Dáil Éireann - Volume 349 - 10 April, 1984
Private Members' Business. - Tourist Industry Potential: Motion.
An Ceann Comhairle Thomas J. (Cavan) Fitzpatrick
An Ceann Comhairle: I have been handed a list of speakers for this evening, and with the approval of the House I will make it an order of the House: 7 p.m. to 7.25 p.m., Deputy Flynn; 7.25 p.m. to 7.40 p.m., Deputy Connolly; 7.40 p.m. to 8.10 p.m., Deputy Moynihan, the Minister of State; 8.10 p.m. to 8.20 p.m., Deputy Foley; 8.20 p.m., Deputy J. Leonard.
Mr. Flynn Mr. Flynn
Mr. Flynn: I move:
That Dáil Éireann, considering the importance of tourism to the economy generally and particularly in the area of employment, calls on the Government to take immediate steps to maximise the potential of our tourist industry.
In moving this motion I would remind the House that the world's biggest growth industry this century is the tourist industry. It is reckoned it is bigger even than the oil industry. It will have huge implications for our economy and for job creation. In the past, Governments made an act of faith in tourism hoping it would develop by its own volition because of ethnic loyalties and the international perception of the far away Emerald Isle, but never adequately funding Irish tourism's main promotional agency, Bord Fáilte.
The amount of operational and development budget given to Bord Fáilte is so small by comparison with other agencies  dealing with exports that Bord Fáilte can only be admired for the results they have achieved during the years. We must speculate how much greater the impact on tourism would have been on jobs and revenue generation if national financial commitments had matched expressions of support during the years. While CII and the IDA were annually getting their requirements to meet their targets, Bord Fáilte found it difficult to transfer political sentiment into tangible allocations. A few simple statistics will prove my point.
For every employee of Bord Fáilte in 1972, 2,700 tourists visited Ireland. For every employee of Bord Fáilte in 1982, 4,700 tourists visited the country. Every £1 spent on tourism in 1972 generated £22 in revenue and every £1 spent on tourism in 1982 generated £27. The industry earned £760 million last year and catered for 2.377 million out-of-State tourists and 4.273 million home holidaymakers. It involves 72,000, or 7 per cent of our total work force. Therefore, in real terms the industry is a major generator of revenue and jobs.
Because of the variety and complexity of the interests involved, a complete rethink of our objectives in tourism is necessary. This should be translated into a national tourism plan setting out short and long-term targets. This would involve imaginative and bold initiatives in matters of taxation, transport, marketing promotion and environmental control and preservation, as well as specialist tourism and general services. In support of Bord Fáilte I foresee an advisory co-ordinating committee comprising representatives of the Departments of Finance, Communications, Industry, Trade, Commerce and Tourism, Environment, Labour and Education so that maximum recognition will exist of the various components of a saleable tourism package.
A few examples will serve to indicate the need for action now. If there is one criterion more than another that will decide the future of tourism it is the question of standards. We have an expensive product serviced by an expensive transport system and people will only pay for  a quality product. It is a business in which there is a high level of person-to-person contact demanding the highest level of personal hygiene and presentation. This demand must be met in every grade of accommodation and service. There has been too much complaint and talk of sloppy and dirty service. This irritant can be overcome by education and management. We must match up the 1983 statistics of 41 per cent of overseas visitors unhappy with value for money with the 89 per cent of all tourists in that year who were satisfied with their holidays.
We are a secondary tourist location whose access transport is expensive. Easier and cheaper access by all carriers will have to be matched with Bord Fáilte marketing strategy. An anomaly exists in regard to competitive carrier relationships. The Department of Communications handle aviation transport policy dealing with charters, access transport and fares. They also handle the national airline. There is a conflict of interests and a separation of the two responsibilities is long overdue. The beneficiary would be the tourist industry. We are dealing with a numbers game and the only way to multiply the numbers is to lessen the burden of transport on the overall cost of the holiday. This decision will take political courage but until it is there the marketing strategy will labour under a very severe handicap.
Last year 1.52 million British tourists came to Ireland, 52 per cent of them to visit relatives. They spent £130 million. Of those, 76 per cent stayed with friends and relatives. These figures show the strength of the ethnic pull but also they show that the number of visitors from Great Britain fell every year since 1978. We must get the British motorist back. We are losing him because of loss of price competitiveness. There are clear indications that the prices of petrol, drink and food are deterring factors.
These areas are under our own direct control and we must face up to this if we are to compete with the foreign holiday threat in our nearest and biggest market. Of all the surveys undertaken the predominant reason visitors still give for coming to Ireland as guests is our scenery  and the friendliness of our people. We can only hope that hard times and recession and the profit motive will not erode the latter but we can do something to protect and preserve the former.
An unspoilt environment is our greatest national asset from the point of view of tourism, and vigilance and determination are the virtues that will keep it pollution free. All local authorities are aware of the unauthorised illegal dumping that is taking place throughout the country—rubbish, litter and abandoned vehicles everywhere. If a tourist never came we owe it to ourselves to clean up Ireland. The resources of the Department of Labour and the youth employment schemes should be harnessed to do a national clean-up. The benefits would be many—jobs for our unemployed, a more pleasant environment for all to live in and an educational good example to all to be more careful about our heritage. Our schools should play their part to create the proper attitude to environmental control.
During the forthcoming US Presidential visit we will be given a great opportunity. We do not want the TV cameras of the world to be showing up our black and dreary spots. We should use those cameras for world wide TV promotion of what is best in Irish tourism.
The development of specialist tourism, not just as an addition to holiday itineraries but as an attraction in its own right for major special interest groups, is a very important factor. These special interest opportunities exist in the sporting, cultural, musical and archaeological fields, to mention only a few, and I appeal to the Minister to examine them carefully. There is also considerable scope for improving and marketing Ireland as an international conference business centre. We have an inland waterway system second to none in Europe. Our boat holding capacity can equal any canal system in Europe and there is tremendous scope to develop this so that we can gain what is very much needed in real terms, that is, to attract the European tourists in bigger numbers.
Hotels and tourism are mutually  dependent. The hotel industry, an integral part of the tourist industry, plays an ever-increasing part in the social and economic life of this country. In many respects it acts as a barometer of the entire industry. Our 615 hotels, employing 22,700 people — 85 per cent of them outside the Dublin area — the majority of them Irish owned, are in some difficulty at this time. However, even in their difficulty they earned over £150 million in foreign revenue last year. They paid £61 million in VAT returns and bought £100 million of agricultural produce last year. Every job directly involved in the hotel industry maintains another job in related manufacturing, processing and service industries.
The biggest bogey of the hotel industry is the VAT levels which apply to what is essentially an export industry. The disadvantage which tourism has to contend with is that its competitors have an average VAT rating of 9 per cent while our industry labours under double that rate. In effect, there is a 10 per cent or 11 per cent visitors tax on every out-of-State visitor who comes here. Add to this the domestic inflation rate, which is also double the European average, and the consequential loss of competitiveness is very easily identified. There is a strong argument that if the VAT rate for hotel room and food sales was reduced substantially, with the corresponding reduction in these tariffs, the loss of revenue to the State would be more than compensated by increased business volume and hotel turnover.
The Government have contributed about £10 million to rescuing the Great Southern Hotel chain and have agreed to the deferment of the payment of VAT to help them get over their financial problems. In simple equity the Government should allow similar arrangements with the Revenue Commissioners as those for OIE to allow for a deferment of payment of VAT where this would cause serious financial hardship and job losses. There could be an increase of VAT returns to the Exchequer because more businesses paying the lower VAT rate would be attracted from the non-VAT paying sectors of accommodation operating here.
 Hotels have been losing the businessmen's market share to in-home catering and small caterers not paying VAT. If the VAT on business purchases could be reclaimed, a great deal of commercial traffic would be generated and returned to the hotels. In effect, we would get back the businessmen's trade from the black economy. Because of low profitability over the past ten years re-investment has been very limited in the hotel industry, resulting in a deterioration, especially of hotel plant. Simultaneously the incentives schemes operated by Bord Fáilte when tourism was at its peak in the sixties have also dwindled drastically. The Government should consider immediately interest subsidies for existing capital development loans and to keep up standards a refurbishing grant scheme is absolutely essential. The Minister promised this last winter and still we await news of any implementation of a scheme. An investment in renewals today will save the State millions of pounds later in replacement and much higher capital outlay when the plant fails completely.
The scheme announced in the 1984 budget by the Minister dealing with the question of rebate of VAT on sale of goods to tourists is an embarrassment to our tourist promoters and should be withdrawn forthwith. Neither scheme has an opportunity of working. They are complex and will be impossible to administer. It is ridiculous to suggest that a VAT rebate scheme on purchases made by ordinary tourists will only apply if each item purchased is in excess of £152 in value. The question of certification by customs will make it impossible to make this scheme a success. What was needed was a simple scheme directly in line with the one I recommended during the debate on the Tourist Traffic Bill last winter. I recommended a Swedish model as the one best suited to cater for our situation. It was simplicity itself. It was easy to promote and readily and easily understood by everybody. The visitor should have to pay for the item and the VAT, get the proper receipt and at the exit point he should be able to get the rebate of the VAT paid. All he should have to do is produce his receipt and  identification. That is the way the scheme works in other jurisdictions. Why is it that other countries when dealing with schemes to promote tourism can take the pragmatic view all the time? Why do we have to make it virtually impossible for anybody to benefit under this scheme?
Aer Rianta, working as agents for the State, should have operated the scheme. The shipping companies would have been happy to oblige as well because they too are involved in the arrangements for bringing visitors to and from this country. Those people have vested interests and it would have enhanced their operations at the airports and improved business at duty-free shops. I would have introduced a system where the rebate offices would be located next to the duty-free shops. The people having been paid their rebate in the currency of the State would be able to make further purchases in the duty-free shop rather than going back through immigration control and converting the cash into their own currency.
The arrangements suggested by the Revenue Commissioners are more than an embarrassment. They will be impossible to implement. The scheme is complex, difficult and is not in line with the spirit of the scheme announced by the Minister in his Budget Statement. Even at this late stage I ask the Minister to have another look at withdrawing the scheme as outlined by the Revenue Commissioners and bringing in a scheme similar to that which operates in other European countries.
If there is some difficulty about a land frontier, I would confine the scheme to international tourists at first. The airports and seaports could cater for the business that would be generated. What would be generated would be an increase in the sale of goods throughout the country with a consequent increase in the employment generated by that VAT increase. Every sale attracts VAT and the amount of money lost to the Exchequer would be more than made up by the increased revenue which would accrue from expenditure at first point of sale by tourists. That has been a great disappointment to everybody in the industry. The Minister must remember that the scheme for the rebate  of VAT on purchases made by tourists will now be implemented not just in some Scandinavian countries but in most of the major tourist countries on the Continent. The convoluted system being suggested as our answer to helping tourism will only mean that multi-destination tourists, particularly from America, will spend their money in countries where they can get the easiest and best rebate. If we are to compete in this area of activity we will have to do so in a way which will justify the Minister bringing in the scheme at all.
There is no doubt that there has been a great lack of tourism policy on the part of this Government. I would point out to the Minister that in the recent Finance Bill the hotel industry has been specifically excluded from section 84 loans. They are also excluded from the venture capital scheme. We on this side of the House have no doubt that no direct input was made by the Minister of State or by the Minister for Industry, Trade, Commerce and Tourism at the Cabinet table in getting means allocated to the industry whereby they could deal with section 84 loans and venture capital. What other industry deserves the implementation of those schemes more than the tourist industry?
We have given lip service to what tourism could do for this country but as yet there has been no positive commitment in giving Bord Fáilte the necessary funds to adopt a proper marketing strategy designed to attract people in large numbers. In real terms every pound spent in the tourist industry returns more than a pound spent in any other area of activity. I am asking the Minister of State, through the Minister, to make representations to the Cabinet to reverse the ridiculous decision concerning the rebate of VAT on purchases made here by tourists and to reconsider the situation in regard to section 84 loans and venture capital.
Mr. Connolly Mr. Connolly
Mr. Connolly: That this is a very important motion is shown by the fact that so many Members want to express their views. Bord Fáilte have done a reasonably good job over the years but they have not been getting the necessary funds  to carry out much needed promotional work. Let us take, for example, the case of the Midland Regional Tourism Organisation. They lack funds to encourage tourists and are unable to design and market a programme for tourists who come to this country.
Pricing policies must be examined because charges vary greatly among hotels and restaurants. I must be slightly critical and say that hotels and caterers go in for the kill and jack up prices whenever an organisation holds a major function. This is giving us a bad name and I could not support it. They may get away with it once but not a second time. People are intelligent and they know what is going on.
My colleague has referred to the rebate of VAT on purchases made by tourists. It is a most clumsy instrument and I cannot see how it will work. I cannot see that tourists will want to become involved in all that documentation.
The very high rate of VAT is killing the tourist industry. When we put down this motion last year we asked that VAT rates be substantially reduced. The Minister for Finance said it could not be done but eventually, following the argument we put forward, he reduced VAT. The question must be considered once again. The Minister will quote the figure of revenue shortfall but I believe there would be a gain.
Farm holidays are now taking over the tourism industry. This is due to the level of charges because prices in hotels vary greatly.
The Minister should co-ordinate the activities of Bórd Fáilte and all the other bodies involved in tourism such as CIE, Aer Lingus and the shipping companies. Through this co-ordination tourism packages could be devised.
Private transport, whether to football matches or elsewhere, has taken over from CIE. This is because it is always on time and the package is cheaper and more attractive. What have we done about it?
Local authorities also have a part to play. They should be involved in cleaning up scenic areas and removing cars and other rubbish. This task could provide jobs through the Youth Employment  Agency and months of work would be provided. The local authorities may say they have not the necessary personnel to administer such a scheme but if they were properly approached I am sure they would co-operate. We have more engineers than ordinary workers in local authorities and some engineers are supervising only two men. That is not good enough.
I do not blame Bord Fáilte for the lack of co-ordination. They have not been given the direction but I have no doubt that if such a direction were given they would co-operate with the other agencies and local authorities to bring about an improvement in our tourist facilities.
In the midlands area where I come from the main complaints have related to charges and hotels not being clean. I can elaborate on that. People have had a lot of complaints to make. Bord Fáilte and the Midland Regional Tourist Organisation have not got the finance to go around to these places and see what is happening. Grants should be made available to hotel owners and people in the catering industry to enable them to refurbish their premises. Cabarets were all the go for a number of years, but over the past few months there has been a falling off in attendance. About a week ago a very attractive group were playing in a certain place. I will not name them. A key group were entertaining and there were only 280 people in attendance. I asked what was wrong and I was told it cost £4 to get in and the price of drink had been shoved up again.
Cleanliness is very important. Tourism brings in £760 million. That is an enormous amount. The grant to Bord Fáilte was in the region of £10 million and is now in the region of £20 million. That is a paltry amount. A large amount of the grant given to Bord Fáilte goes on administration costs. It has to be divided by four or five to show the amount which actually goes into the industry. About 22,000 people are employed in the tourist industry. That is a substantial number of jobs. There is a great outcry when a hotel gets into difficulties, and rescue plans are suggested. We must give a lead.
There must be co-ordination between  the State bodies involved in this industry. The Minister should take that on board. They may say that this cannot be done, but a great deal could be done. Our road signposting leaves a great deal to be desired. The local authorities could play their part in co-operation with the tourist board, Aer Lingus, CIE, the shipping company and everybody involved in the industry. We must present an attractive picture; if not the tourist will not come here, they will go elsewhere and they cannot be blamed. They are looking for value for money. The British tourists are looking hard at us also to see whether we are giving good value for money. That is open to question.
People involved in the industry cannot get away with any sort of catering and then charging people through the nose. That is not on. The management in the industry must look at their pricing arrangement and see that they are good. Many tourists have spoken to me about variations in prices. I do not know the reason for this. There are even variations in the price of meals. We need uniformity of prices.
Grants should be made available to enable hotel owners to refurbish their premises. They are unable to do that themselves because their profits are affected by the high VAT rate. The VAT rate should be reduced substantially. This is most important. If we do that our industry will be more attractive to tourists and help us to maintain our existing employment. I want to warn the Minister that if we do not make our tourist industry more attractive, at the end of the year there will be further closures of hotels. I regret having to say that. All these bodies should have been co-ordinated long ago. I have no doubt that if they are handled properly they will co-operate with the Minister.
Minister of State at the Department of Industry, Trade, Commerce and Tourism (Mr. M. Moynihan) Minister of State at the Department of Industry, Trade, Commerce and Tourism (Mr. M. Moynihan)
Minister of State at the Department of Industry, Trade, Commerce and Tourism (Mr. M. Moynihan): I move amendment No. 1:
To delete all the words after “employment,” and substitute:  “commends the steps being taken by the Government to assist the tourist industry to realise its potential.”
I welcome this opportunity to speak about the tourist industry here tonight, its importance to the economy and its great potential for future development. Very few Deputies will disagree with me when I say tourism has a major role to play in setting our economy on the right road and helping us to expand. This industry earns a large amount of foreign currency and supports a large number of permanent jobs. It has the potential to earn more foreign currency and to create more jobs. This Government have done and will continue to do everything possible to create the environment in which industries such as tourism can develop to their fullest potential.
Throughout the seventies tourism was overshadowed by the rapid progress in agriculture and in the manufacturing industries. EEC membership in 1973 gave a great impetus to these sectors and to future job creation in them. The onset of the current recessionary cycle in 1979 undermined many of these achievements with consequent serious losses in employment and the closure of industries once thought to be absolutely impregnable. Tourism, on the other hand, has come through the recession without the deep structural damage evident in agriculture and manufacturing. It has shown a remarkable resilience in the face of very negative trading conditions. Indeed, in the last few years it has been able to capitalise on favourable opportunities prevailing in the overseas markets.
Prospects for tourism in Ireland — short, medium and long-term — are good. We possess in our countryside the physical attributes and in our people the social attributes necessary for a thriving tourism industry, We have here a tourism product which can compete effectively on the world tourism markets, a market which, it is predicted by many leading authorities, will grow into the world's biggest by the end of this century. The most recent forecast of the European  Travel Commission is that by 1990 the level of tourist arrivals in their 21 member states will be of the order of 240 million. This compares with a figure of some 160 million in 1982. The forecast increase of 50 per cent must give us an idea of the immense opportunities existing for Irish tourism and of the benefits which can be achieved through tourism for the development of our total economy.
Irish tourism's ability to achieve this success will be influenced by a number of factors, some within our control and, indeed, some influenced by external matters, which are — a return to growth in the world economy; Ireland's competitive position compared with other destinations, maintenance by us of a high quality tourism product; the political situation in Northern Ireland; our ability to replace the declining Irish-related markets in Britain and the United States. These are all factors which will be crucial to the long-term viability and health of our tourism industry.
Mr. Flynn Mr. Flynn
Mr. Flynn: Did the Minister say to replace the British markets?
Mr. M. Moynihan Mr. M. Moynihan
Mr. M. Moynihan: No. International travel is, to a large degree, determined by the rate of world economic growth. Prospects now, based on current trends, are much more positive than was the case some 12 months ago. Inflation has fallen in most countries, including our own. Projected inflation rates for this year in most of our main markets are of the order of 2 to 5 per cent. International exchange rates are not expected to change significantly. It is confidently predicted that Europe, including Ireland, will for the rest of the present decade be competitive with other parts of the world in terms of value for money offered by their tourist product.
A healthy domestic economy is the foundation which the Irish tourist industry needs. The Government have, in their relatively short period in office, taken positive strides towards stabilising this firm foundation. Ireland indeed compares very well in its recent handling of the economic ills which have plagued all western countries. Our inflation rate has  dropped considerably, our prices have stabilised, we are coming around to growth and expansion in our economy. This Government have taken the decisions on economic matters necessary to put the economy right. We have not been swayed by the easy option of short-term expediency. This House realises and the country appreciates that this Government have the will and ability to develop a sound economy for the future. As I have said, a sound economy is vital for the industry and its expansion and development.
I see tourism as one of Ireland's most important export industries. It has the capability, firstly, to earn foreign currency which we so badly need at present; secondly to provide and sustain much needed employment for our population, particularly the youngsters coming on to the jobs market; thirdly, to make an enormous contribution to regional development by stimulating commercial activity in our more remote areas.
The Government recognise the industry's potential, not alone in words but, I am glad to say, in action also. Since taking office we have acted, notwithstanding the extremely difficult economic circumstances, to alleviate some of the competitivity problems facing the industry. The decisions in successive budgets are evidence of this. Holiday accommodation in hotels and guesthouses was exempt from increase in VAT rates. VAT on car hire, on caravan hire and on boat hire was reduced. The tax on live entertainment tickets is now down to only 5 per cent — 10 per cent less than that in Britain. Visitors can now claim a refund in full on retail sales tax on goods purchased in Ireland. These are all attractive concessions and, working in combination, have a strong, positive appeal among potential visitors.
Tourism is a buyer's market. Effective marketing of the product is probably more important in tourism than in any other import-export sector. We are extremely fortunate here to have a tourism promotional board as dedicated and as effective as Bord Fáilte Éireann. In my period in office, I have had the opportunity to view at first hand the board's  marketing activities on home and overseas markets and I have been deeply impressed by the effectiveness and professionalism of their approach.
Over the past two years the Government have provided the board with a significant level of promotional funds to help them to press home the Irish tourism message in the various world markets. This year, for example, the allocation for Bord Fáilte, of the order of £14.972 million, is the highest provision ever made for the promotion of Irish tourism. In the area of promotional expenditure, as in other areas of Exchequer tourism spending, my Department and I are continually aware of the need to ensure a satisfactory return to State resources employed in the sector. The national objective of tourism policy is to maximise the economic and social benefits in Ireland gained by the promotion and development of tourism consistent with ensuring an acceptable rate of return on the resources employed. The House can be assured that I shall continue effectively to pursue the achievement of these objectives.
While I am on the subject of the importance of marketing, it is appropriate to say a few words about the immediate prospects for tourism growth in the various overseas markets. The market foremost in my mind at the moment is the German market as I have just returned from participating in two of a recent series of Bord Fáilte promotional workshops in this market. The workshops, which were held in nine venues around Germany, were a new development for Bord Fáilte. They combined an evening of Irish entertainment with a promotional message for prospective tourists. I would like to say here that the interest and enthusiasm demonstrated by the German community among whom I had the pleasure and honour to be present on two evenings were really astonishing. At two venues in excess of 1,000 people came, not only by invitation but, by a new strategy of Bord Fáilte in their promotion: they had to pay a small fee in order to indicate their sincerity.
This was a feature demonstrating the tremendous interest there is in Irish tourism on the German market. I was very  fortunate to view at first hand the immense enthusiasm there is in Germany and we can look forward to substantial growth in that market. Initial reaction has been very positive and Bord Fáilte are optimistic that the German market will show significant growth again this year. Indeed our overall prospects for continental European travel to Ireland this year and in the next three to five years are much more promising than they have been in the recent past. All European economies, including that of France, are expected to show a real growth this year of the order of 1 to 2 per cent, improving to 2 to 4 per cent in 1985. This, together with the lifting of the French travel restrictions and competitive air and sea fares, should continue to meet Bord Fáilte's target for tourism growth of between 3 and 5 per cent achievable in 1984.
North America probably holds the best prospect for growth after two consecutive years of expansion with revenue reaching £126 million last year as compared with £60 million in 1981. This year Bord Failte are seeking growth from this market of between 6 and 10 per cent, a highly optimistic approach but one we are confident of achieving. We would hope to welcome over 300,000 United States visitors this year, the highest ever number. This optimism is based on a number of factors: the value of the United States dollar in Ireland, increased air traffic capacity and very competitive air fares, a determinedly high profile Bord Failte marketing campaign and the fact that Ireland exemplifies major tourist attractions for United States visitors to Europe, namely, our culture, history and beautiful scenery. Therefore it will be seen that this American market has tremendous interest potential. On assuming office one of the first matters I investigated was why in the year 1981-82 something in the region of five million American tourists came to Europe, of whom in excess of two million went to Britain and only between 200,000 and 250,000 came here.
Mr. Flynn Mr. Flynn
Mr. Flynn: Because we are a secondary tourist location, that is the reason.
Mr. M. Moynihan Mr. M. Moynihan
 Mr. M. Moynihan: When one remembers that within that colossal American population there are 40 million Irish ties and relations one has reason to be disappointed that such a small proportion came here in that year. I believe that the current decisions of Aer Lingus in relation to fares, increased chartered arrangements and a number of other factors will remedy that situation and secure for us that growth of American tourists to which we are genuinely entitled.
I believe also that the Irishness of the approach to holidays here is important, that the fuller development of Irish music, song and dance in the peak of the tourist season is of particular significance to United States visitors, the absence of which has been noticeable. Parades on St. Patrick's Day and other occasions have exhibited the best features of our culture but too often during the peak tourist season their absence is significantly noticeable. Through promotions, discussions with Bord Fáilte, local Comhaltas Ceoltóirí Éireann and other cultural activities we hope to remedy that situation by ensuring that facilities are made available for the highlighting of all the splendid aspects of our music, song and dance so appreciated by tourists, especially Americans. Those are all plus factors which should render 1984 another record year for United States tourists to Ireland. All reports of that market and in particular feed-back information from Irish tourist companies selling in America suggest that interest in Ireland as a tourist destination was never higher in the United States.
Looking beyond this year the medium-term prospects for the United States tourism market continue to be most encouraging. The most significant part of overseas traffic flow to Europe is from the United States. In 1982 it accounted for approximately 10 million arrivals in Europe. On European Travel Commission forecasts of growth of 5 per cent per annum in this traffic up to 1990, to a total of 14.5 million arrivals, Ireland must be well placed to increase its share of this immense traffic growth. Success in the United States market is so important  as to be almost vital for our tourist industry, particularly our hoteliers, car hire and coach hire companies. It is reckoned that the average spending of an American tourist in Ireland is approximately twice that of his or her continental European counterpart or three times that of a British counterpart. An indication of its importance can be seen from the following statistics: American tourists account for six out of ten cars rented by overseas visitors, for over 80 per cent of our coach tour business, seven out of ten overseas visitors attending banquets and are half of hotel bed nights on the part of overseas visitors.
I went to the United States late last year to help the tourism promotion effort and was most impressed by the work being done there by Bord Fáilte officers. During that visit, at many promotions I attended in the course of that trip and indeed also to continental Europe, it was made very clear that the presence of private sector representatives, hoteliers, car and coach operators and others, was invaluable in getting the Irish tourism message across. I am glad to note that this year Bord Fáilte have introduced a scheme under which private tourist operators will be assisted financially and otherwise in undertaking overseas promotional activities. I would urge all sectors of the industry to avail of the provisions of this scheme and follow the example of those who participate in Bord Fáilte's overseas promotions.
Despite our success in other markets Britain remains the largest, closest tourism market. Unfortunately our image there, arising from the Northern situation, militates against a restoration of tourist growth from that immense market. Last year Bord Fáilte launched a new three-year advertising and publicity campaign aimed at winning a greater share of first time visitors particularly in the non-Irish related sector. The House will recall that well-known personalities were used in the course of that campaign which was designed to improve Ireland's image in Britain as a holiday destination. Last year the newspaper and magazine advertisements features of the campaign won two top awards from the British  Institute of Marketing. So far reaction to that campaign has been positive showing a perceptible increase in numbers from the tourist segment of the market. Last year tourist numbers grew by 2 per cent while revenue, at £131 million, was up by 6 per cent. While Ireland still labours under the disadvantage of perceived high prices for a range of tourist items vis-à-vis prices in Britain, there is a very wrong impression created, particularly when one takes into account the currency differentials there are in our favour. Bord Fáilte are confident that real growth can be achieved in this market in 1984 and have set themselves a target of between 2 and 4 per cent.
The value of marketing and promotion in the tourist context is enormous. Tourism needs to operate in a positive atmosphere. It is that type of industry. Visitors to Ireland and Irish holidaymakers need to be greeted with a welcome and a smile and not with a frown. There is no place in tourism for gloom and despondency. Some of the utterances of the so-called tourism experts, mostly ill-informed and in search of cheap, sensational headlines, do little to further the cause of the industry they purport to represent and in many cases are the source of untold damage. The atmosphere that the industry itself creates is crucial to the desirability Ireland projects as a destination. Informed, constructive criticism is needed if we are to create the right tourism product and the right atmosphere in which to market it.
Maintenance of a high quality tourism product and infrastructure is a prerequisite to the industry realising its potential. It is essential that we provide the accommodation, amenities, facilities and services of the right quality and quantity to fulfil the expectations of our visitors. In the coming years this country will be judged increasingly in tourism terms against the high and in most cases meticulous standards of other competing international destinations. I am glad to say that Bord Fáilte visitor surveys show generally that there is a high level of satisfaction amongst our tourists. The most recent survey of our visitors, undertaken  towards the end of last season showed, for example, that over 80 per cent of all our US visitors would recommend Ireland to their friends and relations. A satisfied tourist is the best salesman, and the only way to have a satisfied customer is to give him the best possible product at the best possible price.
Deputies tonight have referred to this matter and I want to reinforce very strongly my approach on one of the fundamental criteria that I have set down for the expansion and development of tourism, that is value for money. Unless the overwhelming majority of tourists leaving Ireland are satisfied that they have got value for money, then the efforts of Bord Fáilte and other private or other promotional agencies would be nullified. Deputy Connolly made a point about exploitation through groups or otherwise. Any statutory powers whatsoever that I, as Minister, and Bord Fáilte would have to curb any get-rich-quick aspects within any segment of the tourist industry will be used with all the severity that any such attempted exploitation deserves.
One of Bord Fáilte's statutory roles is to assist the development of the tourist product. In the period since 1979 the Government have provided through Bord Fáilte more than £11 million in grant assistance for the development of holiday accommodation. This grant expenditure stimulated a total investment of approximately £35 million in expanding and upgrading our accommodation stock. Initially emphasis was on the hotel sector but more recently grant assistance has been channelled towards other areas of holiday accommodation such as self-catering cottages and caravan and camping parks which have become increasingly popular. In addition grant assistance has been and is being provided for the upgrading of town and country homes as well as farmhouses. Much has been written in recent years on the effectiveness or otherwise of the money spent in this area over the years, most notably the National Economic and Social Council report published in November 1980. My Department's recent extensive review of tourism policy included an indepth  assessment of accommodation grant schemes. This review underlines the need for a more critical approach to future State assistance in this area as a means of ensuring that the State obtains a worth-while return from any investment made.
With future development in mind, my Department, together with Bord Fáilte, are in the process of making a full, detailed assessment of current and likely future holiday accommodation capacity to establish whether supplies over the next four to five years will be sufficient to meet demand. When this assessment is completed it should be possible to identify to what extent, if any, there is a need to expand or upgrade any segment of our accommodation stock and to consider if grant schemes are the most likely means of stimulating the developments which are thought desirable. Non-grant type of assistance in the form of concessionary finance is another means which has been used to stimulate investment and assist operation of the tourism industry. The House is well aware that the Government have established two fixed low interest loan facilities for the tourism sector which operate through the Industrial Credit Company, an investment capital scheme financed through the EIB and a scheme providing additional working capital. The uptake of moneys under these schemes by the tourism sector has been most encouraging and this type of financing is being kept under close review to ensure, in so far as is possible, that sufficient funding continues to be available to the sector.
We are very lucky in Irish tourism to have such a wide range of tourist accommodation available. The top Grade A star hotels, the family type tourist hotels, guesthouses, town and country homes, farmhouses, self-catering, caravan and camping sites, hostels — all have a part to play in the tourist effort. We can offer accommodation to suit almost every conceivable taste and pocket. It is highly important, therefore, that we, the Government, be very careful to ensure that the supply of tourist accommodation be, as far as possible, consistent with the demand for it. It would be very wrong for  us, for example, to initiate schemes to stimulate development of a particular type of accommodation if by so doing we were to put in jeopardy the continued viability of accommodation providers already operating in that sector.
An Leas-Cheann Comhairle John J. Ryan
An Leas-Cheann Comhairle: Minister, you have one minute to conclude.
Mr. M. Moynihan Mr. M. Moynihan
Mr. M. Moynihan: I have a few points to make. Another important development initiated during 1983 was the development of an EEC tourism policy, and the Government have been supporting that actively over the past year. Meetings with the EEC Tourism Commissioner have been arranged, discussions have taken place and in Athens in December an EEC tourism policy was formulated. This in time will be of immense benefit. The possibility of easier frontier barriers, passports etc. is something from which Ireland could benefit immensely in the context of EEC tourism.
In conclusion, I can summarise the importance of tourism to the economy by emphasising the following facts. The total value of tourism to the economy last year was £824 million, £540 million from overseas tourists and £284 million from domestic tourism. The numbers employed in the industry are over 60,000. The total number of out-of-State tourists last year was over two million.
The motion before the House for discussion tonight calls on the Government to take immediate steps to maximise the potential of our tourist industry. I am sure the House will agree, from what I have said this evening, that the Government are in tune with the needs of the industry and are taking the appropriate action to help the industry achieve its potential. I urge the House to support the amended motion.
Mr. Foley Mr. Foley
Mr. Foley: I welcome the point made by the Minister that last year tourism was worth £850 million. In 1982 it was something like £760 million. The breakdown of that figure is interesting. Of that figure £497 million was made from visitors outside the State while home holidays were responsible for £263 million. In 1983 a  total 2.7 million people visited Ireland. According to the Estimates and the figures available tourism is responsible for 76,000 jobs, or 7 per cent of all employment in the Republic depends on tourism.
Tourism is worth approximately £80 million to County Kerry and it provides employment for approximately 7,000 people there. These figures measured against other sections of our economy are very substantial. In the past few years we have lost more than 3,000 jobs in Kerry alone as a result of the decline in tourism. If even one-tenth of that loss was suffered in industry, it would create national headlines and would be regarded as a disaster. However, there appears to be no organised voice so far as the tourist industry is concerned. The losses in employment occurred in small numbers in numerous places, since the industry is spread throughout the county. In the Cork-Kerry region, which I consider to be the best of the eight regions, a boost is needed for the tourist industry especially in regard to a commitment on the question of the ferry service into Cork, a service that has existed for about 160 years and which was availed of last year by 100,000 visitors who between them brought in 20,000 cars. The loss of that service was a major blow to the region. We are informed that Aer Lingus will revert to a profit-making position in 1985. They should be asked then to restore to Cork the direct service flights which they discontinued some years ago.
The problems of the tourist industry are numerous. It is the only export industry that is being penalised in every conceivable way. There are special concessions by way of income tax, VAT exemption and so on in respect of export manufacturers but there are 18 and 23 per cent VAT levels in so far as the tourist industry is concerned. In addition, there are high labour costs and high PRSI contributions to be borne. These factors are hampering the growth that is necessary for the future development of the industry.
Because of the ever-increasing overheads, including taxes, those engaged in the tourist industry were forced to cut  back where possible and one of the areas in which there were cutbacks was the area of staffing. That is one of the reasons for the problems of the industry not being highlighted. Operators cut back on a gradual basis so that they might remain in operation. Obviously, these cutbacks have resulted in a reduced service to our visitors. This is a situation which must be remedied because of the damaging effect it is having in terms of customer satisfaction and of the PR image of our tourist business. In addition, the reduction in the level of services can amount to the loss of valuable spending by the visitor.
One of the greatest problems in the market field in regard to tourism has been our reputation for very expensive hotel accommodation. Although we have a wide variety of accommodation to offer — caravans, camping, farmhouses, town and country houses and guest houses — the high-class hotels are regarded as the barometer of the tourist business. Yet, this is the section that is the most severely penalised in terms of taxation and so on. If we are to succeed, the level of services will have to be adjusted. I am confident that any concessions we would make to the industry would be more than offset by way of increased turnover. Deputy Flynn has made that point also. When we compare the burden on the industry in terms of taxation we find that our industry is at a disadvantage compared with other tourist countries. If, for instance, the VAT on tourism were to be reduced to 10 per cent, the loss would be made up easily by way of increased income to the Exchequer from increased numbers of tourists.
Our greatest potential, and perhaps the easiest one, for creating employment is through the development of tourism and this can be done at a very low cost compared with industrial development. Because tourism is spread throughout the country, the small units would survive but unless we are prepared to give more help to the industry, that will not be the case. I appeal to the Minister for Finance to implement what he outlined in his budget speech with regard to interest-free loans, refurbishing loans and special  concessions in respect of youth employment during the summer months. Such employment should be exempted from PRSI payments. Many of the young people use the money earned in this way to further their education.
Tourism is almost totally dependent on home-produced raw material. The consumer comes to the product rather than the product being exported. There are figures to prove that 80 per cent of the food used in the tourist industry is home produced. This is a direct help to the agricultural sector which is our other great resource. Therefore, the agriculture and tourist industry complement each other. There are benefits to the spin-off industries also such as crafts, tour services and so on. This enables people to set up small business without being involved in big capital outlay.
There is a need for a greater awareness of the true value of the tourist industry and for the full co-operation of national, regional and local effort to develop a product that is suitable for the potential market. In many areas local committees have proved what can be done in co-operation with other bodies. More than ever there is need for strong and active local organisation because, in the long term, development will come about only by way of local initiative working through to regional and national levels.
In some instances small beginnings by way of local initiative have grown into major operations. In this context I refer to the efforts of a small committee who began their work 25 years ago in Tralee by way of organising a carnival. That was to develop into the Festival of Tralee which has become a major international tourist attraction bringing millions of tourists to Tralee and establishing that area as a tourist resort in its own right.
To sum up, I suggest that with very little help and effort the job loss trend in the tourist industry could be reversed. This would automatically reduce the unemployment figures and will set the industry on the path of regrowth and job creation. In the short term it would be the quickest and most effective method of dealing with the unemployment problem. This is an industry with great potential  and one that contains no danger in so far as pollution and such other problems are concerned.
I appeal to the Minister to consider the situation of the eight regional boards, especially in relation to the Cork-Kerry region. This year the grant-in-aid to Bord Fáilte has been increased by just less than 6 per cent. However, we find in the Cork-Kerry region that Bord Fáilte are reducing the grant under various headings. That is why I am appealing to the Minister to investigate the methods used by the board in relation to such a situation. They have adopted a dogmatic attitude to our region. I do not believe any other region has generated more finance than has the Cork-Kerry region. In the past three to four years about £500,000 was generated in the region and this was directed towards worthwhile promotion. Is this the reason that the board are cutting back on the grant-in-aid for this region? I take this opportunity of congratulating the Minister of State on the job he is doing in the field of tourism.
Mr. J. Leonard Mr. J. Leonard
Mr. J. Leonard: I support the motion in the name of Deputies Flynn and Connolly but regarding the amendment tabled by the Government I can only say that there is no evidence to support the claim that steps are being taken by the Government to enable the tourist industry to realise its potential. Indeed, in my area the steps the Government have taken have dealt a body blow to the tourist industry. I am talking of taxation measures and so on.
Job creation has been mentioned and in a time of recession it is important to examine how tourism could help the economy generally. Tourism gets a modest level of Government support. In 1982 the grant to tourism was only 10 per cent of that given to agriculture or the manufacturing industry. There is great potential for tourism and in 1982 it generated £301 million in foreign earnings, which is a very sizeable sum.
The Border region has been the subject of a number of reports, jointly financed by the EEC. We had the report on the Erne catchment scheme in the east Border region by the Economic and Social  Committee of the EEC and yesterday there was the north-eastern region development scheme which is a development strategy for the region from 1983 to 2,001. Each of those reports lays strong emphasis on tourism and says that it held out the best hopes for the development of the region. They all pinpointed the need for the development of our waterways and lakes, expansion of the Lough Erne navigation system, forest park development, the promotion of activity based holidays and consultation on the development of several large tourist complexes in areas of scenic beauty. On a cross-Border basis there is a unique opportunity to develop the region not alone from an economic point of view but also in the interests of goodwill. Over the last number of years we have been agitating for an administrative structure in that region because I fail to see why the EEC should fund an area which is so neglected. There is also room for development on a voluntary basis and many voluntary organisations who are developing tourism should get greater recognition and financial support.
In 1980 the EEC set up the Border counties fund for Cavan, Louth, Monaghan, Donegal and Leitrim and over a five year period they allocated a sum in the region of £20 million. It was based primarily on tourism development. They assessed transport, communication and craft industries as it was a region that had no history or background of tourism. It was also an area scarce in natural resources and where farm sizes were small. It looked as if tourism would be the ideal vehicle to provide additional funding for small farmers.
In 1968 the north-eastern tourist development region in Louth, Monaghan and Cavan had 946 beds to offer to tourists. In 1974 the number had increased to 1,207. However, since 1974 the number has got smaller and the figure is now 1,070, a substantial reduction of about 20 per cent at a time when there should be development in that region. That gives an indication of the extreme neglect of the region and of the measures imposed on them by way of taxation and VAT  which caused such distortion in business both sides of the Border.
On 6 March I asked a question in the Dáil regarding projects and their locations financed by Bord Fáilte from the European Regional Development Fund Special Border Programme for the years 1981, 1982 and 1983. The Minister for Finance said that there were three grants made available for supplementary holiday accommodation in Cavan, three in Kingscourt, two in Killeshandra, two in Cootehill, Shercock and Belturbet and two in Poles and Lough Gowna. There was also a grant for hotel improvements in Cavan. There were just a handful of grants in County Cavan and County Monaghan fared even worse. There was only one hotel improvement grant and there were grants for supplementary holiday accommodation at Castleblayney, four at Carrickmacross and two at Ballybay. In Louth the situation was even more dismal because they had only hotel improvements in Drogheda and Dundalk and supplementary accommodation at Carlingford and Dunleer. They were the only grants provided out of that fund which we thought would have been of great benefit and value. I asked Monaghan County Council to keep a record of the amount of money granted under those headings which we had received. Bord Fáilte provided £925,000 for accommodation development in 1981. County Monaghan received £15,900. I have not got figures for the other counties. The following year they received £7,900 from an allocation of £1½ million. In 1983 they received £4,000 from an allocation of £350,000.
It is very hard to understand that type of approach by the development organisations in that area. I wrote to Bord Fáilte some time ago asking them to designate an official to counties Monaghan and Cavan. They replied as follows:
Bord Fáilte does not consider that the expenditure from the ERDF (Non-Quota) Section would be enhanced by the appointment of an official. The take-up from the fund is dependent upon a number of factors,  including the general level of economic activity within the counties and the existence of suitable projects.
There have been adequate projects and a sufficient number of applicants for accommodation grants and it does not seem right to say that it would not be enhanced by the appointment of an official. We are satisfied after long and serious discussions on various Border committees that the only chance for development in those areas for tourism would be by the setting up of the structure to which I referred. A few weeks ago a full-time EEC representative was appointed by the Commission in the Munster area. I appeal to the Minister to examine the subject very carefully.
Dáil Éireann 349 Private Members' Business. Tourist Industry Potential: Motion.