News

Drop in UK tourism post-Brexit could see Irish economy lose out on almost €70 million this year

• New report authored by DCU economist Anthony Foley shows the pub and pub culture are vital to Ireland’s tourism product—but fewer visitors from the UK will hamper growth;
• 80 percent of all visitors to Ireland said the Irish pub was the most important factor influencing their decision to holiday here;
• However, with Brexit impacting the size and spending power of Ireland’s largest single tourism market, hospitality industry and wider tourism sector growth will be impacted;
• Without pro-enterprise measures in place, a shrinking UK market will undermine Government’s ambitious plans to grow tourism sector by 2025;
• DIGI calls on Government and Minister for Finance to “act now” and institute pro-enterprise measures in this year’s ‘Brexit Budget’, including a 15% reduction in Ireland’s alcohol excise tax, the second highest in the EU.

The drop in the number of British tourists in Ireland post-Brexit could see the Irish economy lose out on almost €70 million in revenue this year, impacting the tourism sector and the drinks and hospitality industry.

This is according to a new report published today, “The Contribution of the Drinks Industry to Irish Tourism”, commissioned by the Drinks Industry Group of Ireland (DIGI) and authored by Dublin City University economist Anthony Foley.

British tourists spent €1.1 billion in Ireland in 2016, but a 6.2 percent drop in their numbers in the first seven months of 2017 compared to last year would equate to revenue loss of €68.2 million if the trend continues.

Already under pressure from high alcohol excise tax, this decline has significant implications for Ireland’s drinks industry and tourism sector growth.

The experience of an authentic Irish pub, a live trad session and a taste of real Irish beer and whiskey are top of tourists’ ‘to-do’ lists on their visit to Ireland, according to the DIGI report. A Fáilte Ireland survey found that 80 percent of all overseas visitors to Ireland picked the Irish pub as the most influential factor in booking their trip here, and also said it was an attraction they most wished to visit on their holiday.

Key report findings include:

• 83 percent of visitors said they listened to music in an Irish pub on their holiday, the highest ranked answer; this figure is 88 percent for North American visitors;
• Tourists spend over a third (34 percent) of their holiday budget on food and drink; this figure rises to 40 percent for British tourists;
• Half of all overseas visitors to Dublin visit the Guinness Storehouse;
• The drinks industry is one of Ireland’s biggest exports: Jameson is drunk in 120 countries, Baileys in 130 and Guinness in 150.
• The industry continues to invest and innovate with up to ten whiskey-related visitor centres recently or soon-to-be opened including the Teeling and Slane distilleries.

“While it is very encouraging to learn that overseas visitors are excited to enjoy Ireland’s drinks industry businesses,” said DIGI Secretary and CEO of the Licensed Vintners Association, Donal O’Keeffe, “our tourism sector remains overly reliant on the UK, a market that is already contracting and set for years of economic uncertainty.”

British tourists account for 41 percent of all visitors to Ireland, the country’s largest single market. In the wake of Brexit, however, fewer are coming.

The value of sterling against the euro, too, has plummeted since the UK’s EU referendum in June 2016, making Ireland a more expensive holiday destination. If the currencies reach parity by the end of year, as predicted by Morgan Stanley, British tourists could continue to look to cheaper destinations on the European mainland or at home.

With every penny and cent factors now determining a trip abroad, Ireland’s high alcohol excise tax is hampering its biggest attraction. Ireland’s alcohol excise tax is the second highest in the EU; broken down by drink type, we have the highest excise tax on wine, the second highest on beer and the third highest on spirits.

These factors combined could undermine the Government’s ambitious plans to grow annual overseas visitor numbers to 10 million and increase tourism sector employment by an additional 50,000 jobs by 2025, according to Mr O’Keeffe.

“The drinks industry is inextricably wound up in Ireland’s tourism product. With the pub the tourist’s top draw, it makes sense that the Government properly safeguards this essential network of businesses by easing their tax burden, allowing them to become more price competitive and increase their earning potential.”

To protect drinks industry jobs, DIGI is seeking a reduction in alcohol excise tax in Budget 2018—what it is calling the ‘Brexit Budget’.

“Without any change to this country’s high, even punitive, alcohol excise tax, a continued drop in sterling will further undercut Ireland’s tourism competitiveness. Fewer British tourists will patronise the drinks businesses that are so important to the tourism sector,” said Mr O’Keeffe.

The drinks industry directly employs 92,000 people in Ireland, in pubs, restaurants, hotels, off-licences, distilleries and microbreweries, as well as other related businesses, nationwide. Annually, it exports goods worth €1.25 billion and generates €2.3 billion for the Exchequer.

Although there has been an overall increase in tourism, North American tourism is not guaranteed: the current global geopolitical climate has seen the dollar fall against the euro, making European countries like Ireland less affordable.

“Any decline in tourism numbers will impact rural Ireland the most. In some parts of the country, the tourism sector is the major and, in some cases, only employer. This could lead to job losses and business closures,” said Mr O’Keeffe.

“The Government must act now. Tourism, just like agriculture, stands to be severely affected by Brexit. In this year’s Budget, Minister for Finance Paschal Donohoe must prioritise pro-enterprise and pro-growth measures for the drinks and tourism sector, like a reduction in alcohol excise tax. In addition to helping Irish businesses weather the coming Brexit storm, it will put the Government on a more certain path to achieving its 2025 targets.”