February 16, 2011
By Staff Reporter
Tourism minister John O’Donoghue has described it as a “wake-up call” for the industry that employs 150,000.
“We do need to become more competitive. Prices being charged for the tourism product here have to be very carefully analyzed,” he said, adding that after 10 years of uninterrupted growth, the industry has become complacent and that radical action is needed to confront the problem of the costs visitors face.
“We must have value for money,” he said. “We must be competitive in the marketplace. Our failure to do so on the ground will unquestionably have a deteriorating effect.”
A factor that has been cushioning the industry is exchanges rates with sterling and the dollar, but with a strengthening euro, the situation would be “unmasked” and the position would be worse.
O’Donoghue said that in 1995 almost two-thirds of European visitors surveyed rated Ireland as giving good or very good value for money. He said it is “very disturbing” that last year the number had dropped to a third.
The main complaints are the cost of drink, eating out, the price of food in shops and the overall cost of living.
“Such comments are particularly worrying as nearly 60 percent of tourist expenditure is on accommodation, food and drink,” O’Donoghue said.
The tourism boom led to a peak of almost six million visitors in 2000 but last year’s foot-and-mouth disease crisis and the Sept. 11 attacks on the U.S. hammered the industry. Visitor numbers have not recovered this year.
O’Donoghue said the sector with the greatest potential for growth remains the European market with its 370 million population. He said he wants to see aggressive selling of Irish holidays there.
Tourism prices are running way ahead of inflation. In the six years to last June, inflation for restaurants and hotels was 52 percent — a full 10 points ahead of the general inflation rate.
Details of the soaring costs are given in a draft study prepared for the Irish Tourist Industry Confederation that was leaked to RTE. The report points out that Ireland is now the second most expensive country in the euro zone after Finland.
It says the tourism boom, which dates from the late 1980s, has lost impetus and suffered a “deep deterioration” in price competitiveness since 2000.
Between 1996 and 2002, average Irish consumer prices rose by 21.7 percent, compared with 11.3 percent for the EU.
The report said the industry is at a “turning point” and a tourism development strategy needs to be completed as quickly as possible.