Beating Brexit

/, News/Beating Brexit

Beating Brexit

With the date for Britain’s exit from the EU fast approaching, Hotel & Catering Review examines the current state of play in Ireland’s hospitality sector and assesses what those businesses should be doing to prepare beforehand.

Although there is less than a year to go until the UK exits the EU, no definitive account of what Ireland’s relationship with our nearest neighbours will look like has emerged. The issue of a hard border, thought to have been solved late last year, seems to be up in the air once more, while even the possibility of air travel disruption between Ireland and the UK can’t yet be ruled out. Businesses operating within the hospitality and tourism sectors are understandably concerned despite a positive start to the year in terms of increased overseas arrivals and access capacity – after all, Great Britain is a vital market for Irish tourism, delivering 47 per cent of all overseas visitors and around 30 per cent of overseas tourism revenue. So, with mere months to go until Brexit becomes set in stone and the UK leaves the EU for good, is Irish hospitality and tourism ready for what’s to come?

“It’s a very mixed story,” says Martina Bromley, Head of Enterprise & Hospitality Development with Fáilte Ireland. Last year saw a drop of seven per cent in British tourists visiting Ireland, down to four per cent so far in 2018. “It would still be substantial from any market’s perspective and any business to be losing that market share. But the situation seems to have been buoyed a little by other markets doing much, much better… [businesses are] seeing an increase from European [visitors] and obviously from the US market and from other developing markets as well. That seems to have camouflaged in some ways the direct impact.”

In the two years since the UK voted to leave the EU, a number of measures or steps have been taken by the Irish Government, including developing contingency plans, lobbying for a soft border in Northern Ireland, and the recent €300 million Brexit Loan Scheme – 40 per cent of which was put aside for food and drinks businesses. Fáilte Ireland has been proactive in its approach to the issue through its comprehensive Get Brexit Ready programme launched last September, which has engaged with around 1,600 tourism businesses. The initiative focuses on areas such as retention of the Great Britain market (working around added value, value for money, new opportunities in the GB market and more), opportunities in new and emerging markets beyond those in Britain, Europe and the US in tandem with Tourism Ireland, and the capabilities of both businesses and people – increasing efficiencies, boosting sales capabilities and much more. Take its Service Excellence programme, which has been well-received by the industry and ensures that tourism businesses can deliver the best possible visitor experience. Strategic management programmes have also been run in conjunction with the Irish Management Institute, with more than 20 different businesses completing a nine-month programme resulting in a full international sales development plan.

“Brexit has really made us look at what are those challenges, what are those issues and then, with our industry, working out a plan – a programme that really will make a difference,” Bromley explains. “I think the fact that we can be proactive and reactive to those challenges and issues has really been very well-received by the industry.”

But more can undoubtedly be done in the coming months. Eoghan O’Mara Walsh, Chief Executive of the Irish Tourism Industry Confederation (ITIC), argues that the tourism sector hasn’t been given any focused Brexit attention by the Government, calling for a specific Brexit mitigation fund to be introduced in the upcoming Budget to allow the sector to diversify from the UK market. Irish Hotel Federation (IHF) Chief Executive Tim Fenn is of a similar opinion and believes that there are more steps to be taken by the State.

Fáilte Ireland’s Martina Bromley at a China Ready networking event. Photo: Chris Bellew/Fennell Photography

“While Government cannot influence the economic conditions affecting other countries, there is a wide policy range of measures within their control to ensure that the right business environment exists to withstand the negative impact of Brexit. These include retaining measures such as the 9 per cent VAT rate and zero travel tax, for example, which have been hugely significant in underpinning the recovery of the tourism sector,” he said in a statement to Hotel & Catering Review, echoing similar points from his counterpart in the ITIC. “More also needs to be done to help improve competitiveness by tackling the high costs that are stifling business in Ireland, such as insurance. We welcome the Government’s recognition of the impact of insurance costs on hotels and guesthouses and the wider business sector. The priority now is the swift implementation of the recommendations and conclusions of the Cost of Insurance Working Group (CIWG) on employer and public liability insurance costs.”

New product development is also critical, and the success of initiatives such as the Wild Atlantic Way and Ireland’s Ancient East have demonstrated how programmes with sufficient funding can spread tourist penetration to new parts of the country. “We must build on that success. The recent launch of Ireland’s Hidden Heartlands by Fáilte Ireland is very welcome as it will support areas of the country that are particularly exposed to the impact of Brexit,” Fenn added. “However, additional dedicated marketing funds are required to help Fáilte Ireland and Tourism Ireland to implement the mitigation measures they are working on with industry so we can continue with sustainable tourism growth.”

RESPONSIBILITY

But there’s also an onus on private businesses to take their own steps to secure their future. While there’s something of a tourism boom at the moment driven by markets outside of the UK, the industry and individual businesses need to ensure they remain as competitive as possible and offer good value for money.

“There’s a tourism boom at the moment and when demand exceeds supply there’s a temptation to push prices up,” says Eoghan O’Mara Walsh. “We do have to stay competitive to ensure that we don’t get out of kilter and be seen as expensive to the international visitor.”

For many businesses, diversifying into new markets could play a key role in their survival and growth in a post-Brexit world, while still recognising the major growth potential in those markets in mainland Europe and North America. It’s something that many industry stakeholders have considered in their Brexit response – the ITIC in its recent 2025 tourism strategy document identified the potential from new and emerging markets such as China (albeit noting that the main growth is likely to come from North America and mainland Europe), while Fáilte Ireland has urged businesses to target visitors from the likes of India, China and the Gulf region.

Eoghan O’Mara Walsh at the launch of ITIC’s ‘Tourism: An Industry Strategy for Growth to 2025’ on March 20th last. Photo: Maxwells

Take the Orchard Centre in Co Wicklow, a visitor centre operated by dairy farmer Joe Hayden, who also supplies milk to Baileys. Hayden was among those in attendance at a recent Fáilte Ireland conference on winning business in new emerging markets, as part of the organisation’s Get Brexit Ready programme. “The definite plan is to expand into new markets – new markets for us are primarily in Asia,” Hayden explains. “We’ve been very fortunate in that we have had experience in that market over the past eight years, particularly in India.”

A lot of Fáilte Ireland’s work at the moment revolves around this topic, getting the industry ready for those three markets in particular. It’s not as simple as deciding one day that you’re going to focus on increasing your visitors from China – there are cultural issues or practices to consider, often as simple as handing over a business card in two hands. “They have cultural nuances and various [other] elements that you need to be aware of,” Bromley explains. “[Chinese people] don’t like their feet to touch the ground, so having slippers is a very important element.”

Being aware of these cultural differences is key – as is examining your products and services. “I think the most important things to focus on are your products and services, your payment options – consider UnionPay cards, Alipay – and also your communication,” Dublin Airport’s Edel Redmond advised, speaking at the recent Fáilte Ireland conference. “Communication is key with the Chinese passengers and tourists to Ireland in particular. WeChat is essential for communicating, using QR codes in all of your products and services so they can easily and efficiently understand the product offering that you have.”

THE ROAD AHEAD

O’Mara Walsh highlights a number of key steps that must be taken in the coming months and years if Irish hospitality and tourism is to survive and thrive, not just in the short-term but the medium and long-term also. Those, he notes, include the maintenance of the Common Travel Area and a soft border with Northern Ireland, a regulatory environment that would prevent the UK from providing its tourism sector with an unfair advantage, and the continuation of an all-island marketing strategy. A resolution to the UK’s departure from the Single Aviation Market is also required, which could impact greatly not just on tourism but trade – when the UK leaves the Single Market it will also leave the Single Aviation Market. In theory, UK airlines will not have a license to fly into Ireland and vice versa for an Irish airline flying into the UK. It seems incredible that that could be allowed to unfold but it’s the reality on the ground (or in the air) at present unless a new or amended aviation agreement is established before next March arrives.

Despite these challenges and in the presence of huge uncertainty, there is some light at the end of the tunnel. Martina Bromley notes that there has been strong engagement with Fáilte Ireland’s range of Brexit supports in recent months, which bodes well for the survival and success of individual businesses during what will be a tumultuous time for many industries. For his part, O’Mara Walsh is cautiously optimistic about the road ahead, though he notes that the end result could depend on the nature of Brexit itself.

“Yes, in the short answer,” he replies when I ask whether he has a positive outlook on the sector’s ability to cope with the changes and challenges it faces, though it’s tempered with a warning. “If there’s a hard Brexit – which we hope there’s not going to be, but that is to a certain extent going to be determined by political manoeuvres in Brussels and London – it makes things difficult. But if there’s a soft-ish Brexit and, if we employ the right strategies and policies then, yes, we think the future for Irish tourism can be very bright. By 2025 we estimate that there can be about 80,000 more jobs throughout the country in Irish tourism and the sector as a whole can grow by about 65 per cent… but that’s predicated on the correct policies and the correct investment strategies, and there are a lot of enabling factors that are required to achieve that. So what we’re saying is that tourism’s future is bright, but it’s not going to happen unless there are proactive, pro-tourism initiatives both from government and the industry itself.”

By | 2018-07-23T04:33:16+00:00 July 28th, 2018|Categories: Advice, News|Tags: , , , , |Comments Off on Beating Brexit