An Unprecedented Crisis

Ireland’s tourism economy has changed profoundly in the space of only a couple of short weeks. Covid-19, since the first case in Ireland on February 29th, has had – and continues to have – a catastrophic impact on Ireland’s tourism and hospitality industry. Each day seems to bring a new and more worrying development.

First and foremost a public health issue, Covid-19 undoubtedly poses massive economic and business implications and Ireland’s tourism and hospitality industry is in the front line. With the cessation of flights between US and Europe including Ireland, the closure of tourism sites, the cancellation of St Patrick’s Festival, and the ban on gatherings of 100 people indoors or 500 people outdoors, the impact on Irish tourism has been devastating and immediate.

Tourism employs 265,000 people throughout the country and is Ireland’s largest indigenous industry. 68% of employment is outside of Dublin. Covid-19 has meant widespread cancellations and deferments but of far more concern is that all new bookings for the industry have dried up. Carriers, hotels and accommodation providers, restaurants, attractions, hospitality businesses, tour operators, and transport providers are facing a bleak year with an empty pipeline and order book.

The only way of minimising job losses and business closures is aggressive Government intervention to protect the industry from the ravaging effects of Covid-19.

The Irish Tourism Industry Confederation (ITIC), representing the leading tourism stakeholders across public and private sectors, is part of a tourism taskforce recently established by the Department of Transport, Tourism & Sport and chaired by Ministers Shane Ross and Brendan Griffin. At these meetings ITIC has relayed the gravity of the current situation and outlined the urgent and immediate measures required if Ireland’s tourism industry is to be somewhat protected during this unprecedented challenge.

A 3-step plan to save Irish tourism

ITIC has outlined a 3-step plan that needs to be adopted and actioned by Government. A cabinet Covid-19 sub-committee meeting takes place this Monday and the below measures need to be announced and implemented straight away.

Step 1: Business Survival

With cancellations of existing business, and no new bookings, Ireland’s tourism and hospitality industry simply has no revenue stream to sustain itself. Cashflow is the oxygen of business during this crisis and Government must ensure that the state takes no additional money out of business. Therefore, measures needed include:

• Vat and payroll tax forbearance with interest free terms
• Waiving local authority rates
• Interest-free debt moratoriums from pillar banks
• Deferment of water charges

Keeping cash in businesses is the only way that job losses can be stemmed at this point.

Step 2: Liquidity Measures

Even when the Covid-19 crisis passes – as it will – tourism and hospitality businesses will require working capital and business development funding to continue trading. A rescue and recovery package needs to be put together for Ireland’s tourism industry and measures needed include:

• Interest free loans from the Strategic Banking Corporation of Ireland and pillar banks
• Relaxation of state aid rules
• EU supports specifically for the tourism and travel industry
• State guaranteed working capital and business continuity loans
• Commitment from the insurance industry including provision of business interruption cover
• Financial support to industry for cancellations of large events as a result of Covid-19
• Support for industry to sustain employment

Step 3: Demand stimulation

Demand and bookings will be very slow to recover from international markets even when the Covid-19 crisis passes. Therefore industry, Agencies and Government must deliver massive market intervention measures to kickstart business. Measures required include:

• Tourism Vat rate to be set at 0% for the duration of the crisis and at 9% on a permanent basis once the recovery has taken place
• Doubling investment in overseas marketing
• Domestic marketing increases to drive home holidays
• Restoration of VAT relief measure on VRT for tourism car rental
• Support for airlines to maintain and renew key routes

The above suite of measures is needed straight away for Ireland’s tourism and hospitality industry to survive this unprecedented challenge to its existence.

A resilient industry

Irish tourism faces its biggest ever challenge with the advent of Covid-19. Jobs and businesses over a matter of days and weeks are facing huge threats. The above measures, if adopted and enacted by Government, will give some breathing space to the 20,000 tourism and hospitality businesses up and down the length and breadth of the country.

Ireland’s tourism industry has proved itself remarkably resilient in the past to external crises such as 9/11, SARS, Foot & Mouth, the volcanic ash cloud, and the domestic and global financial crash. However, Covid 19 is the single most difficult event for Irish tourism and it is vital that we keep an industry in place once the crisis passes.

Irish tourism and hospitality businesses fully support the Covid-19 national response and will not be found wanting in this regard. ITIC recommends an industry-led taskforce to monitor and steer Irish tourism’s recovery but of immediate concern is Government’s response to this crisis.

Irish tourism can and will recover once this crisis passes but enabling and supporting factors need to be put in place immediately. Government has no choice but to do all within its power to support the country’s most important indigenous industry.