan other visitors. Figure 3.1 shows the share of visitornumbers and revenue attributable to each major marketsource in 2002.


‘000 Visitors

1990 1995 2000 2001 2002

Britain 1,785 2,285 3,428 3,340 3,452

Mainland Europe 744 1,101 1,435 1,336 1,378

France 198 234 283 280 298

Germany 178 319 319 285 288

Other Europe 368 548 834 771 792

North America 443 641 1,056 903 844

USA 402 587 958 829 759

Canada 41 54 98 74 85

Other Overseas Areas 124 204 261 261 245

Total Overseas 3,096 4,231 6,181 5,840 5,919

Foreign Revenue Earnings (€million) 1,112 1,749 2,824 3,115 3,267

Receipts paid to Irish air and sea carriers (€million) 334 383 813 807 718

Total Foreign Revenue Earnings (€million) 1,446 2,132 3,637 3,922 3,985

Table 3.3Visitor Numbers and Foreign Revenue Earnings 1990-2002

North AmericaOther Areas

Mainland EuropeBritain


Figure 3.1Share of Visitor Numbers and Revenue

2002 Share of Visitors - 5.9 million

North AmericaOther Areas

Mainland EuropeBritain

2002 Share of Revenue - €4 billion

59% 42%

23% 23%

4%7%

14%

28%

31

Britain provides the largest number of visitors (59%) andshare of revenue (42%). The share of revenue accountedfor by overseas visitors, other than from Britain, is largerthan their share of visitor numbers.

Table 3.4 shows that North American visitors have aconsistently very high level of per capita spend incomparison with Britain and Mainland Europe. As aconsequence any downturn in the American market has adisproportionate effect on the overall revenue stream.

Purpose of Visit

In examining visitor flows, it is relevant to distinguishbetween discretionary and non-discretionary travel. Table3.5 shows that travel to Ireland by those whose mainpurpose for visiting was for a holiday has grown slightlyahead of the trend in overall visitor numbers.

Total holiday visits peaked in 2000 at 2.5 million, butslipped back to 2.4 million in 2002 (the second highestlevel on record). The highest growth rate over the decadewas attributable to business travel, undoubtedly fuelled bystrong economic growth in Ireland. In contrast, the lowestincrease was evident in the numbers visiting friends andrelatives reflecting, perhaps, the fall-off in emigration inthe 1990s.

Overseas Holiday Visitors

Despite the problems encountered in 2001 and 2002,overseas holiday visitor numbers grew by an average ofmore than 6% per annum over the 12 years from 1990.Holidaymakers from Britain recorded the strongestgrowth at 8.3%. North American holiday visitors grew by9% per annum up to the record performance in 2000.However, following the setbacks in 2001 and 2002, theannual average growth rate dropped below 6%. Holidayvisitors from Mainland Europe grew by almost 4% perannum since 1990 with the major markets, Germany andFrance, performing below average – at 2.5% per annumfor Germany and France registering a reduction of 1%per annum.

Table 3.6 sets out the growth in overseas holiday visitornumbers, broken down between key source markets.

Table 3.4Overseas Visitor Spend per Capita (€) 1990-2002

Source: CSO/Fáilte Ireland

1990 1995 2000 2001 2002

Britain 237 279 317 362 372

Mainland Europe 425 447 506 610 629

North America 477 545 652 795 840

Other Areas 483 601 684 801 933

Total Overseas 326 386 434 505 522

Table 3.5Growth Rates in Visitor Numbers by Purpose of Visit

2000 v 1990 2002 v 1990

Total Visitors +7.2% +5.5%

Holiday (main purpose of visit) +8.0% +6.3%

Business +9.8% +7.5%

Visiting Friends/Relatives +5.1% +4.8%

Average per annum growth rate %


32


Overall growth in the absolute number of Britishholidaymakers to Ireland belies significant changes in thepattern of demand, within that market, that have had adisproportionate impact on the nature of tourism withinIreland, particularly in terms of product usage andregionality. The key changes are set out below.

• British holidays of 1 to 5 nights duration increasedby 19% per annum in the 10 years since 1992when they accounted for 1 in 5 holidays. Todaythey account for 56% of all British holidays toIreland. Holidays of 6 plus nights have increased byless than 2% per annum over the same period.

• The number of British holiday visitors not using acar in Ireland has grown by 18% per annum in thepast decade while those using a car, either broughtor hired, have only grown by 1% per annum.

• Visits to Dublin increased at double the rate ofoverall British holiday visitors over the 10 yearperiod (13% per annum compared to 7% perannum overall). They have increased more thanfour-fold since 1996 and account for more than half(52%) of the total increase in British holiday visitssince 1996.

• British holiday arrivals by air have grown by 17%per annum over the past 6 years while arrivals bysea have declined.

Within the holiday segment, several other trends ofnote were:

• a growth in short-stays, mainly in Dublin

• a decline in activity holidays (e.g. angling, cycling,hill-walking)

• strong growth in conference and associated travelup to and including 2000, followed by a severedrop subsequently

• significant growth in the adult English languagelearning segment.

Total promotable segments – defined as holiday, conference,incentive1 and language learning visitors – amounted to2.68 million in 2002, having peaked at 2.8 million in 2000.Within the promotable category, the greatest growth hasoccurred in Dublin city breaks. This segment increased from95,000 in 1996 to 372,000 by 2002 and contributedsignificantly to overall growth. If Dublin city breaks areexcluded, there is no increase in the promotable segmentsin the 1996 to 2002 period.

Table 3.6Overseas Holiday Visitor Numbers 1990-2002


1990000s

1993000s

1997000s

2000000s

2001000s

2002000s

Annual AverageGrowth (%)1990-2002

Britain 466 575 925 1,123 1,112 1,215 8.3

North America 368 262 475 647 563 521 5.7

Mainland Europe 379 535 561 618 571 581 3.6

Germany 112 169 179 172 150 151 2.5

France 127 143 117 116 119 113 -1

Other Europe 140 223 265 330 302 317 7

Other Areas 61 64 111 145 144 127 6.3

Total 1,274 1,436 2,072 2,533 2,390 2,444 6.3

1 Incentive travel refers to reward trips offered by companies to staff and family members for work performance

33

Market Share Analysis and Trends

Not only has the number of visitors to Ireland increased inrecent years but, more importantly, the share of globaltourism that Ireland now attracts is higher than in the pastand it has outperformed most of its competitordestinations. For example, Ireland has:

• captured 14% of all international tourist arrivals (43million) in Northern Europe (by 2002), up from an11% share ten years previously

• attracted 7% of all US visitors to Europe, up from5% in the early 1990s

• attracted 19% of Australians visiting Europe, almosta doubling of share in a decade

• maintained similar levels of market share ofoutbound travel to Northern Europe from Italy, theNetherlands and the Nordic countries

• seen a decline latterly in its share of an expandingBritish market to Europe, now at 7.2% ( down from8% in 1999)

• lost share, compared to the mid-nineties, of theGerman outbound market to Northern Europe andhas been losing share latterly of French outboundtravel to Northern Europe.

2 Real growth based on 2002 prices

Market share trends must be seen in the context where it islikely that the worsening economic environment in many ofthe major source markets increases price sensitivity amongconsumers. All overseas tourist expenditure in Ireland is, ineffect, equivalent to an export and, as such, is highlysensitive to international competition.

Regional Destination within Ireland

Table 3.8 shows that all regions have benefited from thegrowth of tourism in recent years. The best performingregions have been Dublin – fuelled by the growth in urbanand short break markets, and the South West – because ofits strong tourism base and international reputation. Theweakest regions in terms of growth were the North West,West and Shannon.

Analysis of the regional destination of visitors showscontrasting fortunes for Dublin in trends between theoverseas and domestic markets. Dublin enjoyed thestrongest growth of all regions from overseas tourism of9.1% per annum since 1990 compared with 6% nationally.In contrast, Dublin showed only a 1% increase per annumfrom domestic trips against an overall growth for domestictourism of 3.6% per annum. All other regions recorded agrowth of less than 4% per annum since 1990 in overseasvisitor numbers.

Table 3.7Ireland‘s Share of Outbound Travel to Northern Europe


Ireland’s Share (%) 1996 1997 1998 1999 2000 2001 2002

Italy 11.6 11.1 10.9 11.4 13.3 12.1 12.0

France 14.8 15.8 17.8 11.9 8.3 8.8 9.6

Netherlands 8.5 8.9 9.9 8.2 9.5 9.6 8.2

Germany 4.8 5.0 5.0 4.6 4.8 4.6 4.6

Nordics 1.0 1.0 1.1 1.5 1.6 1.4 1.3

Table 3.8Regional Distribution of Overseas and DomesticTourism Revenue


1990€m

2002€m

Real Growth2

1990-2002As a % of

1990 revenue As a % of

2002 revenue

Dublin 356 1,257 151% 22% 30%

South West 290 793 94% 18% 19%

Midlands/East 159 414 85% 10% 10%

South East 169 434 82% 10% 10%

Shannon 198 433 55% 12% 10%

West 276 596 53% 17% 14%

North West 175 284 15% 11% 7%

Total 1,623 4,211 84%

34


Activity Holidays

Most activity holidays showed considerable growth in thelate 1980s and early 1990s but as shown in Figure 3.2,have recorded declines since then. This is of concern givenIreland’s comparative strength in this area over a number ofyears. In the case of angling, the decline is attributable to acombination of a declining interest in angling as a leisurepursuit, increasing competition and product deteriorationin Ireland.

Golf is holding up better than most niche activities but hasreached a plateau since 1997. It should be borne in mindthat outdoor pursuits were adversely affected in 2001 byFoot and Mouth restrictions. However, a number ofproducts were in decline before 2001, notably walking,cycling and angling. Preliminary results for 2002 do notshow any reversal of this decline.

Breakdown of Expenditure by visitors

Tourism, both international and domestic, impacts on awide range of sectors, including food and drink, retail anddistribution, internal transport and personal services, as setout in Figure 3.3.

Figure 3.2Overseas Holidaymakers Engaging in Outdoor Activities 1990-2001

0

50

100

150

200

250

300

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Source: Fáilte Ireland Source: Fáilte Ireland

Hiking/WalkingGolf

AnglingCycling

Equestrian

Fares to Irish CarriersBed & Board

Other Food & DrinkSightseeing/

Entertainment

Internal TransportShopping

Other€93m

Source: Fáilte Ireland/CSO

Figure 3.3Breakdown of Out-of-State Visitor Expenditure2002 (€million) - Total €4 billion

€278m

€525m

€718m

€957m

€1,111m

€302m

35

Domestic Tourism

Domestic residents spent almost €1 billion on close to 6million trips, of at least one night away from home, withinIreland during 2002. Domestic holidays accounted for 3million of these trips and were worth an estimated €640million. Holidays of 1 to 3 nights duration constituted 2million trips while almost one million were holidays of 4 ormore nights. Details in relation to the number andassociated expenditure of domestic trips are set out inFigures 3.4 and 3.5.

Irish tourists have long been an important bedrock for thetourism industry. They are particularly important for certainsectors of the industry, for particular areas and at off-peaktimes. Hotels are the most popular type of accommodationfor domestic holidaymakers accounting for 45% of all bed-nights on short holidays. The South West Regionconsistently accounts for some 25% of all domesticholidays, while the West and the South East each accountfor a further 20%. In addition, some 30% of all short breakholidays are taken between January and April. In 1990, Irishresidents took some 5 million trips – at a time when thenumber of overseas visitors was 3.6 million. In per capitaterms, domestic holidaymakers do not spend as much asoverseas visitors. In 1990, although they accounted for58% of tourist numbers, they contributed a quarter (or€0.5 billion) of the overall revenue generated by tourism(€2 billion). The comparative figures for 2002 show thatdomestic tourists accounted for 48% (or 5.9 million) ofoverall tourist numbers and generated less than 20% (or€0.9 billion) of tourism earnings.

In 2002, against the expectations of the industry, thenumber of domestic trips recorded – at 5.8 million –represented a 21% decrease on 2001 performance (7.5million trips) and a 10% decrease on 2000 (6.4 milliontrips). Figure 3.6 illustrates, by purpose of trip, the patternof domestic tourists from 1995 to 2002.

Figure 3.4Number of Domestic Trips 1995-2002

Figure 3.5Expenditure on Domestic Trips 1995-2002



8

7

6

5

4

3

2

1

1400

1200

1000

800

600

400

200

0

No

. o

f Tr

ips

(m)

€ m

illio

n

1995 1997 1999 2001 2002

1995 1997 1999 2001 2002

Short HolidaysLong Holidays

Other Domestic Trips

Short Holiday SpendLong Holiday Spend

Other Domestic Spend


Figure 3.6Domestic Visitors by Purpose of Visit 1995-2002Domestic Visitors by Purpose of Visit 1995-2002

1995 1998 1999 2000 2001 2002

Business TripsOther Domestic Trips

Home HolidaysVisiting Friends/Relatives Trips

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

(00

0s)

36


3.2 The Irish Tourism Experience

Identifying and analysing the Irish tourism experience – i.e.the experience of the customers of Irish tourism - is ofprimary importance in the formulation of Ireland’s tourismpolicy and in shaping the competitive position for theindustry. From a supplier viewpoint, there is a naturalinclination to define tourism through the perspective of aparticular product. While analysis along product lines canbe useful, and provide valuable, if partial, insights, it isessential that overall analysis of the industry is undertakenfrom a customer perspective and that the tourism productis defined accordingly. From this perspective the tourismproduct can best be described as “the complete experienceof the tourist from time of departure from home to thetime of return”.

Typically, the tourism experience embraces a number ofinter-related elements as set out in Figure 3.7.

Evaluation of the Ireland tourism experience must take intoconsideration the range of elements set out in thediagrammatic representation. The weighting attached tothe different elements in the evaluation will, of course, vary.It is essential that all elements of the holiday experiencefully meet customer expectations and that they comparewell with competitor destinations in order for the industryto meet its full potential in the future.

Survey analyses indicate that the core tourism appeal ofIreland is characterised by people, place and pace. Visitors toIreland are motivated principally by:

• the expectation of a warm and welcoming peoplewith the opportunity to interact with the peopleand the culture in all of its diverse forms

• the perception of beautiful unspoilt scenery andopportunities for sightseeing

• the comfort of a relaxed pace of life delivering bothphysical and emotional benefits to the visitor.

These three key elements exert a different pull dependingon factors such as the country of residence of the potentialvisitor, whether they are first time or repeat visitors andwhether or not they have ancestral or more immediateethnic ties with Ireland.

Surveys of overseas holiday visitors have consistentlyconfirmed the importance of the above core productvalues and provide a rating of visitor satisfaction withthese aspects of the Irish holiday experience as set out inTable 3.9.

Figure 3.7Ireland’s Tourism Product - Principal Components

Place

Natural Attractors

Scenery/Landscape

Seascapes

Countryside

Waterways

Accessibility

Airports/Seaports

Airlines

Shipping companies

Facilities/Services

Roads/Signposting

Internal Transport

Communications

Accommodation

Restaurants

Pubs/Bars

Entertainment

Activities

Things to see and do

Shops

Other support services

People and Pace

Intellectual Value System

People/Way of life

History/Heritage

Arts/Culture

Folklore/Beliefs

Towns/Villages

Land use

People, place

and pace/

Value for money/

Safety/security

37

Ireland delivers substantially on the most important factors.In most cases, and in particular with regard to easy, relaxedpace, the level of satisfaction exceeds the level ofimportance. Consistently, and with little variation over thepast 10 years, the holiday experience of visitors to Irelandhas met or exceeded expectations in the case of over 90%of visitors. However, underlying all of these core factors isthe perception of value for money. On this factor, Irelandhas been significantly losing out in recent years. In 2002,55% of overseas holidaymakers considered that they hadnot got good value for money – well down on previousyears.

Successful promotion of the Irish tourism product to amore discerning customer base requires a natural and builtenvironment together with a range of experiences and alevel of service up to the highest international standards.Tourists today are more demanding and expect more oftheir investment of time and money. While holidays, ingeneral, are becoming shorter but more frequent, with arecent emphasis on city breaks and weekend trips and agrowing tendency to try to cram a greater amount into ashorter stay, there is a much higher level of expectation of apositive experience, on the part of the visitor, than was thecase in the past.

Table 3.10 illustrates the significance of the variouselements of the Irish tourism product in terms of usage byoverseas holidaymakers. Of particular note is the

importance of hotels, guesthouses and B&Bs in touristaccommodation, the high incidence of eating out inpubs/bars, the significance of the built heritage in terms ofvisitor attractions and the low levels of activity holidays.

Table 3.9Important Factors when Choosing to Holiday in Irelandand Satisfaction Ratings

Source: Fáilte Ireland Visitor Attitudes Surveys 1997-2002

Very Important(%)

Rating - % Very Satisfied

1997 1999 2000 2001 2002

Friendly, hospitable people 87 88 88 89 88 90

Beautiful scenery 86 89 89 89 89 91

Memorable experience 82 83 82 83 84 82

Natural, unspoilt environment 81 83 77 79 79 83

Safe and secure 77 76 77 78 79 80

Easy, relaxed pace 74 83 83 82 82 82

Suitable for touring 66 76 72 73 73 71

Attractive cities/towns 64 59 62 66 64 65

Overall Satisfaction Rating 94 91 94 94 93

Table 3.10Use of Various Elements of the Tourism Product byOverseas Holiday Visitors

Accommodation Type Overseas Holiday Visitors(%)

Guesthouses/B&Bs 45Hotels 36Holiday Hostel 9Self-catering group schemes 6Camping 2Youth Hostel 2Self-catering (individual Premises) 2Self-catering apartments 1Cabin Cruiser 1

Food Services Use of Food Service Outlets(%)

Food in pubs/bars 61Budget restaurants 36Food in Hotels 30High quality restaurants 30Food in other accommodation 18

Internal Transport Use of Internal Transport Services(%)

Car hire 31Intercity bus services 21Taxis 18Day coach tours 10Intercity rail services 9Coach tours (including overnight stay) 5

Places of Historical/Cultural Interest Use of Visitor Attractions(%)

Historic houses/castles 56Monuments 39Gardens 32Heritage/Interpretive Centres 31Museums/Art Galleries 27Theatre/Concerts 10

Activity Use of Activity Products(%)

Cycling/Hiking/Walking 7Golf 7Fishing 4Equestrian pursuits 2

Source: Fáilte Ireland Survey of Overseas Travellers 2002

38



The success of Irish tourism as an important instrument ofnational and regional economic development in recentyears, in particular, has resulted from the outstandingachievement of the industry in gaining or holding marketshare in virtually all the markets in which it competes in astrongly expanding market environment. Ireland's share ofUS visitors to Europe increased from 5% in 1990 to 7% in2002. Latterly Ireland has seen a decline in its share of theexpanding British market – a share it held since 1990.However, in line with the significant increase in the numberof British people taking overseas holidays, holiday visitornumbers from Britain to Ireland increased by over 8% peryear on average between 1990 and 2002 – a growth ratehigher than from any other market. France, and to someextent Germany, are exceptions to the increasing or constantmarket share of Irish tourism over the past 10 years.

Domestic tourism remains a bedrock for the Irish tourismindustry and accounted for almost half of all visitornumbers seeking accommodation in 2002. Its contributionto tourism earnings is considerably less, largely because ofthe length of stay but, nevertheless, accounted for almost€1 billion in tourism revenue in 2002.

The perception of visitors with respect to the Irish tourismexperience has remained consistently high over the past 10years across most of the factors that determine theattractiveness of Ireland to overseas visitors (includingpeople, scenery, environment, security etc). This might beexpected given the increased market share that Ireland hasgained. An exception, in more recent years, has been invisitor perception of value for money, with only 45% ofvisitors in 2002 considering that Ireland representedgood/very good value for money.

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40


Tourism in Ireland Today - An Assessment

“Irish tourism is, arguably, the most successful sector ofIrish-owned enterprise since the foundation of theState. The industry today has strong foundations whichunderpinned its success in the 1990s. It is, however, atan important turning point in its evolution. Recentyears have seen a significant loss of competitivenesswhich, if not redressed, will undermine the capacity ofthe industry to benefit from the strong growthenvisaged in international tourism in the years ahead.”

4chapter four

41

42



• The strong foundation blocks on which the Irish tourism industry rests today include a historically highcustomer base of almost 6 million visitors, consistently high overall customer satisfaction ratings, a competentand experienced workforce and a modern and efficient capital stock of accommodation and other attractions,including air and sea transport services.

• Following competitive gains in the 1990s, Ireland in 2002 was perceived by 55% of visitors as not providinggood value for money.

• High insurance costs are a major burden and there is an urgent need to accelerate the Government'sinsurance reform programme to reduce premiums.

• While specific Government actions are necessary to address price inflation generally, the tourism industry itselfhas the primary role and responsibility in driving down costs in the industry.

• The range of tourism products and services has improved significantly but there are indications of under-utilisedcapacity and falling margins that threaten reinvestment and the maintenance of standards in the future.

• A number of gaps in tourism infrastructure, most importantly the development of a National ConferenceCentre, need to be addressed, as well as a greater emphasis on environmental conservation, productinnovation and the packaging and presentation of tourism product to meet changing customer requirements.

• While there have been major improvements in air and sea access to Ireland during the 1990s, additionalvisitors could be attracted through changes in transport policy and improvements in access infrastructure.

• A greater level of industry investment is needed in human resource development and training to upgrade skilllevels in the industry to the highest international standards.

• There is considerable scope to improve the efficiency and effectiveness of spend in marketing and promotionby the State and tourism industry.

• The ability of the Department of Arts, Sport and Tourism, the Tourism State Agencies and the tourism industryto more effectively shape and influence policy in the wider issues that impact on tourism, will be a keyinfluence in determining the future success of the sector.

• The role of the Department of Arts, Sport and Tourism in policy formulation and analysis requires to bestrengthened if the tourism industry is to contribute its full potential to national and regional development.

43

4.1 Foundations for Future Success

As set out earlier in this Report, the Irish tourism industrymade significant advances during the 1990s, with aboveaverage international growth rates and gains in marketshare, in particular from North America and Britain. Thestrong foundation blocks on which the Irish tourismindustry rests today include:

• a historically high customer base with almost 6million overseas visitors in 2002 – close to the peak6.18 million achieved in 2000. This is more thantwice the number of overseas visitors for 1990 andmore than three times the number who came toIreland in 1985. Moreover, some 6 million domestictourist trips were made in 2002. This is a majorcustomer base, by any standards, which generatedin total approximately €5 billion in revenueearnings in 2002

• high overall customer satisfaction levels as indicatedin comprehensive visitor attitude surveys conductedover the years. Consistently, and with little variationover the past 10 years, the holiday experience ofvisitors to Ireland has met or exceeded expectationsin the case of well over 90% of visitors. Satisfactionwith accommodation is also generally high with theCERT Hospitality Survey for 2002 showing that closeto 80% of visitors were well satisfied with theaccommodation they used, ranging from top classhotels to B&B establishments. A high proportion ofvisitors (between 80% and 90% of surveyrespondents) would recommend Ireland as aholiday destination which is significant in the lightof the importance of word of mouthrecommendations in determining holiday choices

• the high employment base of Irish tourism,currently estimated at 140,000, with a very strongupward trend over the past 10 years in excess ofthe rate of employment growth nationally. Thisincreasingly competent and experienced workforcerepresents a major asset going forward – given thenature of the industry in which the attitudes,competence, enterprise and innovation of thepeople are both part of the production process tomeet customer needs and the product itself whichthe customer experiences

• the capital stock of Irish tourism has increasedsignificantly in both quantitative and qualitativeterms in recent years, financed primarily by theprivate sector but with major support through EUand Exchequer funds and tax incentives. Theadditions to the accommodation base have beenparticularly noteworthy but there have beensimilarly high levels of investment in tourismattractions, leisure facilities, State heritage andcultural facilities, tourist information offices andpassenger transport – including aircraft, sea ferries,coaches and car hire fleets. This rate of expansionmeans that a high proportion of the currentphysical stock of Irish tourism is modern, efficientand up-to-date.

In short, there is a confidence, professionalism andexpertise in the industry today, based on the competitivesuccess of recent years, which did not exist in the past. Theindustry has generally achieved the challenging investment,revenue earnings and employment targets set for it undersuccessive national plans and EU Operational Programmesfor Tourism. These are invaluable foundations whichprovide a solid base on which the new challenges facingthe Irish tourism industry can be addressed withconfidence.

Any review of Irish tourism requires an assessment of its keycomponents as a necessary foundation for the developmentof a new strategy for the future development of the sectorand an associated set of actions to drive the industryforward. This Chapter provides such an assessment under anumber of headings:

• competitiveness and value for money

• product development

• access transport

• the people in tourism

• marketing and promotion

• the wider issues affecting future growth

• tourism policy formulation and implementation.

4.2 Competitiveness and Value for Money

Satisfaction Ratings

During the 1990s, the Irish tourism industry performedwell in terms of competitiveness, as indicated in theoverall satisfaction ratings accorded by overseas visitorsand the increase in market share attained, as set outearlier in this Report. Increasingly, Ireland was seen to beoffering a better quality product. It was competitivelypriced, assisted by favourable exchange rates for the USdollar and sterling. Deregulation in the aviation sectormeant easier and cheaper air access. The friendliness ofthe Irish people and the scenic beauty of the countrywere increasingly appreciated and the growing interest inIrish culture, particularly in the performing arts,contributed to Ireland becoming an attractive and evenfashionable destination. However, declining market shareof holiday visitors from Germany and France during the1990s was a worrying trend.

The most significant finding from Bord Fáilte VisitorAttitude Surveys is the increasing proportion of thosequestioned who say that the value for money of theirholiday experience is only "fair, poor or very poor".The value for money rating declined significantly in 2002when 55% of overseas visitors surveyed considered thatIreland did not provide good value for money. Such arating, if sustained, constitutes a potential competitivenesscrisis for the industry. While there were a number of factorsthat accounted for this (including fluctuations in exchange

rates and more easier price comparisons resulting from theintroduction of the euro), deterioration in satisfactionratings were evident across all markets. Figure 4.1 illustratesthe significant drop from the 63% satisfaction peakachieved in 2000 down to 45% in 2002. Looking at theresults by market, there was an even steeper decline in theUS market – where satisfaction ratings dropped by 25percentage points, from 73% to 48% from 2001 to 2002.

The aspects most frequently mentioned by surveyrespondents, as offering poor value for money, were eatingout, drink, food purchased in shops or supermarkets, andthe cost of living generally. Figure 4.2 illustrates the extentto which actual experience of prices exceeded visitorexpectations in 2002.


Figure 4.1Overseas Holidaymakers Rating of Value for MoneyOverseas Holidaymakers Rating of Value for Money

Source: Fáilte Ireland/Survey of Overseas Travellers

% o

f h

olid

ay v

isit

ors

Very good/good value Fair/Poor/Very poor value

1997 1998 1999 2000 2001 200230

40

50

60

70

80

Figure 4.2Overseas Visitors View of Prices in Ireland 2002Overseas Visitors View of Prices in Ireland 2002


0 10 20 30 40 50 60

Self-catering

Hotels

Guesthouse/B&B

Car Hire

Eating Out

Food (other than eating out)

Taxis

Drink (Alcoholic)

% more than expected

44

45

There are a number of factors influencing the pricecompetitiveness of the Irish tourism product but theexternal shocks suffered in 2001, and the downturn invisitor numbers since then, have brought competitivenessinto sharper focus. These factors include:

• inflation and how it impacts on operating costs andprices generally

• taxation levels, in particular indirect taxes and exciseduties

• currency movements

• insurance costs

• the ability of the industry to manage costs andprices through improvements in productivity,innovation, use of new technologies anddiscounts/special offers.

Inflation

Figure 4.3 illustrates the annual change in the ConsumerPrice Index since 1996 and how it compares with inflationin the eurozone. The Irish index (100) was set inNovember 1996 and, by December 2002, had increasedto 121.4. In July 2003, the Central Statistics Office (CSO)reported that inflation had decreased in each of theprevious four months but, even at 3.5%, was almost twicethe EU average of 1.8%.

The CSO also reported that, among the most notable pricechanges in the year, were increases in alcoholic beveragesand tobacco (+9.9%) and in restaurants, hotels andlicensed premises (+6.5%), which were increasing well inexcess of the average rate of inflation.

Comparisons within the eurozone

The price competitiveness of Ireland within the EuropeanUnion is a useful measure against which to measureperformance for two reasons – firstly, because the majorityof overseas visitors to Ireland are European in origin andsecondly, because Ireland competes with other Europeandestinations for long-haul visitors.

With the introduction of the euro there is now totaltransparency of costs among the twelve eurozonecountries. As Figure 4.4 demonstrates, recent researchpublished by Forfás (Consumer Pricing Report, May 2003)found no abatement in the rates of consumer price inflation(since the euro changeover), but rather indications werethat Ireland could soon emerge as the most expensivecountry for consumer goods/services within the eurozone.Specifically the research found that Ireland's position was:

• the second most expensive of the 15 EU memberstates - it was fifth from the bottom in 1999 and ismarkedly more expensive when compared toGreece, Spain or Portugal

• the most expensive of the eurozone countries forfood and for prices in pubs and restaurants

• the second most expensive for off licence alcohol –with 10 of the 12 eurozone countries some 40% to60% cheaper than here

• the second most expensive country for recreationand culture.

Figure 4.3Consumer Price Index 1996-2002 Annual Percentage ChangesConsumer Price Index 1996-2002 Annual Percentage Changes

Source: CSO

0%

1%

2%

3%

4%

5%

6%

1996 1997 1998 1999 2000 2001 2002

EurozoneIreland

46

For visitors, the price issue relates not so much to the costof access and accommodation, which is generally pre-booked at a known and fixed price, but, as alreadyindicated, to the price of eating out, drink, food in shopsand the general cost of living when they get here.

In order to address Ireland's comparatively high inflationrate in European terms, it is essential that the provisions ofthe Social Partnership Agreement 2003 - 2005 – SustainingProgress – are fully implemented by all the social partners,to help restore, and enhance, national competitiveness. Inthis respect the provisions relating to pay, productivity andthe facilitation of change in the workplace are particularlyimportant to the tourism industry, as well as theAgreement's anti-inflation initiative. The analysis andmeasures proposed by the National CompetitivenessCouncil and Forfás, in their May 2003 Statement onInflation, are also of importance, in particular therecommended commitment to an inflation targetbenchmarked to the eurozone average, prudent fiscalpolicy, enhanced competition reform and the avoidance offurther increases in excise duties, VAT and in charges forGovernment services for the remainder of 2003 and inBudget 2004.

Taxation Levels

Reforms in the Irish taxation system over the past decadehave resulted in generally favourable rates of income andsocial insurance taxes and corporation tax in comparisonwith other EU countries. This operates to the benefit of theIrish tourism industry, as well as business generally, in termsof labour costs and the availability of profits for re-investment. The Irish tourism industry also benefited fromvery generous capital allowances for hotels and other formsof accommodation and roll-over relief until the changesintroduced in the Finance Act 2003. There are someindications that some of the investment that has takenplace was tax driven rather than tourism driven.

Price differentials at international level for tourism productsand services can often be partially explained by differencesin tax rates. Table 4.1 sets out the current VAT ratesapplicable to hotels and restaurants in the EU. The Tableshows that Ireland is in the mid-range of rates applicable torestaurants while it is the fourth highest in the case ofhotels. The VAT rate applicable to hotels and restaurantswas increased from 12.5% to 13.5% in the 2003 Budget.


Figure 4.4Index of Affordability of Consumer Goods 2002Index of Affordability of Consumer Goods 2002

Source: Forfás Consumer Pricing Report

0 20 40 60 80 100 120

Finland

Ireland

Netherlands

Germany

Luxembourg

France

Belgium

Austria

Italy

Spain

Greece

Portugal

Table 4.1VAT Rates in Hotels and Restaurants 2003

Source: Department of Finance

Hotels

1 Denmark 25.0

2 Britain 17.5

3 Germany 16.0

4 Ireland 13.5

5 Sweden 12.0

6 Italy 10.0

7 Austria 10.0

8 Greece 8.0

9 Finland 8.0

10 Spain 7.0

11 Belgium 6.0

12 Netherlands 6.0

13 France 5.5

14 Portugal 5.0

15 Luxembourg 3.0

Restaurants

1 Denmark 25.0

2 Sweden 25.0

3 Finland 22.0

4 Belgium 21.0

5 France 19.6

6 Britain 17.5

7 Germany 16.0

8 Ireland 13.5

9 Portugal 12.0

10 Italy 10.0

11 Austria 10.0

12 Greece 8.0

13 Spain 7.0

14 Netherlands 6.0

15 Luxembourg 3.0

47

The combined impact of the relatively high rates of exciseduty and VAT in Ireland on alcoholic drinks, in particularwine, exacerbates price differentials with other Europeandestinations. Table 4.2 illustrates the position in the case ofa standard 750ml bottle of still wine. It is obviouslyimportant, therefore, that the potential impact on thetourism industry and on Exchequer tax receipts of anyproposed changes in excise duties and VAT rates arecarefully taken into account before decisions are taken toadjust such rates in the future.

Currency Movements

Another factor that has led to Ireland becoming a moreexpensive tourist destination has been the strengthening ofthe euro against the US dollar in particular, but alsosterling. By 2002, the currency appreciation led to Irelandbecoming some 11% and 5% more expensive for US andBritish visitors respectively since 1999 – as set out in Table4.3. While such developments also impact on othereurozone countries, any further weakening of the value ofsterling or the US dollar, against the euro, would acceleratea worsening of Ireland's competitive position.

Insurance Costs

High insurance costs are a particular concern of the tourismindustry and very significant increases in premiums havebeen experienced over the past 3 years. Not only aregeneral insurance increases raising industry costs, but thescale of the increases are also placing in jeopardy many ofthe activity holidays, tourist attractions and festivals thatoffer good prospects for future tourism development.

The Government's Insurance Reform Programme seeks tobring about a reduction in insurance costs by the insuranceindustry, for the benefit of consumers and businesses,through improving the functioning of the insurancemarket, decreasing the cost of delivery of compensationand investigating the competitiveness of the market. TheProgramme is overseen by a Ministerial Committee whichmeets monthly. Implementation of the recommendations inthe Motor Insurance Advisory Board Report of April, 2002are being advanced. The Interim Personal InjuriesAssessment Board (PIAB) is up and running and proposalsto establish the PIAB on a statutory basis are expected to besubstantially advanced by the end of 2004. The Report oncompetition in the insurance sector by the CompetitionAuthority is also expected to be completed by year end.

Given the negative impact of recent increases in insuranceon the tourism industry, there is an urgent need toaccelerate the Insurance Reform Programme, to assess thespecific impact of insurance increases on the tourism sectorand to bring about reductions in premiums at the earliestpossible date. The tourism industry itself should alsoconsider the scope for co-operative actions, in areas such asthe management of claims, health and safety measures andself-insurance, to address the issue.

Table 4.2Excise Duty and VAT on Still Wine

Excise Duty€ per 750ml VAT

Ireland 2.05 21.0%

Britain 1.88 17.5%

Sweden 1.81 25.0%

Finland 1.77 22.0%

Denmark 0.71 25.0%

Netherlands 0.44 19.0%

Belgium 0.35 21.0%

France 0.03 19.6%

Austria 0.00 20.0%

Germany 0.00 16.0%

Greece 0.00 18.0%

Italy 0.00 20.0%

Luxembourg 0.00 12.0%

Portugal 0.00 12.0%

Spain 0.00 16.0%


Table 4.3Exchange Rates: Units per euro

US $ Stg£

US $ Stg£

1999 1.0658 0.6587

2000 0.9236 0.6095

2001 0.8956 0.6219

2002 0.9456 0.6288

% change since 1999 -11.28% -4.54%

Source: Department of Finance

48

Tourism Industry Initiatives on Inflation

While actions at Government level are desirable to addressinflation, the tourism sector itself has the primaryresponsibility to manage within the given cost environmentand to seek to drive down costs in the industry. Whileinflation, insurance costs, currency movements and taxationrates constitute major pressures on costs, tourism pricingand margins are substantially influenced by the actions ofbusinesses themselves. Network groups and the tourismindustry representative bodies can play an important role indeveloping and supporting initiatives which help to reducecosts and prices. There is a need for the industry, inco-operation with the Tourism State Agencies, to identifyspecific measures to improve competitiveness at operationallevel, through improvements in general management andhuman resource practices, more effective and efficient useof new information and communication technologies,enhanced productivity measures, more innovative pricinginitiatives and a relentless drive to reduce costs.

4.3 Product Development

Product Development Strategy

As highlighted in Chapter 2 of this Report, the range oftourism products and services in Ireland has improvedsignificantly both in terms of quantity and quality, over thepast decade. Some €4.3 billion has been invested intourism capital stock during the 1990s.

The two EU backed Operational Programmes for Tourism,1989 - 1993 and 1994 - 1999, helped to identify theinvestment requirements of the industry and supported theupgrading of tourist accommodation and associated all-weather leisure and conference facilities, the developmentof specialist activities (such as golf, angling, equestrian,walking), enhancement of national and local public culturaland heritage infrastructure and the modernisation of thetourist office network.

The Tourism Development Strategy, launched by BordFáilte in October 2000, emphasised the need for a moreintegrated approach to tourism planning and investmentfor the purposes of the National Development Plan, 2000 -2006, and in allocating investment support under thetourism product development measure of the two RegionalOperational Programmes under the Plan. The strategy,which is very much in line with the aims and objectives of

the National Spatial Strategy launched in November 2002,identified and categorised the country's tourism zones andoutlined the critical issues to be addressed for the 2000 -2006 period i.e. regional spread, seasonality, infrastructuralbottlenecks, sustainability, congestion, customer service andquality management. Investment supports under thecurrent product development measure are being targetedat a range of projects including:

• major attractors (and clusters of existing attractors)

• special interest pursuits

• tourism/environmental management.

The product development measure is intended to addressthe key product gaps currently found in Ireland's tourisminfrastructure, with support focused, in particular, ondeveloping and underdeveloped tourism areas of thecountry. Support available for the established tourism areas(Dublin, Cork, Galway, Shannon and Killarney) is confinedto environmental and visitor management initiatives. Nosupport is available for additions to tourismaccommodation as any further expansion is expected to bemet through normal market forces.

Some remaining national strategic product gaps exist, mostimportantly the development of a dedicated state of the artNational Conference Centre in Dublin. The recent decisionby the Government to advance this project by way of aleasing arrangement through an open competitiveprocurement process is a major step towards the realisationof a Conference Centre which has the potential to generatean additional 30,000 annual visitors. Moreover, there areuntapped opportunities arising from the hosting ofinternational field-based sporting events, which would bestrengthened through the development of the proposedNational Sports Stadium in Dublin. The artistic and culturalinfrastructure of Dublin also needs to be upgraded tocompete with other European capital cities.

Tourism Accommodation Stock

In line with the expansion of the Irish tourism industryduring the 1990s and driven by favourable taxationarrangements, there were significant additions to thetourism accommodation stock as set out in Table 4.4. Theexpansion mainly occurred in the hotel and guesthouseand registered self-catering categories, due to changes incustomer demand and the availability of taxation


incentives. The number of approved B&Bs fell, although itis unclear to what extent this development may have beencompensated by increases in unapproved accommodation.The current stock of accommodation is generally regardedto be of high quality although the high number of hotelsopting out of the official voluntary classification system is amatter of concern, given the growing customer emphasison standards and quality of service.

While the levels of investment in, and expansion of, tourismaccommodation since the mid 1980s would suggest thatthe rates of return to those involved in the industry havebeen attractive, recent information indicates that theoutlook is not as favourable as it has been. Based on annualsurveys of the hotel industry conducted by Horwath BastowCharlton, average room occupancy rates have beendeclining since 2000, as well as profit before tax per room,as set out in Table 4.5.

Further development, investment and upgrading in touristaccommodation will be heavily dependent on the returnsavailable in the sector and the tax treatment of suchinvestment. If occupancy rates and margins continue todecline, future investment in facilities is likely to becurtailed giving rise to an eventual deterioration in quality.However, current pressures and levels of unused capacity inthe hotel and wider accommodation sector would suggestthat a cautious attitude should be taken in the short-termin relation to new investment, unless warranted by clearlyidentified market needs.

As at 1st January 1996 1997 1998 1999 2000 2001 2002 %'96-'02

HotelsPremises 713 728 771 838 847 851 858 +20

Rooms 26,350 26,976 30,445 36,282 39,656 40,008 41,983 +59

Guest HousesPremises 344 370 422 489 488 489 486 +41

Rooms 3,616 3,856 4,501 5,114 5,207 5,272 5,336 +48

B&BsPremises 3,921 3,926 4,267 4,221 3,904 3,791 3,563 -9

Rooms 16,131 16,975 17,216 17,123 17,828 15,529 14,652 -9

Caravan & CampingPremises 133 132 133 133 132 132 127 -5

Pitches 8,079 8,753 8,457 8,390 8,405 8,299 7,396 -8

HostelsPremises 188 227 224 230 207 206 198 +5

Beds 9,304 11,381 10,898 11,230 11,027 11,015 10,771 +16

Registered Self-Catering Units 2,008 2,162 2,165 2,390 2,527 2,432 2,461 +23

Listed Self-Catering Units N/A N/A N/A N/A N/A 5,978 5,649 -6


Table 4.4Tourism Accommodation Stock 1996-2002

Table 4.5Hotel Room Occupancy Average Rates and Profit beforeTax per Room 2000-2002

2000 2001 2002

Room Occupancy Average %

National 68.3 65.9 64.8

1-49 Room Hotel 57.0 50.7 54.8

50-99 Room Hotel 68.4 63.0 63.3

100+ Room Hotel 68.6 68.1 64.6

Profit before Tax per Room € 9,895 9,067 8,555

Source: Horwath Bastow Charleton Hotel Industry Surveys2000-2002

49

50

Environmental Issues

The quality of the natural environment is regarded as oneof the core assets in promoting Ireland overseas, and inseeking competitive advantage for Ireland as a tourismdestination. Visitor Attitude Surveys have shown a generallyhigh level of satisfaction on the part of overseas visitorsunder a range of environmental issues such as beautifulscenery, natural unspoilt environment, nature/wildlife/floraand attractive cities/towns. Satisfaction levels in relation tolitter and pollution are at much lower levels, suggesting thecontinuing need for improvements. The details are set outin Table 4.6.

The main challenges at national level now facingenvironment and sustainable development policy areimproving the quality of inland waters, improving wastemanagement, enhancing the urban and rural environmentthrough good design of new development and sensibledevelopment control decisions, controlling greenhouse gasand other emissions in accordance with Ireland'sinternational commitments, and protecting naturalresources.

The intensity of tourism activity in Ireland is low byinternational standards, given our population density andvisitor numbers. However, congestion and visitormanagement issues do arise, in particular in some flagshipmajor tourism attractions and locations during the peakperiod. A pilot initiative on tourism and the environment,launched in February 1998 following the mid-term reviewof the Operational Programme for Tourism, 1994 - 1999,provided over €3 million in grant aid to twenty twoprojects, covering a range of different tourismenvironmental issues. The pilot initiatives included visitorand traffic management, area-based planning and analysis

of carrying capacity, training and awareness, litter control,development of alternative touring routes and best practicein environment restoration. However, the take-up under theenvironmental heading of the current tourism productdevelopment measure has been poor, suggesting a possiblelack of appreciation of the importance of sustainabledevelopment. Accordingly, the contribution of LocalAuthorities, as the regulatory authority for the sustainabilityof the environment, will be critically important tomaintaining an attractive natural and built environment. Inthe past, Bord Fáilte played an important role inchampioning environmental issues and highlighting theirimportance in terms of sustainable tourism development.An enhanced role in this area should now be taken on byFáilte Ireland, with support from the tourism industry. Thiswould have a number of benefits:

• it would be consistent with an increasing publicconcern that tourism development be well alignedwith the conservation of the national and builtenvironment which, in itself, is a major touristattraction in Ireland

• it would be consistent with the increasing numberof tourists who are concerned about environmentalissues and who increasingly choose locations,accommodation, visitor attractions and visitorservices on the basis of their fit with goodenvironmental practices

• it would be consistent with the trends in EU andnational legislation which is driving environmentalrelated change to minimise waste, reduce wastedisposal costs and conserve energy

• it would provide an opportunity for touristenterprises to achieve cost reductions throughreduced energy and water use, reduced food andpackaging waste, and reduced linen rental andlaundry charges.

Innovation and Better Packaging and Presentation ofthe Tourism Product

The under utilisation of many tourism facilities and attractionsand reducing occupancy rates in tourism accommodation,suggests that more could be done at local and regional levelto cluster, integrate and better market our existing range offacilities. These include heritage, cultural and sportingattractions that could meet many of the changing


Environment 1997%

1999%

2000%

2001%

2002%

Beautiful scenery 89 89 89 89 91

Natural unspoilt environment 83 77 79 79 83

Attractive cities/towns 59 62 66 64 65

Nature/wildlife/flora n/a 73 75 75 78

Litter free/pollution free n/a 54 54 54 56

Table 4.6Rating of Ireland on Environmental Issues (% Very Satisfied)

Source: Fáilte Ireland Visitor Attitude Surveys

51

international customer requirements identified in Chapter 1 ofthis Report. There should also be a more proactive andinnovative focus by enterprises and the Tourism State Agencieson packaging the Irish holiday product to meet specificcustomer needs – e.g. specialist sporting activities includinghorse and greyhound racing, car touring, health and wellbeing tourism. This approach should be informed by theinternational product benchmarking of Fáilte Ireland andadvice for the adoption of best international practices. Statesupport for major sporting events and festivals should beconditional on guaranteed appropriate levels of access foroverseas visitors and the capacity of the events to generateincremental visitors and international publicity.

An important role for Fáilte Ireland, therefore, will be tohelp strengthen the capability of the industry in productinnovation and development.

The processing of project proposals for grants under theexisting tourism product development measure of theRegional Operational Programmes needs to be accelerated,and the criteria and procedures need to be reappraised, in thelight of experience under the existing round of applications.In particular, additional resources require to be put in place topromote the scheme effectively, to encourage innovation andgreater private sector involvement and to ensure that goodprojects are brought forward and supported.

Validated Accessible Scheme for People with Disabilities

Fáilte Ireland has introduced a new voluntary scheme for thevalidation of all listed and registered accommodation thatprovides for the needs of people with disabilities. Proprietorsare invited to have their premises validated and promotedthrough the new scheme. No fee is required to enter thescheme. The Validated Accessible Scheme (VAS) will enablepeople with disabilities to make an informed choice whenbooking accommodation. This information will be available onthe national tourism websites commencing 2003 and in thevarious accommodation guides from 2004. Initially the newscheme will apply to premises with accommodation suitablefor guests with mobility impairment. The scheme will then beexpanded to encompass premises with accommodationsuitable for guests with hearing/sight impairments.

Special Interest/Activity Products

Special interest activities such as golf, angling, walking, cyclingand equestrian pursuits, rural tourism and holidays based onIrish language, culture and way of life, add to the range andvariety of the Irish holiday experience, contribute to regional

development objectives and have a higher yield than othertourism segments. Although some decline has occurred inthese segments since the early 1990s, such holiday activitieshave good growth prospects based on the changing customertrends identified earlier in this Report. While many of the issuesalready identified to support the future development oftourism will benefit special interest segments, there are othersector-specific issues that also need to be addressed. In manycases, special interest sectors are not well co-ordinated atnational level. While Product Marketing Groups are active inmost segments and are supported by Fáilte Ireland, there is aneed to expand membership to provide a basis for long-termviability, in terms of funding and marketing. For many specialinterest segments, the barriers to realizing full potential are notdirectly within the control of tourism interests and require tobe addressed at a wider national level. For example:

• the difficulty regarding access to walking routes onprivately-owned land remains to be resolved

• the decline in angling catch levels would beimproved through better water quality

• the speedy processing of visa applications wouldsupport the English Language Training sector

• the ongoing viability of certain heritage attractionsis at risk without a comprehensive plan to addressthe need for on-going maintenance and capitalreinvestment.

Many special interest segments are comprised of smallfamily-run enterprises which have limited resources formarketing and development. They require advice andsupport at national level in areas such as research, trainingand marketing.

4.4 Access Transport

One of the principal drivers of success of Irish tourism in the1990s was the improvement in the range, quality andcompetitiveness of air and sea access over that period.Overall passenger throughput at Dublin, Shannon and Corkairports was close to 20 million in 2002 compared with afigure of 11 million in 1995 – with almost 80% travellingthrough Dublin Airport. Increased capacity and lower airfares have enhanced the attractiveness of Ireland as adestination, generating most of the increase in visitor trafficand outpacing the performance of sea travel. The position issummarised in Figure 4.5.

52

Competitive and convenient access transport – in terms ofroutes, capacity, services, frequency and fares – will be acrucial determinant of future international demand fortourism destinations, especially in the case of an island suchas Ireland. The increase in the incidence of short leisure trips,the growth in popularity of urban tourism, and the search forconvenience and good value (spurred by low fare carriersand advances in information and communicationtechnologies) all point to the growing importance ofconvenient and competitive direct access if Irish tourism is tothrive in the future. It will be essential, therefore, to expandaccess services, to open up new routes, to promotecompetition and to have in place the modern port andairport infrastructure to service such requirements.

Air Services to and from Ireland

The past decade was one of liberalisation of EU regulationsgoverning air services. For the first time, an effective freemarket in intra-European air travel was created within theEU, resulting in greater competition, more services andlower fares pioneered by the new, low fare airlines. Air travelto and from Ireland was revolutionised, radically changingthe route and pricing structures on cross channel services,and, more recently, in the case of a number of European

routes. Ireland also benefited from the introduction ofseveral new carriers, and existing carriers expanded theircapacities on cross channel and European routes. Low farecarriers are expected to expand further and indications arethat there are significant opportunities to expand the routenetwork to Ireland, in particular from mainland Europe. This,however, will require additional, competitive, fastturnaround terminal facilities, in particular at Dublin Airport,at the earliest possible date. The impact of such additionalair routes would, in turn, increase the potential for greatercompetition between airlines leading to even morecompetitive fare structures. The recent decision to establishDublin, Shannon and Cork airports as fully independent andautonomous authorities under State ownership is intendedto have the effect of introducing further competition toencourage the development of new services, particularly tothe regions. Visitor reception facilities at key internationalaccess airports also need to be of the highest standards andreflect Ireland's reputation as a welcoming destination.

The airlines servicing transatlantic routes responded well tothe amendment to the Ireland-US Air Bilateral Agreement in1994. Aer Lingus introduced a new transatlantic fleet andcapacity increased significantly subsequently withContinental Airlines, Delta, Air Canada and US Airways


Figure 4.5Total Passenger Movements (Air and Sea) 1990-2001Total Passenger Movements (Air and Sea) 1990-2001

Source: CSO

25,000

20,000

(00

0s)

15,000

10,000

5,000

0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Cross Channel Continental Transatlantic Total Passengers

53

providing access through an expanded number ofgateways. While the aftermath of September 11th saw acapacity reduction of up to 25% in transatlantic seats, thishad largely been restored by 2003. Indications from thecarriers suggest that there is untapped potential for furtherexpansion in the medium-term on transatlantic routes, withthe possibility of opening up new gateways leading toenhanced visitor flows from North America. The recentdecision of the EU Transport Council to mandate theEuropean Commission to negotiate an EU/US aviationagreement in the light of a ruling by the European Court ofJustice, offers the prospect of an open skies policy but maytake a number of years to achieve. This does not rule outthe possibility in the meantime of an early renegotiation ofthe Ireland - US Bilateral Air Agreement with a view toaccelerating the expansion of air services, opening up theprospect of additional visitors from the US.

Route of Travel

Figure 4.6 illustrates how visitors travelled to Ireland overthe past five years. It shows that in 2002, over half of allvisitors (3 million people) came by air cross-channel. In1998 the corresponding figure was 45% (or 2.57 million).In absolute terms this represents an increase of 20% in thenumber of visitors travelling by air cross-channel. MainlandEurope routes showed a similar increase of 20% over thesame period (up to 1.17 million from 0.97 million). Thelevel of direct transatlantic visits has remained fairlyconstant since 1998 at 0.48 million, although significantgrowth took place during the mid 1990s.

There are a small number of direct air services from certainregional airports to Britain and mainland Europe, and directlinks from Dublin to Derry airport. Dublin dominates as thegateway to Ireland, with even western regions moredependent on Dublin, than on other gateways, for theirincoming visitors. This underlines the importance ofensuring adequate gateway infrastructure, and internaltransport networks, not only converging on Dublin but onother international airports also, and of offering the higheststandards in bus, rail, and road (including signposting)services. With decreasing mobility of visitors and shorterlength of stay, the under-utilisation of regional gateways forair services is very apparent. A particular issue for regionalairports must be their continued viability, in view of theirnumber, proximity, and relatively low usage by tourists.

Ferry Services to/from Ireland

Capacity on the Irish Sea routes has increased significantlyover the past decade, with substantial levels of investmentin new fleets by the major sea carriers. The provision ofpassenger and car ferry services is particularly important incatering for visitors bringing their own car and this markethas the potential to expand with appropriate marketingsupport and attractive fare structures and services. Thesevisitors have a tendency for longer stays in Ireland and, asthey tend to travel more extensively throughout thecountry, they are especially important in terms of tourismdevelopment outside the major tourist areas. While overallferry services may be dependent economically on thecarriage of freight, returns on the significant investment infast craft will largely depend on premium car andpassenger business.Figure 4.6

Visitors to Ireland (by Route of Travel) 1998-2002

Source: CSO

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Vis

its

(m)

3.50

1998 1999 2000 2001 2002

Air Cross-Channel

Sea Cross-Channel

Continental European

Transatlantic

Figure 4.7Own Car Visitors 1991-2002


1,500

1,000

500

0

No

. o

f C

ars

(00

0)

1991 1993 1995 1997 1998 1999 2001 2002

EuropeBritain

202

667 799 914 1,026 1,152 1,132 974 966

217 187187

188 172135 152

54

The 1990s saw steady growth in the number of own carvisitors to Ireland – up until 1998, when it peaked at 1.34million cars (an increase of over 70% on 1990). Thenumber of British visitors bringing their own car hasremained reasonably constant over the past 5 years – in theregion of 1 million visitor cars. In contrast, the number ofEuropeans bringing their own car is now at 152,000 – adecline of some 20% since 1998, reflecting the trend for agreater proportion to travel to Ireland by air and hire carson arrival. Trends towards shorter stays, and the increasingcompetition from low fares on air services, have combinedto present particular challenges for the ferry operators, butferry services will continue to be an important element insustaining the Irish tourism industry. The importance ofhaving in place a competitive ports structure together withmodern reception facilities providing for the comfort andconvenience of passengers is also important.

Internal Air Services

The Cork/Dublin and Shannon/Dublin routes are served ona commercial basis. The public service obligation (PSO)regime provides regular links between Dublin and theregional airports in Kerry, Galway, Sligo, Knock andDonegal. These are heavily subsidised routes, with anaverage subvention of €70 per trip in 2001 and 2002, andat an estimated cost to the Exchequer of €20 million in2003. The Irish Government also supports the Dublin/Derryservice, operated by Loganair/British Airways, at anestimated cost of €2 million per annum. While traffic onthe internal air services has increased in recent years(260,000 trips in 2002), due to improved timings andfrequency, the extent of usage by tourists is estimated to bevery low. This is because the services are primarily designedfor domestic and business traffic and they currently lack anycode share arrangements with connecting internationalservices at Dublin.

4.5 The People in Tourism

The friendliness and hospitality of the Irish peopledifferentiates Ireland from competitor destinations. The2002 Visitor Attitude Survey found that 45% of holiday-makers identified this as the dominant distinguishingadvantage, while one in every two tourists (49%) who saidthat their holiday exceeded expectations attributed this tothe friendliness and hospitality they found here.Unfortunately, the trend in both instances is declining since1997. This is an issue which needs careful management by

the industry, in terms of impressing on staff, and the widergeneral public, the importance of day-to-day interactionwith tourists.

Despite the widespread acknowledgement of theimportance of education and training for the ongoingdevelopment of the tourism sector, and despite theavailability of significant State funding for improvements inrecent years, there has been relatively little directinvolvement or investment by the industry in this area.A culture of continuous training of staff in the industry hasnot traditionally existed and there remains a lack ofstructured, systemic training in enterprises. Similarly,continuing training for managers and owner-managers oftourism enterprises, in particular in the case of SMEs, is notat present on a scale that would permit an upwarddevelopment shift in the sector. The 2002 Tourism andEmployment Survey found that some 52% of employeeshad received formal training – the highest levels being inthe restaurant sector (75%) and the lowest in guesthouses(33%). The final objective of training and human resourcedevelopment in tourism must be to improve the quality ofthe tourism product offered to customers, to buildproductivity and capability in enterprises and to enhancecareer prospects for talented and ambitious students andemployees. Given the competitiveness challenges facing thesector as outlined earlier in this Chapter, there is an urgentneed to improve productivity – which can be assisted bytraining at both operative and management levels.

A key issue is the relatively low priority given by theindustry to formal educational qualifications. The tourismsector has traditionally employed a relatively large numberof untrained staff, except in areas requiring specific skillsand in management and supervisory positions. Levels ofprofessionalism in the sector need to be enhanced, thestatus and esteem associated with working in the industrymust be raised, the employment of non-skilled staffrequires to be addressed, and areas where pay andconditions remain low need to be made more attractive.Unless this is done across the industry as a whole, thestatus and credibility of education and trainingprogrammes will be called into question and students willbelieve their qualifications are not valued and willquestion their personal investment in preparation for acareer in the industry through education and training.This will have implications for the considerable investmentin third level educational courses which has taken place inrecent years, leading to lower take-up of places andhigher drop-out rates.


55

High turnover of staff in the tourism sector, which is notunique to Ireland, is another challenge facing employers.It is a particular problem for seasonal attractions, especiallyin rural areas, in the restaurant and fast food sectors and inkitchen and food service departments. The 2002 Tourismand Employment Survey conducted for CERT found that23% of the businesses surveyed had vacancies but, inabsolute terms, this was 8,000 jobs or only 3.7% of overallemployment. The majority (83%) of staff in the five sectorssurveyed were employed on a permanent basis – up from73% in 1999 – and the hotel sector had the highestproportion of permanent staff, at 90%. The shortage ofIrish staff has been addressed, in part, by the employmentof overseas workers in increasing numbers. This is a trendthat is likely to continue for the foreseeable future, with theIrish industry becoming increasingly more dependent on amore culturally diverse workforce. This has importantimplications for training and the maintenance andenhancement of the traditional Irish welcome.

While there has been significant financial and other supportfrom the State for the provision of tourism training inenterprises, it has been somewhat fragmented and hasfailed, for the most part, to promote the development of astructured systemic approach to training in-house. Thefragmented nature of the tourism industry and theprevalence of small, owner-operated enterprises is part ofthe underlying reason for this failure. As part of the newstrategy for Irish tourism, a coherent strategic overview ofthe education and training requirements of the industryneeds to be developed as well as a series of actions to meetthese needs. In this context, Fáilte Ireland, working with theindustry, educational institutions and other interestedstakeholders, including students, should:

• develop a Human Resource Strategy for the tourismsector. This should see the industry becoming afirst-choice employer for all who seek employment,whether this be a career, a full-time job, a part-timeor temporary job, in an industry where people arefacilitated to do their jobs with pride andsatisfaction and where there are opportunities forprogression

• as part of the Human Resource Strategy, and takinginto account appropriate manpower planningissues, develop a National Strategy for CapabilityBuilding in the Tourism sector, as a focus forstrategic planning for education and training

• provide a focus for leading, instigating andinfluencing the policy instruments and activities,across the State and private sectors, which willenhance overall capability building for the industry,and for the quality assurance, coordination,facilitation and support of training activity. This willencompass a variety of interventions, ranging fromquality assurance to programme delivery, and it isessential that these different interventions bedelivered in an integrated way.

4.6 Marketing and Promotion

Effective marketing and promotion has long beenrecognised as a key element of tourism policy and has beenimportant in building up the customer base of Irishtourism. Strong consumer research and analysis in keysource markets have underpinned the general marketingapproach and mix of advertising and promotional activities.Current marketing strategy for the destination of Ireland isbuilt around Tourism Brand Ireland, a concept whichemerged from within the industry, North and South, withthe assistance of public and EU funding. It is a strategywhich ensures that the branding of Ireland as a tourismdestination is based solidly on research and is carefullymanaged to produce a cohesive image of Ireland as aholiday destination, while recognising the differentcharacteristics of individual markets.

In the National Development Plan, 2000 - 2006, it isacknowledged that the case for Government funding oftourism marketing is strong, because of the diversity ofactivity within the sector and the proliferation of small andmedium sized enterprises. The provision of €190 million inGovernment funding over the life of the Plan for theestablishment and operation of Ireland's first ever Multi-Annual Tourism Marketing Fund (TMF) is the practicalmanifestation of that acknowledgement. The fund isavailable to finance all-island destination marketing andniche product marketing, in close consultation andco-operation with the tourism industry. The funding isadditional to the staff and overhead costs of the TourismState Agencies and does not take into accountcontributions to Tourism Ireland from Northern Ireland.Funding is directed towards advertising and media andtrade promotions and the production of promotionalmaterial. Allocations under the TMF to date are set out inTable 4.7

According to a survey conducted on behalf of the IrishTourist Industry Confederation, annual expenditure by theindustry on marketing was estimated at €134 million in2001 made up of €35 million in advertising, €38 million onpromotional campaigns and brochures, with the balance ofexpenditure attributed to marketing staff and associatedoverheads.

Given the levels of expenditure allocated to promotion andmarketing activities, it is essential that evaluation of theefficiency and effectiveness of that spend is undertaken atregular intervals. The Tourism State Agencies themselveshave systems to review activities and the design of annualmarketing programmes is carried out in consultation withkey stakeholders, most importantly the tourism industrythrough the Tourism Marketing Partnership arrangementsoutlined in Chapter 2.

In June 2001, the then Department of Tourism, Sport andRecreation undertook a Public Expenditure Review in respectof the strategy and outcome of the marketing programme ofBord Fáilte, over the period 1997 to 1999. The Reviewlooked at the effectiveness of the spending on the delivery ofthe intended benefits in terms of income, employment andtax revenue. Some key findings to emerge from the Reviewwere that:

• foreign earnings and employment levels significantlyexceeded the national targets set

• the average yield per visitor improved over thethree years in all segments other than first timeholiday visitors

• relating marketing expenditure to visitor numbersresulted in an average cost per visitor of €8. A moredetailed breakdown for 1999 showed that theaverage cost of attracting• a holiday visitor was €22

• a promotable visitor was €19• a first time holiday visitor was €41

• the marketing costs associated with attracting visitorsfrom Germany and France were much higher thanwas the case in other key markets

• relating total marketing expenditure to total revenuegenerated by visitors gave a return of €50 for every€1 spent in 1999.

In terms of recommendations for tourism marketing policy,the Expenditure Review concluded that the TourismMarketing Agencies should be more flexible in marketoperations and more responsive to changes in themarketplace and that targets and performance indicatorsshould be reviewed to more accurately assess efficiency andeffectiveness of spending – with a focus on the promotablemarket segments. The establishment of the new all-islandbody, Tourism Ireland, provided an opportunity to reviewmarketing policy and how its effectiveness is measured.

In 2002, Tourism Ireland spent over €30 million onmarketing activity to promote the island of Ireland – ofwhich two-thirds or €20 million – was provided by theExchequer in the South. The core of this funding was spenton advertising, which includes TV, radio, print, posters andco-operative campaigns. The production and distribution ofmarket brochures to serve the enquiries generated wasanother substantial part of the overall marketing spend.

Tourism Ireland undertakes a range of assessments of theeffectiveness of its core marketing activities. For example, thelevel of advertising efficiency is measured through consumerresearch which seeks to identify the level of recall of peoplein particular markets in relation to the Irish tourismmarketing campaign in comparison to the campaigns ofcompeting destinations.

Quantitative research commissioned by Tourism Ireland in2003 measured advertising recall at three levels amongIreland’s target market1 in the top four territories (Britain, theUS, France and Germany), namely:

• spontaneous (respondents were asked whichdestinations outside their home country in respect ofwhich they recalled seeing advertising)


2000 2001 2002 2003

€ Million

18.3 23.2 25.9 30.42

Table 4.7Exchequer Allocations under the TourismMarketing Fund


1 The target market is broadly defined as all ABC1 individuals who had taken a holiday outside their home country in the last 5 years for longerthan 4 nights. In the US it is further refined to residents of 10 metropolitan areas with European holiday potential. Responses relate to the islandof Ireland, north and south. 56

• prompted Ireland (respondents were asked if theyrecalled seeing or hearing any advertising for Irelandrecently)

• prompted Tourism Ireland (respondents were readout the local copy of the advertisements and askedif they recalled seeing or hearing it).

The results of the research are set out in Figure 4.8.

Almost one in five (19%) British respondents spontaneouslyrecalled advertisements for Ireland. When prompted, “hadthey seen or heard any advertisement for Ireland” between athird and a half of target consumers in Britain, France and theUS recalled seeing or hearing some advertisement for Ireland.When the Tourism Ireland advertisements were described toindividuals in the markets, more than half of all respondentsrecalled seeing or hearing some advertising for Ireland, withthe exception of Germany. The campaign performance wasweaker in Germany as no television advertising was used in2003, unlike the other three territories.

In comparison to other destination campaigns, Ireland’scampaign had comparatively high levels of competitivestand-out. Ireland’s spontaneous recall was strongest inFrance, where the campaign was recalled behind those ofonly Morocco and Tunisia. In all four markets, Ireland’scampaign was recalled ahead of that of all other near-competitors – including the British campaign in the US,France and Germany.

In a quantitative study of advertising effectiveness, theIreland campaign was rated as more motivating or equallyas motivating as competitor advertising by those whospontaneously recalled it.

The use of internet-based technologies remains at an earlystage of development across the majority of enterprises inIrish tourism. Enterprises that have the capability toeffectively use information and communicationtechnologies in areas such as customer relationsmanagement and marketing will have a competitiveadvantage in the future. A range of measures should betaken by industry and the Tourism State Agencies to helpaccelerate the exploitation of these new technologies inIrish tourism.

4.7 Wider Issues Affecting Tourism Growth

Consultations undertaken by the Review Group have servedto highlight the diversity of the tourism sector and therange of external factors which impact on its development.Among the more important policy areas identified are:

• macroeconomic policies that enhance the businessenvironment for tourism (including central and localgovernment charges)

• issues affecting competitiveness and value for money

• air and sea access and internal transport (includingroads and signposting)

• the environment, physical planning, the natural andbuilt heritage

• licensing laws and the proposed smoking ban in theworkplace

• education and training.

The ability of the tourism industry, the Tourism StateAgencies and the Department of Arts, Sport and Tourism tomore effectively shape and influence Government policy inthe wider issues that impact on tourism, will be a keyinfluence in determining the future success of the sector.

In the past, the Government Department and StateAgencies with responsibility for tourism focused on thedevelopment of the sector and policy measures wereconcentrated in helping the industry to build up itsstrengths in key business areas such as marketing, productdevelopment, standards and training. Such a policy wasappropriate to the development phase of the industry atthat time when it was operating on a much more modestscale than it is today. However, a wider policy now needs tobe defined and a different and more holistic policy

Figure 4.8Respondant Recall for Irish Tourism AdvertisingRespondant Recall for Irish Tourism Advertising

Source: Tourism Ireland

PromptTourismIreland

PromptIreland

Spontaneous

Britain France US

59%

11

34

14

61%

16

26

19

51%

14

27

10

Germany

33%

11

16

6

57

58

approach is needed to address the broader issues which willimpact on the future development of tourism in Ireland.Such a role will require new bilateral structuralarrangements between the Department of Arts, Sport andTourism and other Departments, as well as an internalreorganisation and strengthening of the Department'sTourism Division and the support structures within theTourism State Agencies.

Such a new role for the Department of Arts, Sport andTourism will also require the support of the industryrepresentative bodies. One of the disadvantages of thefragmented structure of the tourism industry, with its largenumber of SMEs and the diversity of product providers, isthat the value of its economic contribution is not fullyappreciated. Strong industry associations can, through well-researched and presented proposals, do much to influencethe wider Government agenda in a way beneficial to bothtourism and national development. An enhanced focus oninfluencing the wider agenda will require a strengtheningof industry representative structures to more effectivelychampion industry interests based on objective,professional research and industry knowledge.

4.8 Tourism Policy Formulationand Implementation

Responsibility for the formulation of national tourism policyrests with the Department of Arts, Sport and Tourism.Current policy for the development of the sector is focusedon supporting sustainable growth in visitor expenditurewith an emphasis on a wider regional and seasonal spreadof business. The Department's policy goals and strategiesare set out in its Statement of Strategy and itsDepartmental Business Plan and reported on in its AnnualReports. Current Government policy and objectives for thesector are set out in the Agreed Programme forGovernment as already outlined in Chapter 2 of thisReport.

The Department's focus has been on setting general policyobjectives and targets, determining the annual Exchequertourism budget and its allocation, and setting theframework for the implementation of tourism policythrough its legislative and corporate governance role inrespect of the Tourism State Agencies. Developmentstrategies for the industry in the past were set out in the EUOperational Programmes for Tourism which specified arange of schemes and programmes to address product

development, marketing and training requirements, withassociated national and sectoral targets for the industry.This position changed in the context of the NationalDevelopment Plan, 2000 - 2006 when tourism prioritiesand investment plans were incorporated over a smallerrange of Operational Programmes covering ProductiveInvestment, Employment and Human ResourceDevelopment and Regional Development. The current planincorporates a programme budget of some €400 millionfor tourism, of which only €55 million is being providedthrough EU funds.

The tourism industry has been a highly successful sector ofmainly Irish-owned enterprise – arguably the most successfulsector of Irish-owned enterprise since the foundation of theState. As such it has contributed significantly to meetingnational investment, foreign revenue earnings andemployment creation targets under successive tourismprogrammes, although the achievement of seasonality andregionality targets have proved more elusive.

Recent Departmental priorities have focused on a majorrestructuring of the institutional arrangements for theimplementation of tourism policy, with the establishment ofTourism Ireland in 2000 as an all-island tourism marketingco-operation body under the Multiparty Agreement of GoodFriday, 1998 and Fáilte Ireland under the National TourismDevelopment Authority Act, 2003 to bring togetherfunctions previously undertaken by Bord Fáilte and CERT.Details of the functions now exercised by both bodies areset out in Chapter 2. Following the reorganisation ofstructures at national level, it is essential that an early reviewof the functions, activities and interactions of the manybodies involved in tourism promotion and development atregional level is undertaken. In the case of the RegionalTourism Authorities and Shannon Development, a closercorrelation between the identified core visitor servicing anddevelopment functions and the State financial supportprovided to them through Fáilte Ireland would be desirable.This is all the more so given the recent deterioration in thefinances of a number of the Regional Tourism Authoritiesdue to the reduction in visitor numbers using their servicesand rising costs.

The concept of a synergistic and mutually beneficialapproach to developing tourism on the island of Irelandhas evolved since the late 1980s. The establishment ofTourism Ireland, as an all-island tourism destinationmarketing body, is a logical progression of thesedevelopments – to the benefit of the economies of the


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island, North and South. While North/South co-operation ismost advanced in the area of international marketing, italso operates beneficially to the tourism industry at manyother levels. The principal policy challenges are to sustainand grow the more mature parts of the industry on theisland while supporting the economic and regionaldevelopment policies of both jurisdictions which seek toimprove the socio-economic well being of less successfultourism regions.

The overall thrust of the new Strategy for Irish Tourism setout in this Report supports the principle of North/Southco-operation. It will be a key aim of the Department ofArts, Sport and Tourism, together with Fáilte Ireland, towork with its Northern counterparts and Tourism Ireland onareas of mutual benefit. A particular challenge will be tobed down the new structures and to ensure clarity of focusand responsibility for each body. It is expected that thisapproach will be mirrored through the evolution of thealready strong industry links that are in place. Tourism hasbeen clearly identified as a mutually advantageousopportunity for both jurisdictions with clear economic andsocial benefits for both communities. The principal aim willbe to deliver on the potential manifested by the successfulco-operation which has evolved over many years.

In the case of Fáilte Ireland, the policy challenge will be tointegrate the former activities of Bord Fáilte and CERT tocreate a new dynamic development body to help addressthe new challenges facing the tourism sector and tocapitalise on the new opportunities opening up as set outin this Report.

The policy formulation and implementation role of theDepartment is set to change in the light of the newstrategy for the development of tourism set out in thisReport and in line with the new emphasis on influencingthe wider agenda. A tightening in the public finances willalso require a greater emphasis on the efficiency andeffectiveness of Exchequer tourism expenditure. TheDepartment will also continue its long-standing policy ofworking in partnership with the tourism industry in thefurther development and implementation of policy.


The Irish tourism industry today has strong foundationsbased on a substantial customer base, high overallcustomer satisfaction ratings, competent and experiencedstaff and the quantity and quality of its capital stock. Theindustry represents what is, arguably, the most successfulsector of Irish-owned enterprise since the foundation of theState. In becoming so, it has achieved the challenginginvestment, revenue earnings and employment targets setfor it, in the past, under successive national plans and EUOperational Programmes for Tourism. These significantachievements provide a solid base to address withconfidence the new challenges facing the tourism sector.

The industry is, today, at an important turning point in itsevolution. The strong competitiveness gains achieved duringthe 1990s have been eroded in more recent years. Unlessthe industry, defined to encompass both its private andpublic sector components, takes strong and immediateaction to regain competitiveness it will regress in the yearsahead. However, if corrective actions are taken withresolution and efficiency, significant opportunities exist, inthe context of the anticipated strong growth in internationaltourism in the years ahead, to build upon, and even surpass,the major success story of Irish tourism in the 1990s.

The industry faces major challenges in regaining itscompetitiveness in the light of reducing customersatisfaction ratings, in particular as regards delivering goodvalue for money. For visitors, the price issue relates not somuch to the cost of access and accommodation, which isgenerally pre-booked, but to the price of eating out, drink,food in shops and the general cost of living when they gethere. While actions at Government level are necessary toaddress price inflation generally, the tourism industry itselfhas the primary role and responsibility for driving downcosts in the industry. Reforms in the Irish taxation systemhave resulted in substantial gains to business generally butcomparatively high VAT rates and excise duties exacerbateprice differentials with other eurozone countries and pose acompetitive difficulty for Irish tourism. High insurance costsare also a particular concern and there is an urgent need toaccelerate the Government's insurance reform programmeto reduce premiums.

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The range of tourism products and services, includingtourist accommodation, has improved significantly in termsof quantity and quality but there are indications ofunderutilised capacity and falling margins which couldthreaten reinvestment and the maintenance of standards inthe future. Some remaining gaps exist in tourisminfrastructure, most importantly the development of aNational Conference Centre and a National Sports Stadium,as well as an enhanced emphasis on the environment,product innovation and the packaging and promotion oftourism products to meet changing customer requirements.While air and sea access to Ireland has seen majorimprovements during the 1990s, additional visitors couldbe attracted through changes in transport policy and thefurther development of access infrastructure.

People are essential to the future development of the sectorand a greater level of investment is needed in humanresource development to upgrade skill levels to integratenew entrants from home and overseas, and to address staffretention and other problems. While a strong fundingcommitment remains to tourism marketing and promotionby the State and the tourism industry, there is scope toimprove the efficiency and effectiveness of spend in thisarea. The ability of the tourism industry, the Tourism StateAgencies and the Department of Arts, Sport and Tourism tomore effectively shape and influence policy in the widerissues that impact on tourism, will be a key influence indetermining the future success of the sector. TheDepartment's policy formulation and implementation rolewill need to be developed and strengthened in line withthe new strategy set out later in this Report.


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A Strategy for Irish Tourism 2003 - 2012

“The New Vision for Irish Tourism is that of adynamic, innovative, sustainable and highly-regarded sector – offering overseas and domesticcustomers a positive and memorable experiencebeyond their expectations. Assuming reasonablyfavourable international economic and geopoliticalcircumstances, the Review Group has set achallenging target to double overseas visitor spendto €6 billion over the 10 year period to 2012, withan associated increase in visitor numbers from justunder 6 million to 10 million.”

5chapter five

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• Irish tourism requires a new strategy to chart the way forward at a pivotal point inits evolution.

• The Review Group’s vision for Irish tourism is that of a dynamic, innovative,sustainable and highly-regarded sector offering overseas and domestic visitors apositive and memorable experience beyond their expectations.

• The medium and long-term prospects for tourism worldwide remain strong and,over the next 20 years, are projected to be similar to the doubling of tourist trafficthat occured over the period 1980 - 2000.

• Central to the future success of Irish tourism will be a recovery of thecompetitiveness that has been lost in recent years and a capability to respond withflexibility and agility to changes in the market place.

• Assuming reasonably favourable international economic and geopoliticalcircumstances, the Review Group has set a challenging target for Irish tourism todouble overseas visitor spend to €6 billion over the ten year period to 2012, withan associated increase in visitor numbers from just under 6 million to 10 million.

• The key strategic drivers of success for Irish tourism in the future will be thebusiness environment, competitiveness and value for money, access transport,information and communication technologies, product development andinnovation, marketing and promotion, the people in tourism, the Governmentsector and information, intelligence and research.

• A clear decision-making process and implementation plan is needed to providefocus and give credibility for the new tourism strategy outlined in this Report, toreview performance in changing circumstances, to drive forward on the specificactions recommended and to report on outcomes.

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5.1 The Components of a NewTourism Strategy

In the early years of a new century characterised by majorchanges and turbulence in the global geopolitical andeconomic systems, Irish tourism requires a clear strategy.Such a strategy is set out in this Chapter. It takes accountof the fundamental changes in the environment nowaffecting Irish tourism at home and abroad andencompasses the following components.

• Vision It provides a clear articulation of whattourism can contribute to the achievement ofnational social and economic objectives.

• Forces of Change It identifies the fundamentalchanges affecting international and domestictourism at present and provides an assessment ofthe key changes likely to occur in future years.

• Targets and Objectives It establishes challengingbut realistic targets and objectives for the sector.

• Future Drivers of Success It identifies the factorsthat will determine success or failure in achievingthe targets and objectives.

• Flexibility/Agility It emphasises the importance ofan enhanced capability for the different operatorswithin the industry to respond in agile andinnovative ways to unforeseen changes in theindustry.

• Decision-making Framework It provides a clearframework within which good investment andresource allocation decisions by private sector andpublic sector participants in tourism can beencouraged and facilitated.

5.2 Inter-dependency of Activities –A Defining Characteristic of Irish Tourism

Irish tourism is a complex, diverse sector of economicactivity. It supports some 140,000 jobs in a range of sectorsincluding hotels, guesthouses, B&B establishments, hostels,self-catering establishments, restaurants, public houses andvisitor attractions in the areas of heritage, culture, sport andentertainment, as well as the many other jobs that aredependent on tourism in other sectors such as the airlines,

shipping services, ports, airports, car-hire, coach-hire andpublic transport. It also encompasses important areas ofactivities in tourism-related Government promotional,supervisory, regulatory, training, educational, research andinformation services. The new strategy for Irish tourism setout in this Chapter, accordingly, provides a coherentframework within which the different parts of the industryoperate to create a development dynamic that is greaterthan the sum of the individual parts. The inter-dependencyof the different segments of the industry is a definingcharacteristic that requires to be reflected in nationaltourism strategy.

5.3 A New Vision for Irish Tourism

The Review Group proposes the following New Vision forIrish Tourism.

Vision for Irish Tourism 2003 - 2012

Ireland will be a destination of choice for discerninginternational and domestic tourists which:

• provides a tourism experience that exceeds customerexpectations in terms of friendliness, quality ofenvironment, diversity and depth of culture

• has a range of high quality, world-class, competitiveproducts and services widely distributed throughoutall the regions of the country

• is a vibrant source of foreign and regional earningsthroughout the year

• respects the natural and built environments andsupports their conservation and enhancement

• provides attractive career opportunities in tourism forpeople with a range of skills and employment needs

• provides the opportunity for people working intourism to enhance their skills through experience,training and life-long learning

• respects and supports Irish culture in all its diversity

• provides a positive international profile of Ireland.

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In short, the Review Group's vision for Irish tourism is thatof a dynamic, innovative, sustainable and highly-regardedsector that offers to overseas and domestic customers anexperience of Ireland which is positive, memorable andbeyond their expectations. The objectives are to seecustomers of the tourism experience in Ireland repeat thatexperience and to communicate it positively to friends andacquaintances. And in meeting these objectives Irishtourism should be seen as a major source and opportunityfor profitable enterprise and as a powerful tool of social andeconomic development at national and regional levels.

5.4 Irish Tourism – Forces of Change

Future Prospects The fundamental changes affectingtourism internationally and in Ireland at present – and asanticipated in the future – were outlined in earlier Chaptersof this Review. In summary, the medium and long-termprospects for tourism worldwide remain strong despite thefall-off from the long-term high growth trends since 2000.Over the next twenty years it is anticipated that the growthin international tourism will be similar to the doubling intourist traffic that occurred over the period 1980 - 2000.Tourism development will continue to be largelydetermined by the rate of global and regional economicgrowth and associated increases in the disposable incomesof a wide distribution of individuals. The developedcountries will remain the strongest source and destinationof tourist numbers in absolute terms. But, from modestbeginnings, Eastern Europe and the Far East – especiallyChina – will claim an increasing share of the origin anddestination of international tourists including those whomay consider Ireland for a holiday.


Figure 5.1The Components of Tourism Strategy 2003-2012

Forces of Change

Fundamental Changes Affecting Global &Domestic Tourism

Future Drivers of Success

Competitiveness and Value for Money,Product, People, Marketing,

Technology, Access Transport &Business Environment

Flexibility

Agility to respond to change

Decision-making Framework

Improved Resource Allocation

Tourism Strategy

2003 - 2012

Targets & Objectives

MotivatorsBenchmarks of Performance

Vision

Contribution to National Social &Economic Objectives

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Key Geographical Markets for Ireland For Ireland thetourism markets of most importance will continue to be inBritain, the US, the larger countries of Mainland Europe andthe domestic market. There are prospects of increasedvisitor numbers to Ireland from the Far East, Australia andother markets but, while important, these will continue, inthe short to medium-term, to account for a smallproportion of overall visitor numbers and revenue.

Changes in Customer Profile In each of Ireland’s mainmarkets for tourism, however, the customer profile hasbeen changing rapidly and will continue to do so driven bytechnology, demographics (e.g. an increase in the olderpeople share of the population in developed countries) andsocietal changes. Such societal changes include bettereducation, increasing interest in cultural experiences,increased leisure time, multiple but shorter holiday breaksthroughout the year, greater interest in health-enhancingtourist experiences and increasing empathy withenvironmental conservation.

Transport Developments in access transport and in internaltransport are of fundamental importance in facilitatingtourism development. These are also undergoingfundamental changes and will continue to do so in terms oftechnology, organisation and provision of services. Thequality, price, frequency and routes of air and sea carriersare clearly of major importance to an island tourismdestination such as Ireland. Transport services to and fromIreland, particularly to and from Britain and some parts ofMainland Europe, have greatly improved over the past tenyears and more. In doing so, they have made a significantcontribution to the strong growth in visitor numbers toIreland during the 1990s. In particular, low fare airlineservices have transformed the market for travel betweenIreland, Britain and some parts of Mainland Europe and thepotential for additional route development remains strong.

Developments on transatlantic air routes have also shownsome improvements but to a lesser extent than on crosschannel and Mainland European routes.

Internal transport is particularly important for the regionalspread of visitors. Rapid economic and population growthand major increases in visitor numbers in certain areas havegiven rise to congestion problems that are causingdifficulties for the quality of the tourism experience. Theseproblems are being addressed through a majorGovernment investment programme in road and railinfrastructure. The programme is, however, some distance

behind schedule because of project management andplanning administration difficulties and because of theerosion of resource allocations to the programme by costinflation.

Technology Apart from the significant changes intechnology affecting both access transport and internaltransport, the other great technological driver of change inthe tourism industry lies in the rapid development ofinformation and communication technologies. Informationand communication technologies profoundly affect the waythat tourism business is conducted. Their impact is evidentin the areas of competition, marketing, customer relationsmanagement, reservations, room/accommodationutilisation and optimisation, cash-flow management andthe delivery of tourism related education and trainingservices. Measures to optimise the use of these technologiesthroughout the sector as they exist at present, and as theycontinue to evolve, must be a central part of Ireland’stourism strategy.

5.5 Strategic Targets for Irish Tourism2003 - 2012

The Nature of Targets

Ambitious but realistic targets for key indicators ofperformance are an essential component of Irish tourismstrategy. These targets must relate to the fundamentalobjectives of tourism policy. Such objectives are explicitlyconcerned with sustainable national wealth creation andregional distribution. Targets need to be few in number inorder to maintain a sharpness of focus in relation to the keyfactors that determine the performance of Irish tourism.They must seek also to capture the essence of thecontribution the sector makes to social and economicobjectives in Ireland, at both national and regional levels,and to measure that performance against internationallyrelevant benchmarks.

Strategic targets, while not forecasts, provide a sense ofdirection for tourism policy and they facilitate theprioritisation of actions to support the development of thesector. Performance targets must not, however, becomeinflexible straitjackets – it can be expected that manyoutcomes will be out of line with targets because ofchanging circumstances, and that targets will need to beadjusted. It should be understood that targets reflectassumptions about the future course of the underlying

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factors that affect tourism development. At the core of theseunderlying factors, as far as Irish tourism is concerned, arethe rate of economic growth in Ireland and in the mainmarkets in which it competes and the overall sense ofsecurity, or otherwise, arising from geopolitical events.

The strategic targets for Irish tourism set out in this Chapteralso provide the higher-level benchmarks that can be usedby private sector operators and the Tourism State Agencies,at national and regional levels, to develop detailedoperational targets. In setting targets it is important todistinguish the segments of visitors that are most likely tobe influenced by the marketing activities of industryoperators and the Tourism State Agencies – defined as thepromotable segments.

Strategic Target Areas for Irish Tourism 2003 - 2012

Taking considerations discussed in previous paragraphs intoaccount, the following are the strategic areas for whichquantitative targets are being set.

Strategic Target Areas for Irish Tourism 2003 - 2012

• Tourism Revenue• Overseas• Domestic

• Overseas Visitor Numbers• Total• Promotable Segment

• Domestic Holiday Numbers• Regionality

The following paragraphs set out specific targets for each ofthese areas. The main underlying assumptions, on whichthese targets are based, are as follows:

• average annual economic growth rates in Ireland’smain tourism markets (Britain, US, MainlandEurope) over the next decade will, on average, bebroadly similar to that of the 1990s

• the rates of growth, and the time period in whichthey are attained, will vary from one market toanother as they are dependent on rates ofeconomic recovery in these markets,developments in air and sea access and thecapability of the tourism industry in Ireland toreverse the recent deterioration in customersatisfaction in value for money

• the average annual rate of GDP growth in Irelandwill be 5% a year

• international geopolitical stability will recover to alevel broadly similar to that of the 1990s.

Total Overseas Revenue and Visitor Number Targets2003 - 2012

Overseas visitors account for over two-thirds of the bed-nights and over 80% of the revenue earned in Irish tourism.In the light of the analysis set out earlier in this Report, theReview Group believes that overseas revenue can bedoubled to €6 billion and visitor numbers can beincreased, from just under 6 million in 2002 to 10 million,by 2012. The targets for this segment of tourism are set outin the following tables and associated charts.


Revenue (€ million 2002 prices)2002

Actual2006

Target2012

TargetAv. Annual Growth

% 2002-2012

Overseas Visitor Spend1 3,088 3,835 6,000 6.9%

No. of Visitors (m)

Britain 3.5 4.1 5.5 4.8%Mainland Europe 1.4 1.7 2.3 5.3%North America 0.8 1.0 1.8 7.6%

Other areas 0.2 0.3 0.5 6.3%Total 5.9 7.0 10.0 5.4%

Table 5.1Overseas Revenue and Visitor Number Targets to 2012

1 Excluding receipts paid to Irish air and sea carriers & revenue from Northern Ireland vistiors

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Promotable Overseas Visitor Targets 2003 - 2012

The promotable segments of visitors from overseas countriescomprise the potential visitors most likely to be influencedto visit Ireland by the marketing activities of industryoperators and the Tourism State Agencies. The promotablesegment constitutes those visiting Ireland primarily forholiday, conference, language study and incentive travelpurposes (for example, the provision of travel packages toreward employees or business partners for workperformance). An important reason for focussing on thepromotable market segments is that those segmentsgenerate greater revenue per capita than, for example,those who stay with friends and relatives. In 2002, thepromotable segments accounted for 45% of total visitors.

The Review Group believes that a target should be set toincrease this share to 50% by 2012. Specific targets for thepromotable segments, by main market, are set out in thefollowing table and associated chart.

Figure 5.2Overseas Visitor Revenue Targets to 2012 (2002 prices)Overseas Visitor Revenue Targets to 2012 (2002 prices)

2000 2006 2012

Overseas Visitor Spend

1,000

2,000

3,000

4,000

(€m

)

5,000

6,000

7,000

Figure 5.3Overseas Visitor Number Targets to 2012Overseas Visitor Number Targets to 2012

No

. o

f V

isit

ors

(m

)

2000 2006 2012

North America

Other areas

Britain

Mainland Europe

0

1

2

3

4

5

6

Table 5.2Promotable Overseas Visitor Number Targets to 2012

No. (m) 2002Actual

2006Target

2012Target


Britain 1.3 1.5 2.2 5.5%

Mainland Europe 0.7 0.9 1.3 5.8%

North America 0.5 0.6 1.1 7.9%

Other areas 0.1 0.2 0.3 6.6%

Total 2.7 3.3 4.9 6.2%

% of All Visitors 45% 46% 50%

Figure 5.4Promotable Overseas Visitor Number Targets to 2012

Nu

mb

er o

f Pr

om

ota

ble

Vis

ito

rs (

m)

2.5

2.0

1.5

1.0

0.5

0.0

2002 2006 2012

Mainland Europe

Other areas

Britain

North America

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Domestic Holiday Targets 2003 - 2012

The domestic market is of key strategic importance to thedevelopment of tourism in Ireland. Domestic tourism trips,involving at least one overnight stay, numbered almost 6million in 2002. Almost 50% of these trips were for holidaypurposes while a further 40% related to the visiting offriends and relatives. The domestic market is important notonly in terms of size but is also a major instrument in theregional distribution of tourism visitors and revenue. It ischaracterised by a significant flow of visitors from the mainurban areas to the less developed regions including fromeast to west. It, also, plays a major positive role inextending the seasonal distribution of tourism. Itcontributes over 50% of the bednights in hotels, one-thirdof the demand in guesthouses and B&B establishments andaccounts for some 25% of visitor demand on golf courses.Finally, a discerning, discriminating and demandingdomestic market can strongly influence betterdevelopments in the price, quality and range of touristservices and, in doing so, help increase standards andcompetitiveness in the industry.

The most promotable segment of the domestic market isthe segment for holiday trips. The visitor and revenuetargets proposed by the Review Group in this area are setout in the following table and associated chart.

Regional Targets 2003 - 2012

The regional distribution of tourism is highly important fora number of reasons. At a very basic level the tourismproduct is distributed geographically. Developing,facilitating and promoting access to that product is at thevery heart of tourism policy in Ireland. The tourismproduct and associated visitor potential is not, of course,distributed evenly throughout the country. Different areasare more or less attractive to tourists depending on thecharacteristics of their natural and built environment, easeof access and competitiveness relative to other locationsin Ireland and overseas. An important determinant ofregional performance is the effectiveness and the spirit ofinnovation of both tourism operators and promotionalbodies at local level.

Government policy strongly supports balanced regionaldevelopment – as set out in the National Spatial Strategypublished in 2002. Tourism represents one of the strongestmeans by which balanced regional development can beachieved. Accordingly, a fundamental objective of tourismpolicy must be to facilitate each tourist region in achievingits full potential for tourism development – in a way thatmaintains and enhances the sustainability of its tourismbase. This will mean different rates of tourism growth indifferent areas of the country.

For regional development purposes, Government policy hasplaced specific emphasis on the need to promotedevelopment in the Border Midland and Western (BMW)Region. Accordingly, the Review Group considers that adoubling of the number of overseas promotable visitorsstaying at least one night in the BMW region be set as atarget over the period to 2012.


Table 5.3Domestic Holiday Targets to 2012

2002Actual

2006Target

2012Target


No. of Holiday Trips (m) 3.0 3.6 4.3 3.7%

Revenue from HolidayTrips (€b)

0.6 0.8 1.0 4.4%

Figure 5.5Domestic Holiday Revenue Targets to 2012Domestic Holiday Revenue Targets to 2012

Rev

enu

e (€

b)

1.2

1.0

0.8

0.6

0.4

0.2

0.0

2002 2006 2012

Attaining this target will represent a considerableachievement, particularly in the context of an increasingshare of visitors to Ireland taking short breaks – which tendto favour established tourist areas outside the BMW region.As set out earlier in this Report, domestic visitors representa major contribution to regional tourism and thepromotion of this segment will remain a central element oftourism strategy for regional development purposes.

5.6 Future Drivers of Success

Irish tourism is a highly diverse and complex sector. Itincludes a wide range of operators from both the privateand public sectors. The combined actions of theseoperators are what determine the success of Irish tourismrelative to that of other countries and relative to the vision,targets and objectives discussed in previous paragraphs ofthis Chapter. The key strategic drivers of success for Irishtourism may conveniently be discussed under the followingheadings

Key Drivers of Success

• Business Environment

• Competitiveness & Value for Money

• Access Transport

• Information and Communication Technologies

• Product Development & Innovation

• Marketing & Promotion

• The People in Tourism

• The Government Sector

• Information, Intelligence & Research

The strategic contribution and requirements of each ofthese areas is discussed in the following paragraphs. Thesuccess of Irish tourism, within any particular internationalenvironment that emerges, will depend on thedevelopment and implementation of an integrated set ofwell-formulated tourism promotion actions across each ofthese areas.

Strategic Success Driver 1 Business Environment

The main driving force behind the major success of Irishtourism over the past 20 years has been private sectorenterprise involving thousands of mainly small businessentities spread across all parts of the country. As alreadyindicated in this Report, the tourism sector represents themost important and successful sector of Irish-owned,internationally-trading, enterprise since the foundation ofthe State – something that is not always fully appreciatedand acknowledged.

The Government sector has played an important,supportive and catalytic role in the success of the industry.This role has been exercised directly in the form of financialsupport, promotion and marketing, education and training,research, information provision and the maintenance of aneconomic and general policy environment supportive ofbusiness investment. This has included significant reform ofthe taxation regime which is now highly supportive ofbusiness development and internationally competitive inthe areas of corporation tax, capital gains tax, income taxand social security contribution rates. It has been exercisedindirectly through investment in tourism relatedinfrastructure and State-owned tourist visitor attractions.

The ultimate determinant of success in Irish tourism willcontinue to be an energetic, innovative and profitableprivate sector. This will require a domestic environmentwhere Government policies are supportive of businessinvestment in tourism and provide economic andregulatory certainty in an increasingly volatile anddemanding internationally competitive environment.Accordingly, maintaining the profitability of tourisminvestment relative to alternative investment opportunitiesin Ireland and abroad is an important and central objectiveof tourism strategy. Achieving this objective will befacilitated by a range of Government policies that enhancethe business environment for tourism. Some of the keystrategic requirements are as follows.

Table 5.4Regionality Target to 2012

million2002

Actual2006

Target2012

TargetAv. Annual Growth

% 2002-2012

No. of Promotable Touriststo BMW Region 0.8 1.0 1.6 7.5%

BMW share (%) of allpromotable tourists 30% 31% 34%

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Government Policies Required to Enhance the BusinessEnvironment for Tourism

• Promote competition within tourism, within theprovision of tourism-related services and moregenerally across the economy.

• Ensure pro-competition regulation in tourism-related services where free competition does notprevail at present – including in the area of servicesprovided by both the private sector and byGovernment bodies.

• Provide for competitive rates of direct and indirecttaxation on tourism related activities.

• Use Government instruments of economic policyincluding taxation, expenditure, charges forGovernment services and social partnershipnegotiations to keep inflation under control andbelow the eurozone average.

• Address urgently the factors that are generatinghigh absolute levels of, and high rates of increase in,insurance costs for tourism enterprises as identifiedin a number of analyses and recommended actionsalready undertaken and identified, by theGovernment.

• Support the provision of essential tourism-relatedinfrastructure in areas where the potential returns toprivate sector investors are below market rates.Examples include a National Conference Centre, aNational Sports Stadium, roads and rail facilities atpoints of international air and sea access andtourism-attracting facilities in the less developedtourism areas of the country.

Strategic Success Driver 2 Competitiveness & Value for Money

Competitiveness can be defined as the degree to whichIrish tourism can produce and deliver services to overseasand domestic customers so that its share of internationalmarkets is maintained and expanded while, at the sametime, the real incomes of people working in tourism aremaintained and increased in line with other sectors of theeconomy.

The competitiveness of Irish tourism derives from a widerange of factors. The price paid for tourism products andservices is one important factor but it is not the only one.For each individual customer of Irish tourism the perceptionof competitiveness is a function of total experience relativeto other alternative tourist destinations. It encompasses thepoint of initial contact with Ireland as a potential touristdestination, the transport services used in getting to andfrom Ireland, travelling within the country, the quality ofproduct and of services experienced and a host ofintangibles which shape the perception of visitors inrelation to Ireland.

Competitiveness is not always easy to measure but thesystematically recorded views and perceptions of visitorsand trends in market share are reasonable, first cutindicators of competitive performance.

By any standards the competitiveness of Irish tourism over theperiod 1990-2000 was extremely good. Over that period:

• the total number of overseas visitors doubled to6.3 million

• surveys conducted indicated that the holidayexperience of visitors consistently met or exceededexpectations of well over 90% of visitors

• Ireland’s share of visitors from main markets inBritain and the US increased.

These positive trends were helped by a relative fall in thevalue of the Irish currency over that period against sterlingand the US dollar and by the significantly increasedavailability of EU and Exchequer funds for productdevelopment and promotion purposes. It is highly unlikelythat either of these factors will be replicated over thecoming decade.

The current position in relation to the competitiveness ofIrish tourism is less satisfactory as highlighted earlier inthis Report.

• Since 2001, visitor surveys indicate a stronglyincreased level of dissatisfaction on the part ofoverseas visitors with their holiday experience inIreland in terms of value for money, although overallsatisfaction ratings remain high across most otherfactors. In 2002, 55% of overseas visitors consideredthat they did not receive good value for money.


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• The 2003 survey undertaken on behalf of Forfás andthe National Competitiveness Council of price trendsin Ireland relative to other countries in the eurozoneshows that Ireland ranks at present as the second orthird most expensive country in Europe in terms ofprices in pubs and restaurants. Pubs and restaurants,of course, form an important element of the tourismexperience in Ireland. Price deterioration in Irelandrelative to other eurozone countries has been on theincrease since the mid 1990s and is, increasingly, acause of negative comment on the part of visitorsand domestic tourists.

• 2002 saw the first deficit in recent history in thebalance of payments in tourism receipts for theIrish economy as more Irish people holidayedoutside Ireland. Increased overseas travel on thepart of the inhabitants of any country is anindication of its relative prosperity and the demandfor overseas holidays by Irish tourists is mainlydriven by increasing income levels. Nevertheless, itis undoubtedly the case that the decisions of manyIrish holidaymakers to holiday overseas rather thanat home have been strongly influenced by therelative deterioration in the price competitivenessof Irish holidays in recent years.

Addressing the recent deterioration in competitiveness is amajor challenge for Irish tourism strategy. Tourism strategymust therefore address a range of factors, both at the level ofthe firm and that of Government, that determine the overallcompetitiveness of the Irish tourism product. These factorsinclude the quality of product and of service, the availabilityof new products and services, the price and quality of accesstransport – both external and internal and the professionalismand skill levels of the people in tourism and the efficiency withwhich they conduct their business. The strategy should alsoaddress the impact on the competitiveness of tourism ofGovernment actions across a range of functional areas (e.g.education, training, taxation, transport, environmentalconservation and physical planning).

Strategic Success Driver 3 Access Transport

Good access transport to and from external and internallocations is of primary importance to the development oftourism. The main developments in this area from theperspective of tourism have already been summarised inthe Forces of Change paragraph and set out in more detailin earlier Chapters.

Looking to the future, Ireland’s national transport strategiesmust encompass a number of fundamental requirements inrelation to tourism as set out below.

Strategic Transport Requirements of Tourism Strategy

• The quality, price, frequency and route access of airand sea transport to and from Ireland must be atleast as good as that available to potential visitors inthe case of other locations, taking distance andmarket size into consideration.

• Full and fair competition in transport services and inthe provision of the underlying infrastructureservices at air and sea ports should be the preferredapproach in meeting the objectives of quality, price,frequency and route access that best meets theneeds of Irish tourism.

• Any diminution in a strong competitiveenvironment should be accepted only wherecompelling reasons exist and then only in thecontext of a strong regulatory framework whichensures costs and services are bench-markedagainst, and maintained at least at par with, bestinternational practice in the locations against whichIrish tourism competes.

• Good internal transport and services (road, rail, bus)are essential components of a national tourismstrategy. Government plans in place to addressthese requirements are ambitious and well-formulated. However, the project management,planning, administration and cost inflation problemswhich are undermining these plans need to beaddressed as a matter of urgency.

Strategic Success Driver 4 Information andCommunication Technologies

Developments in technology will continue to drivesignificant change in tourism, particularly in the areas oftransport services and the provision of information andcommunications. The importance of information andcommunication technologies has become more evidentthroughout the industry and more widely. This impact willintensify in the years ahead and will affect a number ofareas as set out below.

Information & Communication Technologies – MainAreas of Impact on Irish Tourism

• Customers/Potential Customers

• Customer Relations Management (CRM)

• Competition

• Promotion & Marketing

• Networking

• E-Commerce Transactions

• Management Operations

• Education & Training

Considering each of these areas briefly the following futuretrends can be identified.

• Customers/Potential Customers Customers willincreasingly wish to interact directly with tourismoperators through internet based technology, withconsequences for existing planning and bookingarrangements through travel agents and touroperators.

• Customer Relations Management (CRM) CRMbased on the use of internet technologies holds majorpotential for sectors such as tourism where customercontact is direct and intense and its base is dispersed.Its use is becoming common in a number of sectorsincluding the retail sector, in magazine andnewspaper industries and in many sectors ofmanufacturing industry. In tourism it is alsodeveloping but so far has been confined mainly to the

larger hotel and transport groups. This will change inthe years ahead as internet based CRM is rolled outmore widely.

• Competition Competition for tourists/visitors willincreasingly take place through information andcommunication technologies. Potential customers willuse the technology to seek information and compareprices and locations. They will increasingly seek toundertake booking/reservation and paymenttransactions through the internet.

• Promotion & Marketing The new internet basedtechnologies provide a powerful new instrument ofmarketing and promotion for individual tourismoperators and for the Tourism State Agencies. Theeffectiveness with which the opportunities arising areaddressed will, increasingly, become a source ofcompetitive advantage, or otherwise, for bothindividual operators and for tourist destinations.

• Networking Information and communicationtechnologies provide an opportunity for the mutualbeneficial sharing of information and data betweenoperators in tourism and between these operators andthe Tourism State Agencies. Such networkingarrangements are in the early stage of developmentbut they hold considerable potential for improvedmonitoring and delivery of tourism strategy.

• E-Commerce Transactions Internet basedtechnologies will be used increasingly in the tourismindustry and will allow for considerable improvementsin cash management by tourist operators.

• Management Operations Internationally withintourism establishments, the use of informationtechnologies has started to transform operations inareas such as finance, stock-control and personneloperations. Effective use of these technologies cangenerate considerable efficiencies. Again largeroperators are the main users of these technologies forinternal management purposes but this will change asinternet based skills become more common in thepopulation and the relative cost of the associatedtechnologies and software falls.

• Education & Training The use of internet basedtechnologies in the tourism industry for training andeducation purposes is still in its early stages ofdevelopment. This will change as the technologies are


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particularly useful for on-the-job training in a sectorwhere atypical working hours are the norm.

The use of internet based technologies remains at an earlystage of development across the majority of operators in Irishtourism. The level of skills available within the industry andthe sectors that support it are low. A major challenge fortourism strategy is to address these weaknesses and toachieve the widespread adoption of internet basedtechnologies across all segments of the industry. This will bea key task for industry operators individually, for theirrepresentative support bodies and for the Tourism StateAgencies.

Strategic Success Driver 5Product Development & Innovation

The product base of Irish tourism is highly diverse. Itencompasses the natural and built environment includingaccommodation, restaurant and visitor attractions. There hasbeen very significant investment in the capital stock of Irishtourism over the past ten years facilitated by EU andGovernment financial support, attractive taxation incentivesand a low interest regime in more recent years.

In the case of the natural environment the emerging positionincludes both positive and negative features. On the positiveside there is widespread acceptance of the importance ofgood management and conservation practices inmaintaining and enhancing the attractiveness of both thebuilt and the natural environment. These consistently rank atthe top of the list of factors that attract visitors to Ireland. Onthe negative side rapid economic and population growth,increased car-ownership and the strong increase in visitornumbers have generated a number of substantive problems.These give rise to congestion in both urban areas and in themore important, non-urban, visitor attraction destinations.They have also resulted in inappropriate development insensitive areas of the natural and built environment, andwaste management systems in a number of areas which areinconsistent with modern day standards and the green imageof Ireland, and an unsustainable tolerance of lowenvironmental standards and litter by too many people inour society.

The strategic challenge for Irish tourism over the next tenyears in the area of product development lies in maintainingand enhancing the quality of the capital stock and inmanaging the natural and built environment in ways thatmaintain and enhance their attractiveness for the benefit of

domestic and overseas visitors. There is a need for a farstronger product innovation capacity in Irish tourism to meetthe changing needs of a more discerning customer basewhose product requirements and choice of destination arebecoming more varied. The potential customers for whichIrish tourism compete, increasingly seek a holiday whichenhances personal experience in terms of characteristics suchas personal well being, new life-enhancing experiences, newcultural experiences and indeed experiences generally whichthey consider unique to their individual requirements.

Strategic Success Driver 6Marketing & Promotion

Effective marketing and promotion are an essential element oftourism strategy and a major part of the complex of factorsthat determine the achievement of targets. Clearly the mainresponsibility for marketing and promotion rests with theindustry itself and its individual enterprises. The scope for jointand complementary marketing and promotion betweenenterprises is also significant. Such co-operative marketing hasincreased in recent years and there is both a need and anopportunity to build on this both on an all-island basis and ineach of the jurisdictions. With the advent of e-sales andinternet marketing, there will be greater need and scope forindividual firms to significantly develop their own marketingand sales capability than has been the case heretofore.

Because of the dominance of small scale establishments andthe importance of tourism to national and regionaldevelopment, the case for significant State involvement inmarketing and promoting the industry, in close consultationand cooperation with tourism operators, is also strong. Stateparticipation is essential in the generic task of marketing andpromoting Ireland as a destination for overseas visitors, usingmodern promotional strategies based on a strong brandimage. It is also essential in the marketing and promotion ofspecific niche areas on both the demand side (e.g. Irishethnic market, incentive travel, the adventurous young, theindependent traveller etc) and the supply side (e.g. golf,fishing, walking, conference facilities, rural tourism, Irishlanguage and culture etc). Promotion and marketing is oneof the significant ways through which the Irish tourismproduct is differentiated in the minds of potential visitors andthrough which Irish tourism competes against alternativetourist locations and against the market message and profilethat competing national tourism agencies convey.

Because they are central elements of an effective nationaltourism strategy, it is essential that market and promotion

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activities are based on systematic and up-to-date marketresearch, are focussed on the best market prospects andsegments identified by that research and that performance issystematically monitored and evaluated for effectiveness andvalue for money.

Britain and the US have consistently accounted for almosttwo-thirds of all overseas earnings – 42% and 21%,respectively, in 2002. Market research and analysis indicatesthat these two markets will continue to dominate visitornumbers and earnings in Irish tourism over the next tenyears. The prospects for an increased share of overseasearnings coming from Mainland Europe are good –especially if the interests of Irish tourism can be more closelyaligned with low fare air access. Taking these factors intoaccount the strategic market priorities for Irish tourism overthe next decade are set below.


Market Priority Customer Characteristics

Medium Term Top Growth Prospects

Britain

US

Established markets with growth

potential

France

Germany

Developing Markets with

Potential

Italy

Netherlands

Australia

Nordic Countries

Spain

Canada

Switzerland

Austria

Japan

The principal target segments for

Ireland are

• Urban-based

• Mainly 24-55 age group

(other than in the US)

• Pre and post family stages

• Higher income earners

• Well travelled

• Appreciative of scenery, people

contact and culture

• Interested in Irish ethnicity

Secondary target groups include

• Active retirees

• Families with children from

Britain

• Those motivated by particular

sports, cultural or other interests.

Longer Term Central and Eastern Europe

Asia/Pacific

South America

Strategic Overseas Market Priorities 2003 - 2012

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While current analysis indicates that the areas set out in theabove diagram represent the best medium and long-termmarket prospects, the international tourism industry isundergoing fundamental change at present for reasons andalong the lines discussed in earlier Chapters. These Forces ofChange will persist over the next ten years and beyond.Accordingly, it will be essential for Ireland’s tourism strategyto maintain the flexibility needed to respond withimagination and agility to unforeseen changes in marketdevelopments and prospects.

Key Overseas Market Segments In parallel with thetargeting of specific geographic markets, marketingstrategy will also need to focus on specific segments ofidentified consumer demand including those relating toniche products. The segments of highest potentialidentified for this Review in terms of their contribution tothe objectives and targets of strategy – including thoserelating to regionality, and revenue goals are set out below.

Key Overseas Market Activity Segments 2003 - 2012

In marketing and promoting the contribution of thesesegments to the strategic objectives of regionality andseasonality it is essential that a balanced approach is taken.The objective must be to position Ireland as a destinationsuitable both for short-stay breaks and for longer-staytouring holidays so that both segments grow together andthat growth in one segment is not achieved at the expenseof the other.

In summary, the key elements of the proposed overseasmarketing and promotional strategy over the period to2012 are as follows.

Key Elements of the Marketing & Promotional Strategyfor Overseas Visitors 2003 - 2012

• A consistent focus on the primary best prospectmarkets.

• Investing opportunistically using pilot programmesin areas of new market development potential.

• Greater segmentation of Ireland’s potential marketto maximise use of marketing funds.

• Increased integration of product and serviceproviders in co-operative and complementarymarketing and promotional campaigns.

• The maximum deployment of marketing resourcesto front line marketing activities.

• An increased use of new communicationtechnologies and distribution channels.

• A greater use of customer relationship marketingprogrammes.

• A continuous assessment of marketing effectiveness.

• Exploiting the potential of an all-island approach totourism marketing based on an extended range ofindividual and complementary products available totourists in both Northern Ireland and the South.

The Domestic Market The domestic market is strategicallyimportant, not only in terms of its size, but because of thesignificant contribution it makes to the achievement of theregional, seasonal and business sustainability objectives oftourism strategy. While it is a market of central strategicimportance to Irish tourism, it is also a market experiencingmajor changes in demographic structure, in customerprofile and attitude and in purchasing capability. Marketingand promotional activities will need to continue to reflectthese realities. Accordingly, the marketing strategy fordomestic customers will require to be based on a moresystematic research of customer profiles and requirements.It will continue to need a high priority status and link thefull range of tourism products and services with customerrequirements. The domestic market is, particularly,amenable to effective use of new technology-basedcustomer relations management (CRM).

Touring (predominantlylonger stays)

Culture/ SightseeingCountryside

Castles and GardensDublin breaks

Angling

Conference

Incentive travel

Sporting & Other Events(e.g. horseracing,greyhound racing, fieldgames)

English Language Learning

Golf

Walking

Equestrian

Youth Budget

Cycling

Cruising

Health Tourism

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Strategic Success Driver 7 The People in Tourism

The considerable success that the tourism industry hasachieved over the past twenty years is a reflection of themany excellent people within the industry – their initiative,drive, energy, skills and customer know-how. Successivecustomer surveys have shown consistently that thecharacter, personality and friendliness of the people withwhom visitors come into contact is a major attribute of Irishtourism.

Maintaining the quality of the people experience mustremain a fundamental objective of tourism strategy. Thiswill only happen if the industry, its various segments, itsindividual operators and the Tourism State Agencies worktogether to ensure that generic training, skills-basedtraining (both in-house and external), recruitment policies,team-working arrangements, motivation and incentivisationsystems within the industry are among the best in thecountry and internationally.

In the years ahead the rate of increase in the labour forceand the number of school leavers will fall sharply in Ireland.There will be increasing competition between sectors of theeconomy and between individual businesses within andbetween these sectors to recruit and retain the brightest andthe best people available. It is absolutely essential if the Irishtourism industry is to attract and to keep the best peopleneeded to grow and develop the industry to its fullpotential by exploiting the opportunities outlined in thisReport, that a Human Resource Development Strategy isput in place which has the full support and commitment ofthe industry itself and the Tourism State Agencies. Thisstrategy must position the different segments of tourism asa career of choice for both new entrants and existingemployees as follows.

Human Resource Development Strategy for IrishTourism 2003 - 2012: Key Requirements

Irish tourism and its different segments must be positionedas a career of choice for new entrants and existingemployees through:

• the excellence of its pre-entry, induction and in-career training programmes

• the high national and international standing of itsqualifications

• a wide range of opportunities for careerdevelopment and advancement

• the competitiveness of its remuneration andemployee incentivisation packages

• the excellence of its conditions of employment

• the opportunities provided to employees toinfluence and shape the decisions that affect thefuture development and employment prospects andconditions of the enterprises in which they work

• creating and promoting a high perception on thepart of the general public and potential employeesof the attractiveness of tourism and its differentsegments as a career option.

Strategic Success Driver 8The Government Sector

While the tourism industry in Ireland is driven by privatesector enterprise, innovation and investment, theGovernment sector plays a critical role in the developmentof the industry at national and regional levels. The effectivedischarge of this role is an essential component of tourismstrategy. The role may be described under a number ofheadings.

• Tourism Policy/Strategy A fundamental role ofGovernment, through the Minister for Arts, Sportand Tourism, is to formulate, articulate andcommunicate national tourism policy which puts inplace a consistent framework of integrated actions,across all relevant areas of Government activity,within which private sector enterprise, innovationand investment in tourism flourishes.


• Regulation The Government also is responsible forputting in place a regulatory framework for thetourism industry which is administratively efficient,promotes competition and safeguards standards inessential areas such as registered accommodation,tourism-related education and training, safety andpublic health.

• Incentives & Supports The Government has animportant role in promoting tourism in developingareas where the activities supported are not beingor likely to be provided by the private sector forreasons of market failure (i.e. the likely returns notjustifying private sector investment) and the socialor economic returns are greater than the cost ofintervention.

• Partnership In formulating, monitoring andimplementing strategy, the Government needs todo so in close consultation with representatives ofthe tourism sector.

Strategic Success Driver 9Information, Intelligence & Research

Tourism is a diverse, complex sector with a customer basewhich is also highly diverse in terms of origin, age-profile,income levels, educational attainment, leisure interests andtime availability. It is an internationally competing service inwhich customers travel to experience the product at itsplace of origin or operation. It is a highly volatile industry inwhich instant decisions are made to travel or not to travelto a particular destination and which is strongly affected byeconomic growth rates and political instability.

Given the fundamentally volatile characteristics of tourism itis essential that tourism strategy at national and regionallevels be based on the best possible data and information.That data and information needs to be converted intorelevant intelligence and further converted into afoundation for decisive actions. In short, good information,intelligence and research are essential for the formulation ofeffective tourism policy and the development of supportswhich best meet the needs of a rapidly changing industry.Such requirements need to cover the wide range of factorsthat determine the potential of individual markets for Irishtourism. These include shifts in the offerings of competitors,economic and demographic projections, new technologiesaffecting tourism and other factors in order to provide anessential information input into the investment decisionsthat will drive the tourism sector in Ireland in the future.

Putting in place a highly professional, efficient and effectivesystem of information and intelligence gathering andresearch to underpin decision-making by individualoperators, by the Tourism State Agencies and by theGovernment is an essential component of the new tourismstrategy.

5.7 Flexibility/Agility

All available information indicates that the internationalbusiness environment has entered a period of fundamentalchange, uncertainty and volatility that is likely to persist forsome time. For reasons well set out in this Report thetourism sector is particularly affected by thesedevelopments. It is, undoubtedly, the case that the industrywill come through the present period of turmoil into abetter business environment. The analyses of future markettrends undertaken by the World Tourism Organisation bearthis out. While there are some initial indications thatprospects for tourism are beginning to turn around atpresent, it would be wise to prepare for further uncertaintyand for future volatility.

Accordingly, the strategy for tourism outlined in this Reportwill require to be monitored and reviewed more frequentlyand intensely than has been the case previously withstrategies formulated in more certain times. The objectiveof such continuous reviews, and consequential adjustmentsto strategy, recommendations and actions, is to be able torespond quickly and effectively to changes in marketcircumstances to the benefit of Irish tourism. Of particularimportance in achieving this flexibility and agility ofapproach will be the upgrading of the system ofinformation, intelligence and research as a central elementof tourism strategy as set out earlier in this Chapter.

5.8 Decision-Making Framework

The tourism development strategy set out in this Reportprovides a framework of actions to support the developmentof tourism in Ireland and its regions at a level higher thanwould be the case in the absence of the strategy. The specificactions required are clearly set out in Chapter 6, togetherwith the reasons for taking them, the bodies responsible forimplementing the actions and the time-frame within whichthe actions should be accomplished. The Report should,therefore, be read as a manual for action rather than simplyas a consultative document.

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In order to reflect the action orientation of the Report asmall, high-level Implementation Group should beestablished, for a two-year period, with representation fromthe private and public sectors. The task of theImplementation Group will be to oversee implementationof the recommendations in the Report, revise them as theyconsider necessary in consultation with the bodiesresponsible for their implementation, consider whatreshaping of strategy is needed in the context of changesin the market place and report on their deliberations at six-monthly intervals. A strong on-going process ofconsultation with the industry is a critical component of thefollow-up to this Report.


Irish tourism in 2003 is at a crossroads. It has come througha period of major development and success in the 1990s –probably the most successful decade in its history. Today, itfaces major changes in the international economic andgeopolitical environment very different to those whichhelped to underpin its success in the 1990s. Significantchanges have emerged in the profile of its customer base,both at home and abroad. The competition that it facesfrom traditional competitors has intensified in the face of adownturn in world tourism and some uncertainty about theimmediate future. At the same time new competitors fromEastern Europe and further afield have entered the market inwhich Irish tourism has traditionally competed.

All of this is happening at a time when the competitivenessof Irish tourism has deteriorated and is under further threat.This arises from a combination of price pressures, from acertain complacency at industry and Government levels thatthe good performance of the past can be sustained in achanged international and domestic environment and fromcongestion factors following a decade of both economic andtourism growth faster than had been anticipated and fasterthan the capacity of many elements of infrastructure toadjust to the increased demands.

It is also happening at a time when it is clear that thesignificant levels of financial support for the development ofthe industry from EU and Government, widely available inthe 1990s and to the present time through direct grants,taxation incentives and infrastructural supports, will not beavailable at anything like the same level in future years.

Accordingly, a successful Irish tourism industry in the years

ahead will be an industry that is more self-reliant, agile andadaptable to change in the market place. The industry hasshown, over the past decade and more, its capacity to adapt.It has many strengths including, and beyond, those availablewhen the industry started on an extraordinarily successfuldevelopment path in the 1990s. Among these strengths areits proven track record of meeting customer needs and adeep knowledge of customer requirements associated withthat success, a capital stock based on recent investment thatis modern and efficient across all segments of the industryand a people-in-tourism resource to which customers/visitorshave consistently awarded the very highest accolades.

Central to the success of Irish tourism in the years ahead willbe a recovery of the competitiveness that has been lost inrecent years.

To address these issues a new strategy for Irish tourism isneeded which clearly sets out a new way forward in thecontext of the fundamental changes now affecting theindustry. Such a strategy is set out in this Report andparticularly in this Chapter. It encompasses:

• a clear vision of where Irish tourism wants to go

• a description of the underlying forces that areshaping the industry at present and those that willcontinue to do so in future

• the establishment of challenging targets andobjectives for the industry going forward

• an analysis of the factors that will drive success in theindustry

• an approach to developing an enhanced capabilitywithin both the private and public sectorcomponents of the industry to innovate and respondeffectively to unforeseen circumstances

• a decision-making framework that facilitates theformulation of such a strategy and its implementationthrough consistent and decisive actions atGovernment level and across the different sectors ofthe industry itself.

The Review Group believes that the analysis contained in thisReport and the new strategy for Irish tourism set out in thisChapter offers a path to the future successful developmentof the sector.


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Implementing the Strategy - The Actions Required

“The policies and actions that have delivered strongperformance in Irish tourism in the past will notsuffice to do so in the future. The way in which thechanges now required are anticipated, managedand put in place will determine the future success ofIrish tourism as a sector of investment opportunity,innovation and enterprise, and as an instrument ofGovernment developmental policies.”

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6chapter six

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6.1 Translating Strategy into Action

Irish tourism is a highly complex and diverse sector ofinterdependent, economic activities operating within boththe private and public sectors. The actions now required toimplement the new strategy for Irish tourism outlined inthis Report are equally diverse and wide-ranging. Theyencompass many different decision makers in both theprivate and public sectors.

In identifying the key actions needed to deliver the strategyoutlined, the Review Group was guided by threefundamental principles.

Fundamental Principles Guiding Recommended Actions

1 The growth and development of the tourismindustry throughout Ireland must, primarily, bedriven by private sector enterprise, innovation andinvestment with sensible and appropriateGovernment support.

2 The basic function of tourism policy is to put, andmaintain, in place a consistent framework of well-chosen actions, across all relevant areas ofGovernment activity, within which enterprise,innovation and investment in the tourism industryflourishes.

3 Government has an important complementary rolein supporting the enhancement of businesscapability and capacity within a tourism industrythat is largely owner-operated and small in scale. Inexercising this role, direct public sector interventionin the tourism sector should be confined to thoseareas of clear market failure (i.e. the likely returnsnot justifying private sector investment) and thenonly, in close consultation, and partnership, withthe industry itself.

Tourism has made a major contribution to national andregional development in Ireland for many decades and atno time more so than over the past 10 years. The analysesundertaken by the Review Group indicate clearly that it cancontinue to do so over the next decade and beyond.

The Group have set ambitious targets for the industry overthe period to 2012 covering the key areas of revenuegeneration, overseas visitor numbers, domestic tourism andregional development. The policies and actions that havedelivered strong performance in Irish tourism in the pastwill not suffice to enable the industry to meet these targetsin the significantly changed circumstances that face theindustry today and over the coming decade.

Substantive change is required in key areas of Governmentpolicy, in the delivery of that policy by the Tourism StateAgencies, in the work of the industry representative bodiesand, most importantly, at the level of individual enterprisesthroughout the industry. The effectiveness and efficiencywith which the changes required are anticipated, managedand put in place will determine the future success of Irishtourism as a sector of investment opportunity, innovationand enterprise and as an instrument of Government socialand economic development. The fundamentalcomponents of that change require:

• a new policy framework and set of related actionsthat continue to promote strong, self-reliant,profitable, innovative, customer-focused tourismenterprises

• an industry that itself anticipates and embraces thechanging needs of its customer base – bothoverseas and domestic tourists – and offers to eachcustomer a product, service and experience whichsurpasses that available from alternative providersboth at home and abroad.

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6.2 Action Plan 2003-2005

Chapter 5 of this Report sets out a new strategy for Irishtourism over the period 2003 - 2012. In it the key strategicdrivers of success for the industry are identified.

Irish Tourism 2003-2012: Key Strategic Drivers of Success

1 Business Environment

2 Competitiveness and Value for money

3 Access Transport

4 Information and Communication Technologies

5 Product Development and Innovation

6 Marketing and Promotion

7 The People in Tourism

8 The Government Sector

9 Information, Intelligence and Research

The following sections of this Chapter set out the specificactions required to be taken under each of these key driversof a successful Irish tourism industry. The actions focus onthe period 2003-2005. To attempt to recommend todaywhat actions will require to be taken beyond 2005 is notrealistic. What is required, instead, in an increasinglyvolatile tourism environment, is a process of frequentreview of strategy at not longer than two-year intervals andthe adoption of a series of rolling 2-3 year action planswhich reflect changing circumstances, the periodic reviewof strategy and the outcomes that arise from theimmediately preceding action plan.

The set of actions recommended in this Chapter may,accordingly, be regarded as the first rolling action plan forthe development of Irish tourism over the next decade.Each section sets out clearly:

• the rationale underlying the identification of theparticular driver of success for Irish tourism

• the objectives which the actions recommended seekto achieve

• where primary responsibility lies for undertaking theactions recommended

• the timeframe within which the actionsrecommended should be progressed.

A number of the actions recommended will help to shapeand strengthen more than one particular strategic driverof success and are, therefore, repeated in more than onesection. These multi-purpose actions are marked by anasterisk (*).

The longer term strategy and more immediate action planset out in this Report provide a coherent framework ofactions for the development of Irish tourism, at this stage ofits evolution and taking into account the fact that themajority of businesses are SMEs. The strategy and action planwill facilitate the ongoing review process recommended asan inherent element of the development process for theindustry going forward. The review process will be led by theDepartment of Arts, Sport and Tourism, and will encompassthe Tourism State Agencies, other Government Departmentsand State Agencies whose policies and actions significantlyaffect tourism and, importantly, representatives of the keysectors of the industry.

An immediate and urgent task for the Department of Arts,Sport and Tourism, once this Report is published anddistributed, will be to enter into substantive bilateraldiscussions with the bodies that have key responsibilities forthe implementation of the strategy and recommendationsset out. The Review Group strongly recommends that theDepartment establish a small high-level ImplementationGroup of the key decision makers in both the public andprivate sectors to provide an impetus to the effectivefollow-through on the strategy and recommendations setout in this Report and to the development of the sharedunderstanding and partnership between the key decisionmakers – without which the full development potential ofthe tourism industry will not be realised.

Executive Summary

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Strategic Success Driver 1 Business Environment

Objective To facilitate the development of the tourism industry through a range of tourism-supportive Government macroeconomic and other policies that enhance the businessenvironment and encourage investment

Rationale The ultimate determinant of success in Irish tourism will be an energetic, innovative andprofitable private sector operating within a domestic environment where Governmentpolicies and actions are supportive of business investment in tourism.

Actions Lead Role Milestones/Timeframe

1 Government Commitment: Strengthen Government Government/Department Immediate and ongoingcommitment to creating and maintaining a positive of Arts, Sport and Tourismlegislative, budgetary and regulatory environment fortourism investment and development by

• a stronger and more frequent acknowledgement oftourism as an important, highly-valued instrument ofnational and regional development policy

• a redefinition of tourism policy to encompass notonly the traditional role and functions of a"Department of Tourism" and the Tourism StateAgencies but, in addition, all areas of Governmentpolicy and actions that impact in a significant manneron the development of tourism

• establishing a stronger analytical and resource basewithin the Department of Arts, Sport and Tourism,to monitor, influence and shape developments, inconjunction with the Tourism State Agencies, acrossthe wider arena of Government policy thatsignificantly affects tourism.

2 Competition: Strongly support competition, Department of Arts, Immediate and ongoingor pro-competition regulation where market competition Sport and Tourism/Tourism does not operate, in the case of both private and public Industry Representativesector activities that affect tourism - including the Bodieshospitality sector, access transport carriers andinfrastructure (ports and airports) and internal transport services.

1 Actions that support more than one driver of successful tourism development are denoted by an asterisk *

Implementing Tourism Strategy 2003 to 2012First Rolling Action Plan 2003-2005

Actions to Improve the Business Environment for Tourism Operators*1

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3 Inflation: Take resolute action to maintain recent Government/Department Immediate and ongoingprogress to bring inflation and tourism prices down to of Financethe eurozone average and below through

• the full implementation by all the social partners ofthe provisions relating to pay, productivity and thefacilitation of change in the workplace contained inthe Social Partnership Agreement 2003-2005-Sustaining Progress, as well as the Agreement'santi-inflation initiative

• Government commitment to an inflation targetbenchmarked to the eurozone average rate

• maintaining any increases in charges forGovernment services below the general rateof inflation

• avoiding further increases in excise duties and VATin Budget 2004.

4 Taxation: While company and personal taxation rates inIreland are generally competitive and the narrow base oftaxation in Ireland and EU State Aid Rules constrainGovernment action in this area, nevertheless, within thatframework a number of actions should be taken

• promote reinvestment in maintaining the capital Fáilte Ireland/Tourism Immediate and ongoingstock in Irish tourism at high standards through Industry Representativeuse of the accelerated write-offs already available Bodies/Regionalfor plant and machinery Tourism Authorities

• establish and publish annually information on Fáilte Ireland/Revenue First Investmentinvestment in tourism facilities undertaken with the Commissioners/Tourism Report publishedaid of capital allowances and other tax reliefs in order Industry Representative in 2004to monitor and assess investment in maintaining the Bodiesquality of Ireland's tourism stock

• bring indirect taxation levels on key tourism-related Department of Finance From Budget 2004 and ongoingconsumables down to average eurozone levels– focussing initially on the high excise duties on wine.

Executive Summary

5 Insurance: Address the factors generating the highabsolute levels of, and high rates of increase in, insurancecosts for tourism enterprises through

• the acceleration of the Government's Insurance Reform Department of Enterprise, Reduction in insurance chargesProgramme, in particular the establishment of the Trade and Employment levied from 2004Personal Injuries Assessment Board on a statutory basis

• the consideration of the particular impact on tourism Competition Authority By end 2003of insurance increases in the analysis/report on theinsurance sector being prepared at present by theCompetition Authority

• the consideration of the scope for co-operative action Tourism Industry Immediateby the tourism industry in areas such as the Representative Bodiesmanagement of claims, health and safety measuresand self-insurance.

6 * Infrastructure: Accelerate the completion of keyelements of tourism related infrastructure including

• * National Conference Centre (Strategic Success Department of Arts, See later Actions for detailsDriver 5 also refers) Sport and Tourism

• * National Sports Stadium (Strategic Success Department of Arts, See later Actions for detailsDriver 5 also refers) Sport and Tourism

• * National Roads Programme, in particular the early Department of Transport/ See later Actions for detailscompletion of the Dublin M50 orbital route and the Department of Environment,route network around international air and sea access Heritage and Localpoints and routes/centres of high tourism demand Government(e.g. Kerry, Connemara and the mid-West) includingregional and inter-regional access to Shannon Airport(Strategic Success Driver 3 also refers)

• * National and Regional Road Signposting Department of Transport/ See later Actions for detailsProgrammes (Strategic Success Driver 3 also refers). Department of Environment,

Heritage and LocalGovernment

7 Regional Infrastructural Priorities: Update the Regional Tourism Authorities/ Immediate and ongoingaudit of the tourism-related infrastructural needs of each Fáilte Irelandof the regional tourism authority areas and prioritise thekey actions required to bridge the gaps for submissionto the relevant Department/agency.

* Actions that support more than one driver of successful tourism development are denoted by an asterisk *

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8 Tourism State Agencies – Business Plans: Fáilte Ireland/Tourism For 2004 and ongoingIn order to facilitate investment in tourism and Ireland/Department oftourism related bodies from a number of sources in the Arts, Sport and Tourismprivate and public sectors, Fáilte Ireland and TourismIreland to prepare and publish annually businessdevelopment plans which establish key targets ofperformance in the development, promotionand marketing of tourism at national and regional levelswithin a clear policy framework articulated by theDepartment of Arts, Sport and Tourism and set out inthe plans.

9 Proposed Smoking Ban in the Workplace: Department of Health and ImmediateWhile supporting action to reduce the adverse impact Children/Tourism Industryon public health of smoking in the workplace and in the Representative Bodieslight of the overall assessment by Tourism Ireland thatthe proposed ban will not have a dramatic effect onvisitor numbers, discussions should continue betweenthe Department of Health and Children and the tourismsector on the detailed arrangements for the introductionof the new measures to help minimise any adverseimpact on the sector.

Executive Summary

Strategic Success Driver 2 Competitiveness & Value for Money

Objective To address the deterioration in the competitiveness of Irish tourism in recent years

Rationale The competitiveness of Irish tourism is a function of the total visitor experience relative toother locations. Restoring competitiveness is a major challenge for Irish tourism. It is notjust a pricing issue, it is about wider value for money. It encompasses the experience forcustomers from the initial point of contact with Ireland as a potential tourist destination,through the transport services used in getting to and from Ireland, travel experience withinthe country, the price and quality of products and services, and a host of intangible factorsthat influence the perception of customers of the Irish tourist product. Accordingly, thecompetitiveness of Irish tourism is influenced by the full range of factors and actions setout in this Chapter. There is, however, a need to focus on a number of issues in this sectionthat have a more direct impact on competitiveness.


1 Tourism Industry to Acknowledge Primary Tourism Industry Immediate and ongoingResponsibility for Restoring Competitiveness: Representative Bodies andThe Irish tourism industry should acknowledge through tourism enterprisesits representative bodies and through individual enterprises that

• in recent years it has lost competitiveness and that ahigh and increasing proportion of customers haveexpressed concerns about value for money

• primary responsibility for restoring competitivenessand better value for money rests with the industry itself.

2 * Government Action on Inflation: Government/Department Immediate and ongoingThe Government should resolutely implement the of Financepackage of anti-inflation actions identified in StrategicSuccess Driver 1.

3 Benchmark the Competition: The price and Tourism Industry For 2004 and ongoingproduct offerings against which Irish tourism competes Representative Bodies/should be identified each year and the information Fáilte Ireland/widely distributed within the industry. Tourism Ireland

4 * New Management Development Capability Fáilte Ireland Early 2004 and ongoingProgramme: Fáilte Ireland should develop andintroduce a programme on management developmentcapability for the industry similar to that which EnterpriseIreland has developed for Irish-owned industry and


Actions to Improve Competitiveness and Value for Money

89 * Actions that support more than one driver of successful tourism development are denoted by an asterisk *


internationally-traded services (non-tourist). The objectiveof the programme will be to enhance the capability ofindustry to manage more effectively the major changesnow affecting it, and those in prospect, to increaseproductivity and standards and to restore competitiveness.

5 * Customer Relations Management: Fáilte Ireland in partnership Early 2004 and ongoingFáilte Ireland should develop and introduce a programme with Tourism Industryto improve the standards of the tourism industry in Representative Bodiescustomer relations management (CRM), making particularuse of the potential which modern information andcommunication technologies provide to enterprises forthis purpose, including the sharing of information formutual benefit between enterprises offering productsand services that are complementary. (Strategic Success Drivers 4 and 6 also refer)

6 * Competition: Strongly support competition, Department of Arts, Immediate and ongoingor pro-competition regulation where market competition Sport and Tourism/Tourismdoes not operate, in the case of both private and public Industry Representativesector activities that affect tourism – including the Bodieshospitality sector, access transport carriers andinfrastructure (ports and airports) and internaltransport services. (Strategic Success Driver 1 also refers)

7 Management/Employee Partnerships: Tourism Industry Immediate and ongoingIn order to enhance the scope to anticipate and introduce Representative Bodieschange in the workplace as an inherent and ongoingelement of work practice, management/employeepartnership arrangements to enhance performance,productivity and competitiveness should be stronglyencouraged by the Tourism Industry RepresentativeBodies, in consultation with Fáilte Ireland and theNational Centre for Partnership and Performance (NCPP).

8 Make High Standards the Competitive Fáilte Ireland/ Immediate and ongoingAdvantage of Irish Tourism: Recognising that at its Tourism Industrycurrent stage of development, Ireland is a high-wage, Representative Bodieshigh-productivity economy, a relentless upgrading ofstandards within the tourism sector should be promotedas a competitive response to lower cost alternatives inother countries. These high standards should encompassproduct, (accommodation, restaurants, visitor centres,activity products, natural and built environment),transport infrastructure and services.


Executive Summary

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9 Stronger Role for Tourism Industry The Tourism Industry For 2004Representative Bodies: The tourism industry itself Representative Bodiesshould strengthen the capability of its representativebodies through a widening of their functions and therecruitment or secondment from industry of people withthe requisite analytical and other required expertise topromote and to provide leadership in relation tocompetitiveness throughout the industry and its differentsegments. Measures in which industry representativebodies should take a lead include

• identifying and promoting competitivenessenhancing actions

• facilitating joint cooperative action betweenenterprises in areas such as marketing, trainingand insurance provision

• joint product development initiatives

• the establishment of management networks at localand regional level

• providing training supports in productivityenhancement, cost management, marketing andcustomer relations management

• benchmarking performance of Irish tourism againstdevelopments in competitor countries

• investing in research and planning that supports thedevelopment of tourism and enhances the objectivityand credibility of tourism representative bodies.

10 Training: Develop specific training supports to Fáilte Ireland/Tourism Early 2004 and ongoingenhance the industry's capability in cost management. Industry Representative

Bodies

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Strategic Success Driver 3 Access Transport (External)

Objective To ensure that the price, quality, frequency and route access of air and sea transport to andfrom Ireland are at least as good as that available to potential visitors of alternative touristlocations

Rationale Competitive and convenient air and sea access is a crucial determinant of internationaldemand for a tourist destination and, especially, in the case of Ireland – as an islanddestination.


1 Ireland-US Bilateral Air Agreement: Department of Transport Immediate

• Renegotiate the Ireland-US Bilateral Air Agreement,in advance of an EU-US Aviation Agreement, in orderto remove the US gateways constraint and maximisethe benefits to Ireland from additional air servicesand enhanced visitor flows

• Establish a high-level Task Force to advise on the Department of Transport Immediateissues involved, from the perspective of tourism,general business investment, the airline industry,the airport authorities and regional developmentincluding enhanced promotional and regional andinter-regional access requirements.

2 Dublin Airport Terminal Facilities: Facilitate Department of Transport Decision in principle on provisionadditional, competitive, fast turnaround terminal facilities of terminal by end 2003at Dublin Airport to help develop additional air services,particularly from Mainland Europe.

3 Dublin Airport Visitor Reception Facilities: Aer Rianta/ By start of 2004 seasonImplement a series of actions to improve visitor reception Dublin Airport Authorityfacilities at Dublin Airport including baggage handling,information and general facilities in arrivals/departures areas.

Executive Summary

Actions to Improve Access Transport


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4 * Additional Air-Routes: Actively pursue the best Tourism Ireland in Immediate and ongoing and forprospects for additional route access into Ireland from conjunction with airlines inclusion in operational plans ofMainland Europe and Britain with airport authorities and and airport authorities Tourism State Agencies andair carriers, including low fare airlines that demonstrate an Airport Authorities for 2004 andability to develop and sustain new routes and carry subsequentlysignificantly increased numbers of visitors. (Strategic Success Driver 6 also refers)

5 Regulation of Sea Ports: Appoint a regulator, similar Department of Before end 2003to that for aviation, to regulate port charges with a specific Communications, Marinemandate to enhance facilities, services, competitiveness and Natural Resourcesand transparency.

6 Visitor Facilities at Seaports: Develop a programme Port Authorities By start of 2004 seasonto improve facilities for visitors at major seaports includinginformation on arrival, improved reception facilities, easierand more attractive access through the ports.

Strategic Success Driver 3 Access Transport (Internal)continued

Objective To ensure that tourism priorities are reflected in national infrastructural development plans– in order to improve internal travel arrangements and facilities for tourists

Rationale Direct, easy and affordable access to all tourism areas within Ireland, throughimprovements in roads, sign-posting, public transport and domestic transport links, isessential if regionality targets are to be achieved. Management of tourism flows andcongestion in developed tourist areas, especially in peak season, must also be addressed interms of the impact on sustainability.


7 * National Roads: Improve and upgrade the National Department of Transport/ Tourism priorities reflected in theRoads Programme and, in particular, accelerate actions to Department of Environment, 2004 Roads Programmeachieve the early completion of the Dublin M50 orbital Heritage and Localroute and the route network around international air and Governmentsea access points and routes/centres of high tourism demand (e.g. Kerry, Connemara and the mid-West including regional and inter-regional links to Shannon Airport). (Strategic Success Driver 1 also refers)


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8 * Signposting: Prioritise major tourism routes in the Department of Transport/ 2004 annual reports to includeNational and Regional Road Signposting Programmes Department of Environment, progress on meeting tourismand provide annual progress report on implementation – Heritage & Local prioritieswith particular reference to tourism routes. (Strategic GovernmentSuccess Driver 1 also refers)

9 Bus Services: Bus Eireann should work more closely Bus Eireann in consultation By start of 2004 seasonwith the Regional Tourism Authorities to improve bus with Regional Tourismservices to, and within, key tourist destinations. Authorities

10 Rail Travel, Facilities and Customer Services: Irish Rail Immediate and ongoingA significant upgrading of station facilities, passengercommunications and rolling stock on main inter-urbanroutes is required which, for example, makes provision for

• simplified ticketing arrangements for tourists to allowgreater interchange between bus and rail services

• the priority delivery of electronic information systems at key transport locations for journey planning andon board trains

• ensuring sufficient and adequate seating and luggagefacilities for all passengers on inter-urban routes

• higher standards of service in terms of punctuality,cleanliness, reliability, frequency and comfort of trainsand stations and more independent monitoring ofcustomer service charters

• the priority deployment of modern rolling stock onkey tourist routes.

11 Dublin Airport Metro Link: Accelerate proposals Department of Transport Decision in principle to proceed byfor developing a metro link between Dublin airport and end 2003Dublin city centre with provision for ease of transfer tonational road, rail and bus services.


Executive Summary

Strategic Success Driver 4 Information and Communication Technologies

Objective To accelerate the exploitation of the potential of information and communicationtechnologies and e-commerce for the tourism industry

Rationale The use of internet-based technologies remains at an early stage of development across themajority of operators in Irish tourism. The impact of information and communicationtechnologies on tourism will intensify in the years ahead. Enterprises that have thecapability to effectively use information and communication technologies in areas such ascustomer relations management, marketing, payment, cost control, accounting, trainingand human resource management, will have a competitive advantage.


1 Information and Communication Technologies Fáilte Ireland/Tourism Early 2004 and ongoingDevelopment Programme: Develop a programme Ireland with the industry to maximise the use of information andcommunication technologies for training, marketing andcustomer relations management, including a strongdemonstration campaign, co-operative networks andshared databases, web-based training and the alignmentof websites. Fáilte Ireland will have the ”enterprise facingrole” and Tourism Ireland will have the “market andconsumer facing role“

2 Support Programme: Support the industry in the Fáilte Ireland In 2004 and ongoingintroduction and development of effective customerfriendly e-commerce applications and in buildingcapability in their use.

3 Co-operative Networks: Promote best practice The Tourism Industry Details of case studies publishedmodels of co-operative networks in the application of Representative Bodies in 2004information and communication technologies ande-commerce strategies.

4 Training Courses – New Technologies: Fáilte Ireland Early 2004• Ensure that training courses operated directly, or

supported, by Fáilte Ireland involve a computer useand operation module

• Make it an objective that graduates from Fáilte Irelandoperated or supported courses are proficient in the useand application of new technologies in the industry.


Actions to Improve the Use of Information and Communication Technologies

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5 Leadership Role for State Agencies: Fáilte Ireland Fáilte Ireland Immediate and ongoingand Tourism Ireland should be seen as strong leaders in /Tourism Irelandthe application of information and communicationtechnologies in all aspects of their business includingoperations, communications, training and the standardsof their web-sites/portals.

6 Award/Recognition Schemes: Fáilte Ireland should Fáilte Ireland Programme initiated in 2004establish, promote and widely communicate awards toacknowledge excellence in the application of informationand communication technologies in different areas oftourism including hotels, other accommodation, visitorcentres etc.

Executive Summary

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Strategic Success Driver 5 Product Development and Innovation

Objective To ensure that the tourism product which Ireland offers to overseas and domesticcustomers provides, and continues to provide, a positive and memorable experiencebeyond their expectations

Rationale The Irish tourism product is highly diverse, built around the three pillars of people, pace andplace. It encompasses the natural and built environment, a wide range of hospitalityproducts and services, a range of visitor attractions and cultural facilities, transport facilitiesand, importantly, the interaction with people. The tourism product is the fundamentaldeterminant of the tourist customer experience on which the success of the Irish tourismindustry rests.


1 * Reinvestment in Capital Stock: In order to Fáilte Ireland/Tourism Immediate and ongoingmaintain and enhance the standards of the capital stock Industry Representativein Irish tourism, strongly promote reinvestment in plant Bodies/Regionaland equipment with the aid of the accelerated tax write- Tourism Authoritiesoffs available. (Strategic Success Driver 1 also refers)

2 Innovation Fund: Establish, on a pilot basis, for a 3 Fáilte Ireland 2004-2006year period, an innovation fund to promote and supporton a competitive basis, the development of tourismproducts that are new to the Irish market, have a clearpotential to attract additional visitors and incorporatebest practice particularly in terms of environmentalsustainability, accessibility for tourists with disabilitiesand equality in service provision.

3 Product Clusters: In order to address the under Groups of Tourism Product Immediate and ongoing-utilisation of certain historical, cultural and sporting Suppliers/ Regional Tourismattractions and facilities, it is essential to achieve a better Authorities/Fáilte Irelandpresentation and more integrated and cooperativemarketing of clusters of products that complement eachother and broaden the offerings available to visitors,including those with disabilities. The clusters can besingle product (e.g. golf, heritage etc.) or multi-product(e.g. golf/health-related, culture/heritage etc.) and couldbe promoted and supported at regional level or on anall-island basis.



Actions to Support Product Development and Innovation

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4 Product Research: Identify international trends in the Fáilte Ireland/Tourism Immediate and ongoingsupply and demand of tourism products (to anticipate/ Ireland /Tourism Industrymeet emerging best prospects such as demand for Representative Bodieswell being and health breaks, quality destinations for city jointlybreaks, car touring, cruising) particularly in the marketsagainst which Ireland competes. Communicate thisinformation widely within the tourism industry in Irelandand use it to support product development and marketdevelopment plans.

5 * National Conference Centre: Finalise quickly, Department of Arts, Sport Complete by early/mid 2004 theefficiently and effectively the Government announced and Tourism selection, following opencommitment to establish a National Conference Centre competition, of private sectorin Dublin in partnership with private sector investors. partners(Strategic Success Driver 1 also refers)

6 * National Sports Stadium: In order to better Department of Arts, Sport Decision in principle by end 2003exploit the visitor attraction and overseas marketing and Tourism in partnershippotential of major field-based sporting events of with the main field sportsinternational interest, finalise on the basis of objective, organisationsvalue for money, marketing and environmental analysis,a decision on the provision of a National Sports Stadiumin Dublin. (Strategic Success Driver 1 also refers)

7 Access Rights: Establish clear guidelines and codes of Department of Community, Complete guidelines by start of practice on rights of access for visitors to the countryside, Rural and Gaeltacht Affairs 2004 seasonhills, mountains, coast and State-owned forestry and bring in consultation with farmclarity to the legal position in relation to public liability. organisations, Local

Authorities, RegionalTourism Authorities andCoillte and Fáilte Ireland

8 UNESCO World Heritage Site Designation: Department of the Immediate and ongoing.Put in place the consultation, management and Environment, Heritage and Seek an additional designationconservation arrangements necessary to achieve the Local Government by 2005designation of additional sites in Ireland as UNESCOWorld Heritage Sites, to add to the two so designated atpresent – Boyne Valley and Skellig Michael.


Executive Summary

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9 Litter: In order to address an issue of frequently Department of Environment, Immediate and ongoingexpressed concern to tourists and building on the success Heritage & Localof the plastic bag levy and the expressed commitment Government/Localof the Minister for the Environment, Heritage and Local Authorities/RegionalGovernment and his Department to intensify anti-litter Tourism Authorities/measures Tourism Industry• Local Authorities should further strengthen their actions Representative Bodies

in co-operation with local business and commercialsectors including those engaged in tourism, and withgreater public participation, to tackle litter pollution- with a particular focus on fast tracking projects inestablished tourist areas

• the Regional Tourism Authorities should ensure thatlitter abatement is kept at the top of tourismdevelopment priorities throughout their regions, support periodic surveys of litter pollution and follow through on the necessary abatement measures.

10 Working Closely with the Planning Authorities: Fáilte Ireland/Regional Immediate and ongoingIn order to support the sensible conservation of the Tourism Authoritiesnatural and built environment which is a fundamentalfoundation of Ireland's tourism industry, the Tourism StateAgencies should work more closely with county, city andurban planning authorities in the preparation andimplementation of their development and litter abatementplans and in the operation of planning control, particularlyin areas of visual amenity and historical importance.In doing so, the Agencies would renew a role theypreviously undertook with significant benefits to thetourism industry but which has been less strongly pursuedby them in recent years.

11 The Tourism Industry and the Environment: Tourism Industry Immediate and ongoingA top-class environment awareness and promotion Representative Bodiesprogramme should be put in place by the TourismIndustry Representative Bodies which emphasises theimportance of environmental conservation to the futureof Irish tourism and which provides a series of guidelineson good environmental management practice, coveringareas such as waste-management, energy use andconservation, litter abatement, and the design principlesfor buildings and facilities.

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12 Hotel and Guesthouse Classification: In order to Fáilte Ireland New classification system agreedunderpin the increased emphasis on quality of product with industry by mid-2004and service on which Irish tourism must compete in ahigher cost national environment, Fáilte Ireland should,in close consultation with the industry, put in place amandatory classification system for hotels and guesthouseson the basis of the best up-to-date criteria.

13 A Unified Representation Structure for the The B&B representative By early 2004B&B Sector: In order to better develop and promote bodiesthe important and unique product which the B&B sectoroffers to tourists, there is a strong case for the differentgroups representing the sector to come together into amore unified and single structure to more effectivelyrepresent their industry and work closely with Fáilte Irelandand Tourism Ireland for that purpose.

14 Cultural and Artistic Infrastructure of Dublin:In order to narrow the gap in cultural and artisticinfrastructure which exists between Dublin and othercapital cities in Europe, early decisions should be takento secure

• the redevelopment of the Abbey Theatre Department of Arts, Decision to proceed with publicSport and Tourism private partnership by mid 2004

• the relocation of the National Concert Hall. Department of Arts, Decision to proceed by end 2003Sport and Tourism

15 Product Development Scheme: In order to Fáilte Ireland Immediateaccelerate the processing of applications for grants underthe Tourism Product Development Scheme 2002-2006,primarily in non-traditional tourism areas, Fáilte Irelandshould allocate additional resources to make earlydecisions on the applications that were received in 2002.

Executive Summary

Strategic Success Driver 6 Marketing and Promotion

Objective To focus marketing and promotion activities on the market prospects and segments whichhold the characteristics and potential to best meet the expenditure, visitor number andregionality objectives of Irish tourism policy

Rationale Marketing links Ireland's tourism product with potential overseas and domestic customers.The tourism sector is highly diverse with a predominance of small enterprises which lackthe individual scale, resources and knowledge to engage effectively in internationalmarketing. Partnership arrangements and State support are, therefore, appropriate inmarketing tourism products. The State has a particular responsibility in supportingdestination marketing to the island of Ireland in partnership with the Northern Irelandauthorities and representatives of the various segments of the tourism industry.


1 Market Focus: Continue to concentrate overseas Tourism Ireland Immediate and ongoingmarketing expenditure on the British and US markets /Fáilte Irelandwhich account for over 70% of visitor numbers. In doingso, continue to work to ensure better integration with theco-operative marketing and promotion strategies ofdifferent segments of the tourism industry at national andregional levels, including the car-brought market fromBritain, major sporting, artistic and cultural eventsand by strengthening the role of the niche productmarketing groups.

2 Mainland Europe: Undertake a fundamental review of Tourism Ireland in Complete by early 2004marketing and promotion operations in key Mainland consultation with Europe markets where market share and market capture Department of Arts, Sporthas remained relatively low, stagnant or fallen over the and Tourism and Tourismpast decade and where the perception of visitors with Industry Representativerespect to tourism product in Ireland is below average. Bodies

3 * Partnerships with Airline Industry: Tourism Ireland in Immediate and ongoing• Work closely with air carriers, including low fare conjunction with airlines

airlines and airport authorities, to identify new direct and airport authoritiesroutes with high visitor market prospects which aresustainable from/to Britain, Mainland Europe and theUS and the marketing and cost/price requirementsnecessary to effectively exploit this potential.(Strategic Success Driver 3 also refers)

• Encourage airlines providing direct routes from/toEurope from Australia, New Zealand and the Far Eastto have attractive through route fare arrangementsto Ireland.



Actions to Support Marketing and Promotion

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4 All-island Marketing Initiatives: Promote more Tourism Ireland/Tourism Immediatestrongly the development and marketing of clusters of Industry Representativecomplementary products on the island of Ireland in areas Bodies North and Southsuch as cultural facilities (museums, music festivals, theatreevents) and sporting facilities (golf, angling, walking).

5 * Customer Relations Management: Put in place Fáilte Ireland By end 2003a programme to upgrade the capability of tourismenterprises in customer relations management includingthe strong and effective use of computer-based CRMsystems. (Strategic Success Driver 4 also refers)

6 E-Marketing: Enhance e-marketing capability to ensure Tourism Ireland/ Immediate and ongoingthat potential and repeat international and domestic Fáilte Irelandcustomers receive world class information services and canbe easily directed to online purchasing services for the fullrange of Irish tourism products/packages/flights and ferries.

7 Gulliver: In order to address the expressed concerns of Gulliver/B&B Immediatecertain segments of the tourism industry and to enhance Representative Bodiesthe contribution of the Gulliver computerised informationand reservation system to meeting the needs of theindustry and individual tourists, Gulliver should meet withrepresentatives of the industry to clarify how this canbest be done.

8 Market Expenditure Analysis: As part of the annual Department of Arts, For 2004 and ongoingexpenditure allocation process by the Department of Arts, Sport and TourismSport and Tourism, the Department should undertake andpublish, in conjunction with Fáilte Ireland and TourismIreland, reviews of the marketing expenditure allocatedand results achieved relative to objectives in the previousyear. The reviews should differentiate between the mainexpenditure programmes and between destination andproduct marketing and in each of these areas betweendirect spend, outsourced spend, overheads and outturncompared with objectives.

Executive Summary

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9 Agility/Flexibility: Maintain and enhance the capacity Department of Arts, Sport Immediate and ongoingdemonstrated in recent years to respond to unforeseen and Tourism/Tourism Irelandmarket changes at home and overseas by the timelyreprioritisation of marketing activities and associatedexpenditure allocations, including the use of contingencyfunding.

10 Market Share Analysis: The Tourism State Agencies Tourism State Agencies/ Immediate and ongoingshould monitor market share performance at operational Department of Arts, Sportlevel in all markets (geographical, segment, product/niche) and Tourismwith a view to the information gathered being used by theDepartment of Arts, Sport and Tourism and the Agenciesas a trigger for review, analysis and action response wherenegative trends emerge.

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Strategic Success Driver 7 The People in Tourism

Objective To ensure that the people working in tourism in Ireland operate to the highestinternational standards of professionalism and that the generally highly positive experienceof tourists with the people they meet in Ireland, well-documented in successive surveysover the years, is maintained and enhanced

Rationale Tourism is an industry in which the attitudes, competence, enterprise, innovation,hospitality and friendliness of the people in it are an intrinsic part of the product itself. Thepeople in tourism are at the heart of the tourist experience in Ireland and the ultimatedeterminant of the quality of that experience.


1 Human Resource Development Strategy: Fáilte Ireland (with 2004 ProgrammeIn order to further strengthen the human resource base, Tourism Industrystandards of performance and professionalism of Irish Representative Bodiestourism and in the context of the extended organisational and training andremit and development responsibilities which have education providers)recently been allocated to Fáilte Ireland, a new HumanResource Strategy should be put in place which

• supports the development of professional career pathsfor key occupations in the tourism sector and providesclear, flexible and relevant courses and programmesleading to National Qualifications which holdinternational recognition for excellence

• positions the industry as a highly attractive careerchoice through the excellence of its induction andin-career training, the provision and support ofinternationally recognised qualifications, clear careerprogression paths and opportunities within and acrossthe different functional areas and the promotion ofgood work practices including employee participationin decisions that affect their work

• provides a focus for leading, instigating andinfluencing the education and training policy andpractices of the State and private sectors to enhancecapability at all levels in the industry through qualityassurance, facilitation and support for training anddevelopment interventions

• stimulates actions aimed at achieving more and bettertraining within the tourism industry

Executive Summary


Actions to Support Human Resource (People) Capability


• emphasises the particular importance of communicationand inter-personal skills in tourism in recruiting newemployees and in training existing employees

• ensures the delivery of training programmes forexisting employees at times and places convenient tothe needs of enterprises and employees

• takes full advantage of the significant potential ofdistance based e-learning in training and educationalprogrammes

• supports the development of partnership arrangementsbetween management and other employees as ameans of employee incentivisation and of enhancedbusiness performance by tourism enterprises

• promotes training networks of tourism enterprises inconjunction with the Tourism Industry RepresentativeBodies

• evaluates the impact of the full range of education andtraining supports and services provided at national,regional and local levels with a view to streamliningtheir availability and operation.

2 National Recruitment Plan: Establish a Tourism Fáilte Ireland ImmediateCareer Promotions Group comprised of key stakeholders,including students, to formulate a National RecruitmentPlan, designed to intensify and strengthen linkages withschools, communities and career guidance services.

3 Managing Cultural Diversity: Develop and Fáilte Ireland/Tourism Immediateimplement a strategy and detailed implementation Industry Representativeprogramme to provide for the integration of non-national Bodiesemployees within the work-place and more widely in oursociety in a way that recognises and supports culturaldiversity and enhances their personal and professionaldevelopment and their potential to add a new andvaluable dimension to traditional Irish tourism values.

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Strategic Success Driver 8 The Government Sector

Objective To improve and enhance the effectiveness of Government leadership and interventions inpromoting tourism

Rationale Government policies and actions across a wide range of areas strongly affect thedevelopment of tourism. It is essential to put in place new organisational and operationalarrangements which more fully acknowledge and reflect the importance of tourism as aninstrument of national and regional development and which improve the effectiveness ofGovernment interventions which support the development of tourism.


1 * Redefine the scope of Tourism Policy: Because Department of Arts, Sport Immediate and ongoingof the significant impact on tourism of a wide range of and TourismGovernment activities that are the responsibility of anumber of different Government Departments, the scopeof tourism policy should be redefined beyond itstraditional domain within a "Department of Tourism" toencompass all areas of Government activity that impact ina significant way on tourism. (Strategic Success Driver 1also refers)

2 Strengthen the capacity and role of the Department of Arts, Sport ImmediateTourism Division of the Department of Arts, and TourismSport and Tourism: The Division of the Departmentof Arts, Sport and Tourism dealing with tourism mattersrequires to be strengthened

• to include additional people with the wider range ofanalytical skills and competencies required to deal withthe more extensive scope of Government activitiesencompassed within the wider definition of tourismpolicy advocated in this Report

• to follow through effectively on the recommendationsof this Report in consultation with a number of otherGovernment Departments and agencies and with theindustry itself

• to interact more effectively with other GovernmentDepartments and agencies on issues important to thedevelopment of tourism.

* Actions that support more than one driver of successful tourism development are denoted by and asterix *

Executive Summary


Actions to Support More Effective Government Leadership and Interventions in Promoting Tourism


3 Tourism and the National Competitiveness Department of the ImmediateCouncil: In order to strengthen the focus of Government Taoiseach/ Department ofpolicies in supporting competitiveness in tourism, the Arts, Sport and TourismDepartment of Arts, Sport and Tourism should be includedamong the Government Departments in attendance andparticipating at meetings of the National CompetitivenessCouncil which reports directly to the Taoiseach on issuesaffecting the competitiveness of the economy and itsdifferent sectors.

4 Inter-Departmental Bilateral Consultation Department of Arts, Sport ImmediateArrangements: Establish standing consultation and Tourismarrangements between the Department of Arts, Sport andTourism and the Government Departments/Agencieswhose activities most impact on tourism including theDepartment of Finance, Department of Transport andDepartment of Environment, Heritage and LocalGovernment.

5 Fáilte Ireland: Following the recent amalgamation of Fáilte Ireland ImmediateBord Fáilte and CERT into a single organisation for thedevelopment of tourism in Ireland, the organisationalstructure for the new body should be quickly finalisedtaking account of the new strategy and action plan thatflows from this Report.

6 Regional Tourism Authorities: Establish a closer Fáilte Ireland Early 2004correlation between the identified core visitor servicingand development functions provided by the RegionalTourism Authorities and the State financial supportprovided to them through Fáilte Ireland. Agree the newregional structures for the discharge of Fáilte Ireland'sfunctions and determine the appropriate relationshipsand arrangements at regional level.

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7 Regional/Sub-National Structure: In order to more Department of Arts, Sport Immediateeffectively harness the depth of knowledge, interest and and Tourism/Fáilte Irelandcommitment to the development of tourism at regional,county and sub-county level, it is essential that an earlyreview of the functions, activities and interactions of themany bodies involved in tourism promotion anddevelopment be undertaken as a matter of urgency.The key principles underlying the review required shouldencompass the following

• a clear definition of the roles and functions of differentbodies involved in the promotion and development oftourism at regional and local levels

• the identification of areas of overlap and duplicationtogether with the actions required to remove suchoverlap and duplication. The establishment of acoherent framework (e.g. in the form of regionaltourism plans) within which the roles, functions andspecific actions of the different bodies active in tourismpromotion and development at regional level arearticulated and coordinated

• the establishment of a forum and supportingorganisational structure at regional, county and localtourism development level to develop the coherentframework required, to monitor its implementationand to coordinate effectively the range of activitiesundertaken by different bodies.

Executive Summary

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Actions to Improve the Quality of Information, Intelligence and Research

Strategic Success Driver 9 Information, Intelligence & Research

Objective To provide the essential foundations of comparative data, knowledge and intelligence onwhich to develop the policies and actions by both the public and private sectors that promotetourism across the full range of the nine strategic success drivers outlined in this Report

Rationale Good policy and development decisions by both Government and the private sectordepend on a good base of data, knowledge and intelligence relevant to the tourismindustry in Ireland and internationally.


1 Research, Advisory and Co-ordination Group: Department of Arts, Sport By end 2003Set up a Research Advisory and Co-ordination Group, with and Tourismrepresentatives of the industry, Tourism State Agencies,relevant Government Departments and the researchcommunity in third level education to identify informationand research gaps.

2 Research Register: Compile, maintain and publish a Fáilte Ireland Initial database published in 2004comprehensive database on information and researchrelevant to Irish tourism recently completed, under wayand planned.

3 Tourism Satellite Accounts: In order to more Fáilte Ireland and Tourism Feasibility study and action plan toaccurately reflect the importance and contribution of Ireland in consultation with be completed by early 2004tourism to national economic development, a revised the Central Statistics Officeapproach to the quantification of the economiccontribution of tourism in national accounting termsthrough the use of the Tourism Satellite Accounts (TSAs2)model developed by the WTO should be put in place.

2 A Tourism Satellite Account is a set of detailed tables, consistent with National Accounts, focussed on estimating flows of money relating to tourismactivity. They provide better quality information as they reconcile both demand (from surveys of tourists' expenditure) and supply (i.e. goods andsupplies from surveys of businesses).

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Objective To drive forward and monitor the effective implementation of actions recommended in thisAction Plan and to put in place a process to ensure continuing review of strategy to reflectchanging circumstances.

Rationale The strategy and recommended actions set out in this Report encompass a wide andcomplex range of issues. These will require to be followed through with resolution,commitment and energy if they are to effectively support and sustain the furtherdevelopment of Irish tourism as a major sector of opportunity for enterprise andinvestment and as a powerful instrument of national and regional development.


1 Implementation Group: In order to follow through Department of Arts, Sport Immediatequickly and effectively on this Report, so that it can make and Tourisma real difference to the further development of the tourismindustry in Ireland, a high-level Implementation Groupshould be established to drive forward and monitor therecommended actions. The Implementation Group shouldbe representative of the tourism industry and public sectorand should

• report directly to the Minister for Arts, Sport and Tourism

• sit for a fixed period of no more than 2 years(2003-2005)

• publish a report on its work, results and deliberationsat 6 monthly intervals.

2 Tourism Forum: An annual forum of the tourism Fáilte Ireland First Forum in October 2004industry should be established to consider developmentsin the sector and, to review performance in theimplementation of the new strategy in the context of thesedevelopments. The first forum should be established inOctober 2004, 12 months after the publication of thisReport.

Executive Summary


Implementation Arrangements

The establishment of the Tourism Policy Review Group wasannounced by the Minister for Arts, Sport and Tourism atthe end of December 2002 and convened its first meetingon 28 January 2003.

The Review Group met on 10 occasions. This included twoand a half days of bilateral meetings with the following 17key representative groups and companies associated withthe development of tourism in Ireland.

The Review Group convened an all-day Open Public Forumon 14 April 2003 that was attended by over 100 people.Invitations to the Open Forum were pre-advertised in thenational press. The Forum covered the following four themes

• Marketing and Access

• Tourism Product and People in Tourism

• Value for Money and Competitiveness

• Sustainable Tourism and Regional Development.

The Review Group also invited, by advertisement in thenational press, written submissions in connection with itswork. It received over 100 written submissions frominterested parties, to whom the Review Group is indebted.The submissions are available on the Review Group'swebsite. (www.tourismreview.ie)

In addition to the written submissions and comments madein response to the public invitation, the Review Group alsoconsidered a range of detailed material prepared by itsSecretariat, drawn from the Department of Arts, Sport andTourism, Fáilte Ireland and Tourism Ireland. Somesupplementary consultancy work in specialist areas was alsocommissioned.

As requested by the Minster for Arts, Sport and Tourism atthe inaugural meeting, the Review Group published anInterim Report on 28 May 2003. This was preparedfollowing the consultation phase of the assigned task,during which time the Review Group developed a numberof initial conclusions and interim recommendations. TheInterim Report is available on the Review Group's website(www.tourismreview.ie)

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Appendix ABackground to Establishment of Review Group and Working Procedures

Aer Lingus

Aer Rianta

British Tourism MarketingPartnership

European TourismMarketing Partnership

Irish Farmhouse HolidaysAssociation

Irish Ferries

Irish Hotels Federation

Irish Tour OperatorsAssociation

Irish Tourist IndustryConfederation

National Association ofRegional TourismAuthorities

Ryanair

Shannon Development

SIPTU

Stena Line

The Arts Council

Town and CountryHomes Association

US Tourism MarketingPartnership

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Phase 1 – Review of Tourism Performance and Prospects

• Assess the performance and economic impact of thetourism sector in Ireland over the past 10 years interms of categories of visitor (overseas and domestic),revenue earnings, sectoral and geographical sourcemarkets and internal regional distribution, includinginternational comparisons and movements in Ireland’sshare of key source markets

• Assess the formulation and evolution of tourism policyand the evolution of, and contribution by, the industryto the development of the sector

• Assess the trends in the international competitivenessof the Irish tourism product over the past 10 years andfuture prospects in terms of value for money, pricing,quality and service levels

• Assess the future tourism market potential for Ireland interms of priority source markets, categories of visitors,changes in holiday taking trends and level ofinternational competition

• Identify total public and private funding for tourismdevelopment over the past 10 years, the sources andmodes of delivery and any value for moneyassessments.

Phase 2 – Strategy for Future Sustainable Developmentof the Sector

• Identify the key elements of a strategy, both industry-ledand Government-led, for the further sustainabledevelopment of tourism in Ireland, under the followingheadings and including controllable sector specific issues

• product utilisation, development and innovation

• business capability (including human resourcedevelopment and training)

• enhancing international competitiveness in termsof value for money, pricing, quality standards andservice levels

• marketing

• access transport

• infrastructural and environmental requirements

• statistics, research and planning

• institutional development arrangements, includingregional structures and coordination of supportmeasures

• Identify appropriate actions and recommendations forthe implementation of the future strategy.


Appendix BTerms of Reference

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The Review Group is indebted to the following bodies andindividuals who made written submissions:

Achill Tourism/Turasóireacht Acla Aer LingusAer RiantaAlcock, Anne Arts Council Association of Irish Professional Conference OrganisersBallyhoura DevelopmentBord FáilteBorder, Midland and Western Regional AssemblyBourke, Stephanie Brantley, James Brick, Margaret Bus EireannCar Rental Council of IrelandCERTChartered Institute of Logistics & TransportCIE Tours InternationalClare County Council and Clare County DevelopmentBoardCoach Tourism and Transport CouncilCobh Genealogical Project CoillteCoiste Ghlór na nGael Chloich na CoillteComharchumann Turasóireacht Chorca DhuibhneComhdháil Náisiúnta na GaeilgeConway, Tom & Breda Cork Kerry Tourism (South West Regional TourismAuthority)Cronin, Mary Cruise IrelandDaly, Maire Dennehy, Eilis Department of Community, Rural and Gaeltacht AffairsDonagher, Tom Dublin Chamber of CommerceDublin Institute of Technology (Tourism Department andTourism Research Centre) Dublin Tourism (Regional Tourism Authority)FexcoFulvio, Catherine GaelSaoireGael-TacaGalway City and County Tourism GroupGenealogical Society of IrelandGo Outdoor IrelandHeritage IslandHeritage Towns of IrelandHeron-Grace, Norma Hurley, Siobhan Ireland UnpluggedIreland West Tourism (Western Regional Tourism Authority)Ireland's Blue Book - Irish Country Houses & RestaurantsAssociation

Irish Boat Rental AssociationIrish Coach Drivers' Association Irish Farmhouse Holidays AssociationIrish FerriesIrish Hotels FederationIrish Self-Catering FederationIrish Tour Operators AssociationIrish Tourist Industry ConfederationIsland of Ireland Mills ConferenceKeaney, Raymond Keep Ireland OpenKerry County Council - Tourism UnitKerry County Development BoardKerry County Tourism CommitteeLaois LEADER Rural Development CompanyLarkfield HouseMac Gearailt, BreandánMarine InstituteMarketing English in Ireland - RELSAMcGrath, Mary McKean, Mervyn & Jean McSweeney, Helena Mid-West Regional AuthorityMurphy, Patricia Music Board of IrelandNational Association of Regional Tourism AuthoritiesNational Centre for Tourism Policy StudiesNational Waymarked Ways Advisory CouncilNorth West Tourism (Regional Tourism Authority) O'Leary, Donal O'Reilly, J O'Sullivan, Kathleen Restaurants Association of IrelandRoche, Joseph Roche, Patrick Ryan, Bernadette Shannon College of Hotel ManagementShannon DevelopmentSIPTUSouth East Tourism (Regional Tourism Authority)South-East Regional AuthoritySouth West Mayo Development Co. & Mayo CountyTourism CommitteeSouthern and Eastern Regional AssemblySuck Valley CommitteeTeichmann, Berny The Equality Authority The Hidden IrelandTourism Victim Support ServiceTown and Country Homes AssociationTuatha Chiarraí Teo Western Development CommissionWestern Development Tourism ProgrammeWestmeath Co Council and Westmeath CountyDevelopment Board

Appendix CList of Written Submissions

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Background

The potential benefits and synergy to be gained fromNorth-South co-operation in tourism development andpromotion has been recognised by policy makers on bothsides of the Border for many years. Co-operation on thesematters started to become more formalised and action-oriented from the late 1980s onwards.

The relevant Government Departments in bothjurisdictions, together with the then Bord Fáilte and theNorthern Ireland Tourist Board (NITB), were assisted bycross-Border funding bodies, such as the International Fundfor Ireland (IFI) and the EU-funded INTERREG and Peace &Reconciliation Programmes, to develop and implementspecific programmes across a range of tourism themes,e.g., support for product development in the Bordercounties (Northern Ireland and the 5 Southern bordercounties plus Sligo) and associated training and a limitedjoint marketing programme. This programme focused onbelow the line co-operative activities (i.e. non main-streamadvertising) carried out jointly by the two Tourist Boards inmain markets.

These small cross-Border programmes took place againstthe backdrop of the much larger tourism product, trainingand marketing measures under the EU co-funded TourismOperational Programmes in the South.

In the mid 1990s, a new industry-led joint marketing body,the Overseas Tourism Marketing Initiative (OTMI), wasformed. Both Tourist Boards were members of OTMI and itsBoard included industry representatives from bothjurisdictions. From its inception, it recognised the potentialbenefits of advancing an all-island approach to tourismmarketing.

In 1995, for the first time, an island of Ireland theme wasused to advertise Ireland. The use of a branded approach tomarketing Ireland had been emerging during this time,culminating in the development of Tourism Brand Ireland(TBI) by Bord Fáilte in conjunction with NITB. TBI wasadopted by both jurisdictions and OTMI. In 1996, for thefirst time, an all–island, branded advertising campaign wasused to promote holidays to Ireland in the four mainmarkets of the US, Britain, France and Germany.

Tourism Ireland was formed in late 2000 arising from theidentification of the tourism sector as a key area of co-operation between both jurisdictions in the Belfast

Agreement of Good Friday 1998. It is charged withgrowing overseas tourism business to the island of Irelandand supporting Northern Ireland to realise its tourismpotential. In this regard, it is the guardian of TBI and hasresponsibility for overseas destination marketing of theisland of Ireland. It works closely with Fáilte Ireland, NITB,the tourism industry on the island and overseas indelivering on its remit.

The development and communication of official policy onoverseas marketing is initiated, in the first instance byTourism Ireland’s sponsoring Departments – theDepartment of Enterprise, Trade and Investment inNorthern Ireland and the Department of Arts, Sport andTourism in the South. Policy is determined by the NorthSouth Ministerial Council (NSMC) acting in its tourismsectoral format. The Sponsoring Departments and TourismIreland work with the Secretariat of the NSMC, which co-ordinates the work of the NSMC itself, to deliver a coherentpolicy framework for all-island marketing.

Current Status

North-South co-operation on tourism matters now operatesat many levels. At policy level, the NSMC, with theMinisters from both jurisdictions, oversee and approveobjectives, strategy and resources for overseas marketing byTourism Ireland. This co-operation cascades through bothpublic sectors through the active liaison and co-operationof both sponsor Departments on a range of issues andthrough the co-operation and liaison of the three bodies –Tourism Ireland, Fáilte Ireland and NITB. This co-operationis mirrored in the private sector, at one level through theindustry representation on the board of Tourism Ireland butalso through the close working relationship of the IrishTourist Industry Confederation (ITIC) and the NorthernIreland Tourist Industry Confederation (NITIC).

Industry partnership is a key tenet of the operation ofTourism Ireland. This operates both informally through amyriad of contacts and marketing opportunities andformally through the Tourism Marketing Partnership. This isan all–island group, managed by Tourism Ireland andcomprised of Tourism Ireland, Fáilte Ireland, NITB andrepresentatives of ITIC and NITIC. It has a centralcommittee based in Ireland and a series of local countrycommittees in key markets.


Appendix DTourism Policy on the Island of Ireland

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The Future

The concept of a synergistic and mutually beneficialapproach to developing tourism on the island of Irelandhas evolved since the late 1980s and is now at a developedstage. North-South co-operation is most advanced andformalised in the area of international marketing with lessformal co-operation flourishing across a range of tourismactivities.

Within this context, the principal policy challenges are tosustain and grow the more mature parts of the industry onthe island while supporting the economic and regionaldevelopment policies of both jurisdictions which seek toimprove the socio-economic well being of less successfultourism regions.

The overall thrust of the strategy contained in this Reviewsupports these objectives. It will be a key aim of theDepartment of Arts, Sport and Tourism together with FáilteIreland to work with its Northern counterparts and TourismIreland on areas of mutual benefit.

A particular challenge will be to bed down the newstructures and ensure clarity of focus and responsibility foreach body. It is expected that this approach will bemirrored through the evolution of the already strongindustry links that are in place. The principal aim will be todeliver on the potential manifested by the successful co-operation which has evolved over many years with cleareconomic and social benefits for both communities.

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• 1 Regional Tourism Authorities (RTAs): In 1964, eightregional tourism organisations were set up toadminister tourism at regional/local level. There arenow 6 RTAs in addition to Shannon Development(which took over regional responsibility from the Mid-West RTA). The RTAs are private companies limited byguarantee. Membership includes Local Authorities,local tourism and related industry representatives,including individuals and associations. Fáilte Ireland isrepresented on all Boards. Funding for the RTAs comesfrom commercial income, local membership fees, LocalAuthorities’ subventions and Fáilte Ireland. Theactivities of the RTAs are coordinated by an RTAManagement Committee which meets regularly toconsider common policy issues. Regular meetings alsotake place with Fáilte Ireland.

• 1 Shannon Development: This State-sponsoredcompany was set up in 1959 to develop both Shannonairport and the Shannon region. Its role in tourismincludes visitor servicing activities, productdevelopment, operating tourism attractions and themarketing of the region.

• 1 County Tourism Committees (CTCs): Set up in 1993,these represent tourism interests at county level.Membership of CTCs is drawn from the membership ofthe local RTA. CTCs formulate county tourism plans forincorporation in the County Enterprise Board and RTAplans and stimulate and co-ordinate new productinitiatives.

• 2 County Enterprise Boards: Set up at county level in1993, these Boards are constituted as companieslimited by guarantee. County Enterprise Boardssupport job creation in small manufacturing andservices businesses, including tourism, and providefunding to enterprises in areas not covered by LEADERGroups.

• 3 LEADER Groups: Funded through the EU, the LEADERGroups administer rural development programmes inareas of special need and are set up where there is astrong community base. They provide grants towardsbusiness planning and project development at locallevel, including in the area of tourism.

• 1 Product Development Boards: Appointed by theMinister for Arts, Sport and Tourism in 2002, theseBoards have responsibility for investment decisionsunder the Tourism Product Development Schemefunded under the Regional Operational Programmesfor the Border Midland and Western (BMW) andSouthern and Eastern (S&E) Regions. The Scheme hasan EU co-financed public investment budget of €130million, (with EU grant funding of up to €55 million)and is administered by Fáilte Ireland.


Appendix EOther State Bodies with Functions Associated with the Development of Tourism

1 Under the aegis of the Department of Arts, Sport and Tourism.2 Under the aegis of the Department of Enterprise, Trade and Employment.3 Under the aegis of the Department of Community, Rural and Gaeltacht Affairs.

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Notes

Documents

New Horizons for IrishTourism · 2019. 8. 1. · 5 A STRATEGY FOR IRISH TOURISM 2003-2012 Summary of Main Conclusions 64 5.1 The Components of a New Tourism Strategy 65 5.2 Inter-dependency