Slow Recovery
for Irish Tourism

Tourists stroll along Grafton Street in the heart of Dublin.
Tourists stroll along Grafton Street in the heart of Dublin.

By Frank Shouldice, Contributor
February / March 2003

Preliminary figures released by the Irish Tourist Industry Confederation suggest a minor increase in visitors to Ireland through 2002. The Confederation reports a two percent increase in volume through what has been a very difficult year for the travel industry all over the world.

An increase in visitors from the UK (up six percent) was offset by a 10 percent fall-off in traffic from the U.S. Attractions in the west and south were heavily hit by a fall-off in American business with some hotels reporting a 30 percent drop in U.S. traftic.

A total of 5.9 million visitors were recorded for the year. Rising costs were cited as a major concern for the tourism interests with reports of visitors demanding better value for money. Facing strong competition from other tourism markets, the Confederation expressed dismay that the recent budget increased the VAT rate on tourist services to 13.5 percent, the second highest rate in the euro zone. Inflation since 1996 has run at about 21 percent, compared to the German rate of seven percent over the same period.

It has also been noted that the mix of business has changed to shorter-stay visitors, a trend particularly damaging to regional tourism or any destination far from the main air and sea ports. As it stands, the majority of visitors arrive on the east coast and stay for short breaks.

“Such trends post serious challenges for the industry in its efforts to return to sustained annual growth levels,” warns the report, contrasting 2002 to the boom millennium year of 2000 when tourism traffic peaked to a record 6.2 million.

One of the knock-on effects of high turnover in air traffic is an increased volume of passengers coming through Dublin airport. In an effort to relieve serious congestion there, Aer Rianta, the state agency which manages the airport, plans to open a temporary new wing by summer this year. Once operational, Aer Rianta earmarked a $70 million investment to convert it into a permanent facility.

However, RyanAir, the hugely successful Irish-owned budget airline, has lodged a planning objection to the Pier D proposal. In an ongoing confrontation with Aer Rianta, RyanAir wants to separate state interests from commercial aviation by building a new privately-run terminal at Dublin airport. The budget airline is one of 13 companies interested in winning the contract to build such a terminal.

Aer Rianta is strongly opposed to privatization of air traffic within its own property and the face-off will not be resolved to everybody’s satisfaction. Whatever the outcome, RyanAir’s objection is certain to delay any Aer Rianta plans for expanding operations in time for the summer season. Meanwhile the airline’s boss Michael O’Leary has held meetings with Tourism Minister John O’Donoghue and Transport Minister Seamus Brennan in an effort to present his company’s ambitions for expansion. ♦

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