Balancing act ahead for tourism in Ireland
Tourism Ireland works to draw visitors to the island, including Game of Thrones sites in NI. Its head Niall Gibbons tells of the challenges
Ireland's post-crash tourism boom has passed its peak, according to Tourism Ireland boss Niall Gibbons. With Brexit depressing the value of sterling and upward pressure on costs ranging from labour shortages to the recent Vat hike, the industry is going to struggle to maintain the soaring growth rates of recent years.
Tourism businesses in the Republic were recently hit with a Vat increase from 9% to 13.5%. The rate had been first cut in 2011 to help tourism cope with the impact of the economic downturn.
A challenge of a not dissimilar scale - though one that's less talked about - is a substantial boost in air capacity on continental Europe, which gives travellers more options, potentially at Ireland's expense.
The net effect of all that is that it may prove difficult for Mr Gibbons to meet Tourism Ireland's target of 6% revenue growth from Irish tourism this year.
The targets are set by Tourism Ireland's board, made up of representatives from both sides of the border.
Mr Gibbons' job as head of the north-south body is to market the island of Ireland abroad.
The current flagship campaign encourages travellers to "Fill your heart with Ireland".
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"It's appealing to consumers who are living in a hyperconnected world, telling them that Ireland is a place where you can switch off - that's what the advertising really speaks to," Mr Gibbons says.
"A lot of our strategy this year is about sustainability. It's about actually trying to grow the business in quarter one and quarter four when you've got good value around, you've got good air access, and you've still got capacity around at very good value.
"So that's where a lot of the marketing effort has gone, because the summer season is tending to look after itself. We don't take it for granted by the way, but we've got off to a positive start this year so far. The numbers are up 7% in the first two months, but there's still a lot to play for."
The positive visitor numbers perhaps belie the narrative that the Vat hike by Minister for Finance Paschal Donohoe would cause the industry problems. But beneath the headline numbers every business is different.
"I think the industry were surprised by it," says Mr Gibbons. "There are people who are more worried than others. The people who are most worried are those who are in rural areas, people who are in the food sector particularly who would have extremely tight margins. There's a sense, I suppose, of hurt within the industry, that's the feedback that we're getting.
"And what's going to happen now that we're into April is the Vat really takes hold, because now they're actually paying the Vat over."
He says the increase will have been passed on wherever humanly possible.
Though it's early in the year and not much data is available, Mr Gibbons reckons hoteliers will struggle on average to pass the rate hike in full. Demand won't increase at the same pace as previous years, he says.
One way to attempt to mitigate the problem though is to try and find new customers who spend more money per head.
Those travellers are likely to come from further afield and stay for longer. China and the Middle East are often touted as potential sources of growth, though tapping into those markets is easier said than done.
Fáilte Ireland - a separate organisation which focuses on support for tourism businesses (as opposed to Tourism Ireland's marketing role) - has launched a 'China Ready' programme to help businesses try and tap into the market.
Catering to Chinese tourists means you have to take account of their different cultural and gastronomic preferences, as well as their financial ones. The latter is an area that's changing fast.
"What you're finding is they have now moved to a cashless society," Mr Gibbons says.
"Five years ago I would have been talking about making sure you had Union Pay credit cards if you're really serious about the Chinese market.
"And places like Brown Thomas and Kildare Village have all that, but now you have to be on WeChat Pay and Alipay."
Research is critical if you're going to try and attract Chinese visitors, Mr Gibbons says, but there are rewards to be gained.
The numbers coming here have grown rapidly, from an admittedly low base, but there is scope to continue to win more business.
"About five million will come to Europe (this year), and we've got a very small proportion of it. There is capacity to grow, and they will come off-season as well."
Part of Mr Gibbons' effort to boost those numbers involves lobbying Irish government to make the visa regime more flexible, removing a barrier to travel.
Though travellers from Europe or North America will have a well-defined picture of Ireland in their heads, this country is less well-known in Asia and the Middle East.
That gives Mr Gibbons a bit of flexibility when it comes to marketing, as he can paint on a blank canvas. Ireland's friendly and warm people, picturesque landscape and culture are the three areas he focuses on in this regard.
An accountant by background, Mr Gibbons (53) began his working life at what was then called Coopers & Lybrand, now called PwC.
The Dubliner then moved to the public sector, searching for a job with more money, having just gotten married.
He ended up working in marine research for about seven years, before a job as director of corporate services came up at the newly-created Tourism Ireland, a cross-border tourism agency born out of the Good Friday Agreement.
The role saw Mr Gibbons carry out a lot of the background work in integrating the legacy tourism agencies on each side of the Border.
Then, in 2010, the role of Tourism Ireland CEO became free and he took up the position.
Since then he's overseen Irish tourism marketing through good times and bad.
In 2011, the agency's marketing plans were launched the day after the IMF bailout was announced.
It's a job that involves lots of travel, which might sound nice in theory but it does have its drawbacks in practice.
Building relationships is important, with foreign tour operators who can bring groups of travellers here, with foreign publishers who can provide a platform for ads, and with film studios which can bring big-budget productions here.
Game of Thrones has been an obvious success in this regard, and though it will finish this year plans are afoot for a permanent Harry Potter World-type attraction which aims to capitalise on the hit series for years to come.
A successful relationship has been forged with the series makers, HBO, which has provided plot lines to Tourism Ireland in advance to help the agency capitalise immediately when episodes go to air. More good relationships like that will help counteract the slowdown that Mr Gibbons believes is coming.
Figures released last week by the Central Statistics Office Ireland showed a big fall in the number of British tourists who came to Ireland in February compared to the same month last year.
But the numbers coming from the UK were up year-on-year in the first two months of 2019, and the mood music from British colleagues is that travel to Ireland should be steady this year.
It's still early days but despite the headwinds, the Vat increase that has caused so much wailing and gnashing of teeth, the Brexit uncertainty, and the growth in European air capacity, Mr Gibbons does think the industry will continue to grow. But the boom years look to be finished, alas.
"North America should have a good year, Asia should have a good year, Britain is looking steady although we're keeping a daily watch on it, and mainland Europe may be a bit choppy because there's just other factors outside of our control.
"The target is to grow revenue by 6%. That's going to be very tough now, there's no question about that. We will see growth alright but it's going to be a much more mixed batch of growth, we'll struggle to grow all our markets, that's the early indications that we have. We just have to be really competitive."